Vox asks “What happens if you replace every social program with a universal basic income?” in a May 30 article by Dylan Matthews. The piece goes on to cite Luke Shaefer’s research on a negative income tax.
The article discusses a recent American Enterprise Institute report on a budget-neutral universal basic income (UBI) program, which would provide unconditional cash transfers to citizens by cutting most other social welfare programs. The author argues that this form of a UBI would benefit middle class families at the expense the elderly, and cites a negative income tax policy as an alternative worth considering.
“In an absolute must-read paper for anyone interested in the basic income debate, the University of Michigan’s Jessica Wiederspan, Elizabeth Rhodes, and Luke Shaefer estimated the cost of the US adopting a negative income tax large enough to wipe out poverty,” Matthews writes. “They find that a household-based negative income tax, set at the US poverty line and with a 50 percent phaseout rate, would cost $219 billion a year.”
"The Wiederspan, Rhodes, and Shaefer paper shows something important," continues Matthews. "Funding a basic income through a negative income tax model is doable. It’s not something outside the realm of possibility for a country as rich as the United States."
H. Luke Shaefer, Ph.D. is the director of Poverty Solutions at the University of Michigan, an interdisciplinary, university-level initiative that seeks to inform, identify, and test innovative strategies to prevent and alleviate poverty. He is an associate professor at the University of Michigan, School of Social Work and Gerald R. Ford School of Public Policy. His research on poverty and social welfare policy in the United States has been published in top peer-reviewed academic journals such as Journal of Policy Analysis and Management and the American Journal of Public Health, and has been supported by the National Science Foundation, among other sources.