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.

This article was originally published by Karl's blog, The Independentarian, from Beaufort, North Carolina, on May 26, 2017.

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Karl Widerquist, Ph.D.
Philosopher, Economist

KARL WIDERQUIST, Ph.D. is an Associate Professor of political philosophy at SFS-Qatar, Georgetown University, specializing in distributive justice—the ethics of who has what. He has published seven books, including "Prehistoric Myths in Modern Political Philosophy" (Edinburgh University Press 2017, coauthored by  Grant S. McCall), "Independence, Propertylessness, and Basic Income: A Theory of Freedom as the Power to Say No" (Palgrave Macmillan 2013), and "Basic Income: An Anthology of Contemporary Research" (Wiley-Blackwell 2013). He is a co-founder of the journal Basic Income Studies, the only academic journal devoted to research on Basic Income. Widerquist has published dozens of articles both in the popular media and in academic journals (such as Political Studies; the Eastern Economic Journal; Politics and Society; and Politics, Philosophy, and Economics). He holds two doctorates—one in Political Theory form Oxford University (2006) and one in Economics from the City University of New York (1996). He writes the blog "the Indepentarian" for Basic Income News.

He has appeared on or been quoted by many major media outlets, such as NPR’s On Point, NPR’s Marketplace, PRI’s the World, CNBC, Al-Jazeera, 538, Vice, Dissent, the  New York Times, Forbes, the Financial Times, and the Atlantic Monthly, which called him “a leader of the worldwide basic income movement.”