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The Relative Costs of a UBI and a NIT

Compares the costs of a negative income tax designed to mimic the distributional effects of a universal basic income, set at a level sufficient to eliminate poverty in the US. Author estimates the NIT would cost $826 billion in 2002, compared with $1.69 trillion for an equivalent UBI.

2006

Academic Paper

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A NIT designed to eliminate poverty (in 2002) with a minimum payment of $9,359 that reduces by 25.6% per dollar earned is estimated to have costed $1.09 trillion. UBI and NIT can have identical redistributive effects. The level of taxation required to fund a UBI is roughly double the amount for an equivalent NIT. It's unclear that a basic income guarantee is the best use of society's redistributive capacity. The net cost of a $12k/yr UBI to all adults is estimated at $1.69 trillion per year.
Philip Harvey
Basic Income
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