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News Link • Employment & Jobs

A Universal Basic Income Would Mean Massive Tax Hikes

• by Robert Colvile

The answer is that all are fans of the universal basic income – a policy that is suddenly the hottest thing in town. Finland is trying it. Scotland may follow suit. Silicon Valley bigwigs, including Marc Andreesen, are keen. Long explorations of the idea have been published in the Financial Times and New Yorker. And this weekend, Benoît Hamon romped to victory in the French socialist primaries by making it the centrepiece of his manifesto.

UBI simplifies work incentives, but it also undermines them.

Universal basic income – or "UBI", as the cognoscenti call it – is, in theory, wonderfully appealing. The idea is that rather than doling out benefits, the state guarantees every citizen a certain lump sum per year, handed out regardless of age or need.

You can tweak the model in a host of different ways – by giving higher amounts to the disabled, or the elderly, or smaller amounts to children, or by withdrawing the payment as earnings increase (which is how UBI's sibling, the negative income tax, works). But the essence is that everyone gets the bare minimum needed to get by.

This has numerous theoretical advantages.

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