Universal Basic Income and Progressive Consumption Taxes

Juan Carlos Conesa, Bo Li and Qian Li

Department of Economics Working Papers from Stony Brook University, Department of Economics

Abstract: We provide a comprehensive quantitative evaluation of Universal Basic Income (UBI), evaluating different degrees of generosity and the fiscal alternatives to finance it. Replacing existing targeted transfers with a UBI of equal fiscal cost results in widespred welfare losses. In contrast, a combination of generous UBI (at least $15,000 per household) with a switch to progressive consumption taxation could be beneficial from the perspective of ex-ante expected welfare in the long run. However, the quantitative analysis of the transitional dynamics reveals non-trivial transitional costs for most current households.

Date: 2020
New Economics Papers: this item is included in nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:nys:sunysb:20-01

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