How much does UBI cost?
Some “back-of-the-envelope” estimates and important findings.
October 21, 2017
Karl Widerquist, Ph.D.
Philosopher, Economist

I recently completed some simple, “back-of-the-envelope” estimates the net cost of a UBI set at about the official poverty line: \$12,000 per adult and \$6,000 per child with a 50% “marginal tax rate.” They are in a paper entitled, “the Cost of Basic Income: Back-of-the-Envelope Calculations.” It’s currently under peer-review at an academic journal and available in un-reviewed form on my website.

Here are some of its most important findings:

• The net cost—the real cost—of a roughly poverty-level UBI is \$539 billion per year, less than 16% of its often-mentioned but not-very-meaningful gross cost (\$4.15 trillion), less than 25% of the cost of current U.S. entitlement spending, less than 15% of overall federal spending, and about 2.95% of Gross Domestic Product (GDP)
• This \$539 billion UBI would drop the official poverty rate from 13.5% to 0%, lifting 43.1 million people (including about 14.5 million children) out of poverty.
• This UBI will be a net financial benefit to most families with incomes up to \$55,000, making it an effective wage subsidy (or tax cut) for tens of millions of working families.
• The average net beneficiary of this UBI is a family of about two people making about \$27,000 per year. The family’s net benefit from the UBI would be nearly \$9,000 raising their income to almost \$36,000.
• Lowering the marginal tax rate to 35% would spread the benefits of the UBI program to more of the middle class while increasing the cost to \$901 billion.
• The cost of a UBI of \$20,000 per adult and \$10,000 per child is \$1.816 trillion per year, less than 85% of total entitlement spending, less than 45% of total federal spending, and less than 10% of GDP.