2 min read

Universal basic income refers to a financial support system established by the government in the form of regular, guaranteed payments without the need for pre-qualification. There are many potential pros and cons of implementing a system like this in our country. In theory, universal basic income is designed to give people the minimum amount of money to survive on. The primary benefit and justification for advocates of UBI is that it can reduce the poverty rate and income inequality. Hypothetically, if UBI was working well, people in a lower income bracket would have the opportunity to pursue college and as a result, qualify for higher-paying jobs. If people can expect a certain amount of money from the government each month, fewer people will be living below the poverty line and succumbing to homelessness and hunger. There are important caveats to be aware of, however. The population of the United States is over 330 million, which means if every person was paid, for example, $1000 a month, that would amount to a cost of over several trillion dollars. Circumventing this exorbitant cost with tax strategies like a value-added tax would subsequently raise the cost of goods and services, which lowers the value of UBI. The other major argument against UBI is how it might lower the incentive to work and contribute to the economy. Given some of the arguments for both sides, I am in support of the concept of universal basic income, primarily because I believe reducing homelessness and poverty needs to be a priority. Opponents would cite the cost of UBI, but I believe there are ways to pay for it without imposing a significant tax on working class citizens. Improved contributions from our financial sector come to mind. For example, a financial transactions tax, which is a fee placed on the sale of a financial instrument; this would be placed primarily on citizens with large financial portfolios. A financial activities tax on financial institutions would also help – a small tax on remuneration and profits to fund UBI is a demand that can easily be met by banks and insurance companies.

Click to go back to MMI Policy Questions