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Universal Basic Income, Taxes, and the Poor

Author

Listed:
  • Nora Lustig

    (Tulane University)

  • Valentina Martinez Pabon

    (Yale University)

Abstract

A Universal Basic Income (UBI) is often seen as an attractive policy option to replace existing targeted transfer and subsidy programs. However, in a budget-neutral switch to a UBI there is a trade-off between the generosity of the universal transfer, and hence its poverty impact, and the implied increase in tax burden. We summarize our results for fourteen low- and middle-income countries. We find that, with the exception of Russia, a poverty reducing, budget-neutral UBI would entail a significant increase in the net tax burden of top deciles. The efficiency cost and political resistance for such a policy would likely be too high.

Suggested Citation

  • Nora Lustig & Valentina Martinez Pabon, 2022. "Universal Basic Income, Taxes, and the Poor," Working Papers 2205, Tulane University, Department of Economics.
    • Handle: RePEc:tul:wpaper:2205
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    File URL: http://repec.tulane.edu/RePEc/pdf/tul2205.pdf
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    References listed on IDEAS

    as
    1. Bachas, Pierre & Gadenne, Lucie & Jensen, Anders, 2020. "Informality, Consumption Taxes and Redistribution," The Warwick Economics Research Paper Series (TWERPS) 1277, University of Warwick, Department of Economics.
    2. Nora Lustig & Jon Jellema & Valentina Martinez Pabon, 2023. "Are Budget Neutral Income Floors Fiscally Viable in Sub-Saharan Africa?," Journal of African Economies, Centre for the Study of African Economies, vol. 32(Supplemen), pages 202-227.
    3. Ravallion,Martin & Chen,Shaohua, 2017. "Welfare-consistent global poverty measures," Policy Research Working Paper Series 8170, The World Bank.
    4. Luis F. Lopez-Calva & Nora Lustig & Mikhail Matytsin & Daria Popova, 2017. "Who Benefits from Fiscal Redistribution in the Russian Federation?," Commitment to Equity (CEQ) Working Paper Series 39, Tulane University, Department of Economics.
    5. Parfit, Derek, 2012. "Another Defence of the Priority View," Utilitas, Cambridge University Press, vol. 24(3), pages 399-440, September.
    6. Dean Jolliffe & Espen Beer Prydz, 2016. "Estimating international poverty lines from comparable national thresholds," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 185-198, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    universal basic income; microsimulation; inequality; poverty; tax incidence;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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