Of course, it is possible to fund UBI in America. Based on my calculations from a forthcoming article in Basic Income Studies, this one-minute video argues that a UBI large enough to eliminate poverty in the United States will cost 2.95% of the GDP per year–even if no other entitlement programs are replaced or reduced.
In a paper released in October 2017, the International Monetary Fund (IMF) has analysed the feasibility and effects of introducing a Universal Basic Income (UBI) in various economies, looking at how it might help ease destructive levels of inequality present in many societies around the globe.
The ‘IMF Fiscal Monitor: Tackling Inequality’ focused on how fiscal policy can help governments address high levels of income inequality (from here simply ‘inequality’) while minimizing potential trade-offs between efficiency and equity. As part of the second half of the discussion, the UBI was considered as a mechanism of fiscal redistribution currently being widely debated.
Underpinning the analysis of UBI were a number of premises. The first of these was the assumption that some inequality was inevitable within a market-based economic system. Even though data reveals a decline in the global levels of inequality over the last three decades, the increased inequality within certain economies has had adverse effects, not only in terms of social corrosion and political polarisation but also in terms of economic prosperity. As such, the inequality the report sought to address was the type that was specifically having a negative impact.
The second premise clarified that measures aiming to alleviate inequality should not come at the expense of achieving economic GDP growth. Supporting this, data was presented showing that between 1988 and 2008, across all types of economies, there had been an average growth of real income per capita across every income bracket, even if the increases had been greater for those earning more. It was also shown that an increase in overall growth between 1985 and 2015, in particular in East and South Asia and the Pacific Region, had coincided with huge reductions in relative poverty and absolute poverty, and, therefore, with increases in social welfare. With no clear trend between increased inequality and growth, and with various studies suggesting, contrarily, either that redistributive policies may slow growth or that redistributive policies may help growth (given that the marginal propensity to consume among the poor is higher), it was determined that, on balance, growth should not be unduly undermined.
The third condition stipulated that, given the limited fiscal space most economies operate within, simulations measuring the impact of a UBI should be performed under the assumption of budget neutrality. The vast drop in progressivity among the tax systems of the OECD member states, in particular the drop in the average top rate of personal income tax (PIT) from 62% to 35% between 1980 and 2015, does not seem to have been economically motivated, since during this period there was no evidence of: increased income tax elasticity; proportionally less income going to the top earners (the opposite was the case); increased support for the social welfare of the rich; decreased support for redistribution (the opposite was the case); or, a more progressive tax system being harmful to growth (there was some evidence to suggest the opposite could be the case). It was therefore accepted that this lower progressivity must be the consequence of political preference. As such, in order to control for various political perspectives, the funding for a UBI would have to come from a combination of spending cuts and increased taxes.
Following the establishment of such conditions, the central examination of the UBI was based around simulations of implementation within eight economies: Brazil, Egypt, France, Mexico, Poland, South Africa, the UK and the US. The choice of countries controlled for heterogeneity in geographical area, developmental stage (emerging market and advanced economies), and the generosity and progressivity of the countries’ current noncontributory transfers. The analysis of a UBI was then judged on whether it could increase coverage (the number of beneficiaries) and progressivity (those most in need benefiting proportionally more) of current redistributive programs, without impeding growth.
In almost all cases coverage increased, given the universality of UBI, however improvements in progressivity very much depended on the financing method and the existing level of progressivity within a particular economy. Where UBI was seen as a replacement for current benefit systems, countries with low progressivity but high coverage, such as South Africa, saw larger swathes of their lower earners suffer at the expense of a smaller percentage of beneficiaries within the same income category. In this circumstance, where consumption inequality is higher as a consequence of income inequality, progressivity as well as coverage could be improved if a UBI was financed by increased indirect taxation (consumption tax) rather than through cuts to the current system. In economies where both coverage and progressivity are already relatively high, such as the UK and France, replacing the current system with a UBI would be regressive. Similarly, even in a country where progressivity is high but coverage low, such as Brazil, the introduction of a UBI as a replacement would likely trade one off against the other, ultimately negatively affecting lower income households. In the situation where PIT among the top-earners is increased as a way of financing a UBI (altering the economic behaviour of these payers), the model calibrated to the US economy (moderate coverage and progressivity) found that, although efficiency, in terms of output forgone, was lower than against a system with indirect taxes, the PIT increase yielded greater overall welfare, especially where aversion to inequality was high. The final scenario, where simulations focused on comparing a UBI funded either directly, indirectly or through cuts, against the expansion of a benefit – the Earned Income Tax Credit (EITC) in the US – at the same fiscal cost, found that, due to the targeted nature of the EITC subsidy, welfare improvements were higher than would experienced under the implementation of a UBI.
In summary, The Fiscal Monitor concluded that a perfectly implemented means-tested system would always be superior to a UBI, since it would ensure the necessary coverage and provide the greatest level of progressivity within the bounds, constraints and conditions assumed. Therefore, in countries where there is a ‘good’ transfer program, the finance necessary to fund a UBI would be better used on improving the current system. That said, in reality, given the existence of imperfections in such systems, a UBI could be a powerful means of combating poverty and extreme poverty, especially in countries where both progressivity and coverage is poor. It was also noted that a UBI could be implemented for other reasons, such as in combatting job market disruptions associated with technological progress.
More information at:
IMF Publications, ‘IMF Fiscal Monitor: Tackling Inequality, October 2017’, International Monetary Fund website, October 2017
UBI Taiwan held a press conference to describe their proposal to give every Taiwanese citizen a basic income each month. Skeptics and supporters were given details of how Taiwan could feasibly implement such a policy.
Taiwan’s extremely low tax rates coupled with a highly developed economy make Taiwan a feasible candidate to establish an Unconditional Basic Income (UBI), the group said.
UBI Taiwan was established in 2016 to bring attention to this policy in Taiwan, where it has not yet been a major topic of national discussion.
On the heels of the press conference, UBI Taiwan has scheduled meetings with political party representatives in Taiwan.
The national proposal briefing cover
UBI Taiwan’s basic income proposal does not include a means-test or work requirement, which means, essentially, every Taiwanese citizen would receive a stipend. Under this proposal, adults would receive 10,000 NTD per month ($330 USD) and children 5,000 NTD per month ($165 USD).
The group argued such a policy could help to alleviate income inequality, which has been growing steadily in Taiwan. It may also address some of the financial anxieties related to having children, which has created a demographic crisis on the island.
According to the white paper briefing, UBI would lower the rate of low-income families in Taiwan by 66 percent – from 25 percent currently to 8.5 percent after basic income.
The proposed amount is two-thirds of Taipei’s poverty line, which is the highest in Taiwan.
The press conference was held on October 20 at National Taiwan University’s conference venue. They outlined several methods to realize such a policy in Taiwan, focusing on either immediate or gradual implementation.
An immediate implementation would have a “gross cost” of 15 percent of Taiwan’s GDP, the group said. Ray Song, the research director for this national proposal, said the “gross cost” is misleading because it does not account for how much individuals would pay back their basic income in taxes.
Oscar Han, UBI Taiwan’s lead welfare researcher, discusses the benefits of UBI. The press conference had immense interest and was unable to provide tickets to the large number of Taiwanese who applied to attend.
The “net cost,” which calculates how much the government is actually sending out as a basic income and not receiving back in taxes, is 3.2 percent of Taiwan’s GDP, according to the research team’s calculation.
The group argued one step Taiwan should immediately take to pay for UBI is implementing a carbon tax.
A carbon tax in Taiwan would follow South Korea, which has recently implemented a carbon trading scheme, and Japan, which heavily taxes fossil fuels and is beginning a “climate change mitigation tax.”
Taiwan currently has no carbon tax, but rather subsidizes fossil fuels by 20 billion NTD a year.
A tax on carbon of around 900 NTD per ton that increases 60 NTD per year would generate 1.7 trillion NTD in revenue over ten years, according to the proposal’s white paper.
The Chung-Hua Institution for Economic Research also found a carbon tax in Taiwan could generate 239 billion NTD in revenue a year by 2021.
During the question and answer session, Tyler Prochazka, UBI Taiwan’s co-founder and fellowship director, said adding a UBI on top of Taiwan’s existing social welfare system would put Taiwan closer to average welfare spending in developed countries.
The UBI Taiwan research team leadership answers questions during the press conference. Left to right: Jiakuan Su, Tyler Prochazka, Ping Xu, Ray Song, Oscar Han
“It is noteworthy that 70 percent of Taiwanese would benefit from this policy,” said Oscar Han, UBI Taiwan’s lead researcher for social welfare.
Wealthier families would still receive the basic income, but they would likely pay more in taxes than they receive from UBI, Prochazka noted.
There are several overlapping the social welfare policies in Taiwan that could be substituted by basic income, according to Song.
During the question and answer session, one audience member was concerned that eliminating other social welfare could leave some people worse off.
Prochazka explained that UBI Taiwan is not advocating eliminating any particular social welfare program, but that some would naturally fade away because a basic income would raise many individuals above the qualifying standard to receive the aid.
Considering the political difficulties with immediate implementation of UBI, the other option outlined was to model Alaska’s Permanent Fund, which has been providing a partial basic income to Alaskan residents for decades based on oil revenues and other investments, and gradually phase-in a basic income starting with young Taiwanese.
The Taiwan Permanent Fund (TPF) would collect revenue from taxes, such as a pollution tax, and invest the revenue back into the economy in order to pay out the dividends as a basic income.
The TPF proposed by UBI Taiwan would require an increase in taxes of 5.2 percent of GDP, but it would require several years to phase-in as the fund grows from its investments.
There were audience members who said they thought the phase-in for the Taiwan Permanent Fund would take too long. Song said that their calculations for the phase-in were based on conservative adjustments to taxes.
“This is the most conservative version (of our Permanent Fund plan),” Song said. “If the public is willing to increase taxes more quickly, this would allow us to achieve faster implementation of a full UBI.”
One audience member was skeptical that a basic income would improve labor relations, and she thought business owners would lower their wages in response.
Jiakuan Su, the lead taxation researcher, said that a basic income could give an employee more influence over their employers.
”We have the evidence to show that even when you just give a basic livelihood, you can give an emancipatory potential for us to choose what our passions are, rather than to be forced by economic factors to go do things that we hate,” Prochazka said.
The proposal has been under preparation since this summer when UBI Taiwan began its fellowship research program with students selected from across Taiwan. During their research, the team collaborated with economists who study basic income from various countries, as well as Taiwanese professors to guide their work.
At the beginning of the press conference, UBI Taiwan played a video featuring their supporters from around the world. Among those who showed their support included Andy Stern, Barack Obama’s former economic adviser, Peter Knight, a former World Bank economist, and Enno Schmidt, the leader of the Switzerland basic income referendum.
“A country that is brave enough to face the issues and challenges of our time and to rethink its values, I think that country deserves the leading role in this innovative issue of a Universal Basic Income,” Schmidt said in his video address to the conference.
One of the fiercest criticisms of UBI is that it will increase laziness. Schmidt thinks the opposite is true.
“We are lazy today, just living in the given economic structures. UBI is a measure against this wasting of time, destruction of social relationships and environment,” Schmidt said. “It’s a measure that brings life and work closer together and will lead you to do more, work better, because it can be your work.”
Stern has been an influential advocate of basic income in the United States. He was previously the President of the Service Employees International Union, and has written a book on UBI called “Raising the Floor.” Stern has been providing advice to UBI Taiwan since this summer.
“It’s an amazing effort and it’s just beginning, but it has the potential to change the future of work and more importantly the economic security of everyone on Taiwan,” Stern said in his video for the conference.
Guy Standing, a professor at the University of London and a co-founder of Basic Income Earth Network, advised the UBI Taiwan research team over the summer as they were preparing the proposal.
Standing’s message to Taiwan is that UBI is feasible.
“It’s feasible. It’s affordable. We’ve done pilots in India where we gave very modest amounts for thousands of people and we’ve seen that it improves nutrition, health, reduces mental stress,” Standing said in his video address for UBI Taiwan.
Ping Xu, UBI Taiwan’s co-founder and coordinator, will travel to California this week to attend a cash-transfer conference and discuss her group’s research. She said she is proud of the work they accomplished on the national proposal.
“In this group of young researchers, you can see hope for the future of Taiwan,” Xu said.
Sarath Davala, the lead researcher for the Indian basic income experiment, has worked closely with UBI Taiwan over the past year. Davala said he is hopeful that the proposal will spark a conversation about basic income in Taiwan.
“The proposal is done after rigorous analysis of the existing welfare system. It can become a model for the countries in the region,” Davala said.
The conference took place on a rainy day, but the venue was nearly full of audience members, including some political party representatives and government officials.
“Even in the pouring rain, having so many people show up to the press conference was really encouraging to us,“ said Jaiyou Wei, a research associate for UBI Taiwan. ”But this press conference is only the beginning of our plans to spread UBI in Taiwan.”
The Government of Macau has completed the most recent distribution of its annual wealth dividend, providing most residents of the city with an unconditional cash grant of about US$1,200.
The Macau Special Administrative Region (SAR), an autonomous region of the People’s Republic of China, is a resort city with lucrative tourism and gambling industries (described by Lonely Planet as the “Vegas of China” and a “mecca of gambling and glitz”). Macau is a host to many gambling and betting establishments and is said to rival Malasyain online gambling scene as well – such as the popular Kiss918 app. Those who can’t make the trip out to Macau or Vegas may want to see what gaming options they have available to them online – they could look into the afformentioned gambling apps or try something similar with sports betting sites like www.bangthebook.com. That said, the city’s lottery industry has helped to finance its Wealth Partaking Scheme (WPS). Initiated in 2008 and renewed each successive year, the WPS provides a cash dividend to all Macau residents.
All holders of a Macau Resident Identity Card are eligible to receive the WPS payments, including both permanent and non-permanent residents have been, although payments to permanent residents have been higher in each year of the program’s existence. Some people have chosen to take said payments and, instead of going to the local options, go online to www.paybyphonebillcasino.uk and similar options online. Considering the comfort of staying inside from this, it makes sense.
According to the Macau SAR government, the purpose of the scheme is to “share the fruits of economic development with general public”. However, researchers such as Bruce Kam Kwan Kwong argue the underlying motive of the scheme was simply to “stabilize the political atmosphere” in the face of large May Day protest rallies and other civil unrest.
On July 3, Macau SAR announced the 2017 WPS, under which permanent residents were entitled to 9,000 patacas (about US$1,200 or €950) and non-permanent residents to 5,400 patacas (about US$670 or €570). The amount of the payment has remained unchanged since 2014 (when the amount was increased from 8,000 patacas in 2013 and 7,000 patacas in 2012).
Disbursement of the payment was completed on September 15, with a total of 688,079 checks having been distributed (278,558 by direct transfer and 409,521 by mail). As of September 17, 264,758 of the mailed checked had been honored. Between honored checks and direct transfers, over 543,000 residents of Macau have already received the 2017 WPS dividend. (The Macau SAR government’s announcement does not state how many of these checks were sent to permanent versus non-permanent residents.) As of its 2016 census, Macau has a total population of 650,834.
For additional details concerning the disbursement and eligibility of the 2017 WPS, see Furui Cheng’s July 27 report in Basic Income News: “Wealth Partaking Scheme: Macau’s small UBI“.
Is Macau’s Wealth Partaking Scheme a Basic Income?
The answer is contentious, and, in part, a matter of semantics [1]. Certainly, the WPS shares salient characteristics of a basic income: it is paid in cash, universal and unconditional for all residents, and not means-tested. (Unlike, for example, Singapore’s Growth Dividend, the amount of the WPS dividend does not vary according to income level.)
On the other hand, it may be dubious to say that the WPS provides “regular” payments to residents. As a matter of fact, the WPS has been distributed annually since the scheme’s initial enactment in 2008. However, it is not guaranteed, and it might be more accurate to describe the annual payments as successive one-off grants. Karl Widerquist explained Basic Income News report on the 2014 dividend, “The government has now set the president that the Wealth Partaking Scheme will be in effect every year, but each year it has been created with one-time legislation without a promise of renewal. The amount, timing, and existence of the redistribution have to be renegotiated each year.” This continues to hold true in 2017.
Furthermore, while the most “official” definitions of ‘basic income’ (including BIEN’s) do not stipulate that the amount of the payment is stable, it might be argued that this it is implicitly accepted that it must be so (perhaps pegged to inflation on GDP). The amount of the WPS has historically not been stable, and was even cut significantly in the second year of the program’s existence (from 4,000 to 3,000 patacas for permanent residents).
Finally, the most contentious semantic dispute in the basic income community, arguably, is that regarding whether the term implies that the amount of the payments is high enough to secure at least a basic subsistence-level existence. Even if the WPS qualifies as a basic income on all other criteria (although this itself dubious), the dispute renders the final verdict a matter of definition. The amount of 9,000 patacas per year is far too low to meet minimal living expenses. According to Numbeo’s cost of living calculator, for example, the average monthly rent for a one-bedroom apartment is about is well over 7,000 patacas in the city center and about 6,000 patacas outside of the center [2]. For comparison, the average monthly net salary is over 14,000 patacas, and Macau’s only current minimum wage legislation, for cleaners and security guards, establishes a minimum salary of 6,240 patacas per month. Thus, on some definitions of the term (although not BIEN’s), Macau’s WPS would thereby fail to count as a basic income (although it might still be called a “partial basic income”).
At the least, Macau’s WPS, like Alaska’s Permanent Fund Dividend, is an example of a universal dividend program with some salient similarities to a “pure” basic income (the latter of which exists nowhere in present physical reality).
[1] While BIEN has voted to establish a specific definition of basic income, I have recently argued that an inclusive, umbrella organization should abstain from accepting a singular definition of ‘basic income’.
[2] The average price of draught beer is 35 patacas, meaning that the 2017 WPS would not even be sufficient to finance a daily draught beer.
Reviewed by Russell Ingram
Photo: Casino in Macau, CC BY-NC-ND 2.0 Bailey Cheng
Jon Altman and Eva Cox. Credit to: Alfred Deakin Institute (Deakin University, Melbourne)
The Alfred Deakin Institute at Deakin University in Melbourne, Australia, hosted a forum on the 17th and 18th August discussing the concept of a universal basic income.
Workshop co-convenor Jon Altman (Deakin University and ANU) suggested that part of the impetus for the workshop was the sense that discussion of UBI in Australia was not as advanced as it was in other countries. As evidence of this he cited the comment made by Chris Bowen (Shadow Treasurer for the Labor party), who said that UBI was “a terrible idea”. Tim Hollo – Executive Director of the Green Institute – also highlighted the fact that the Greens were the only major party in Australia currently in support of the concept.
Dr Tim Dunlop – author of Why the Future is Workless – gave context to the discussion by talking about the state of work, technology and automation. He said the “salient point” in labour market analysis is that many problems are current. Evidencing this, he summarized some figures from the International Labour Organization, including; global unemployment exceeding 200 million in 2017; stagnation of real wage growth; decline in proportion of wealth going to wages; 760 million men and women worldwide in “vulnerable work”, defined as work unable to bring them above the the world poverty threshold of AUD $3.10 per day; millions in refugee camps and jails; record levels of over and under-employment; and the creation of “increasingly precarious” work.
Looking at future technology, Dr Dunlop said that the consistent finding was that “around 40 to 50% of jobs are at high risk of automation in the next twenty years” (Oxford Martins School Report, 2015) under “currently existing technologies” (McKinzie Report) and that it would be “close to a form of denialism”, therefore, to state, as many do, that “concerns about technological unemployment are overstated”. Associate Professor Karl Widerquist agreed with this point, stating that “people are not interchangeable parts” and often find that their “learn[t] skills” are “not needed any more”. In this regard, he said a UBI could compensate for the continual disruption of technology, and the inherent inability of workers to adapt and provide themselves with income. Phillip Ablett (USC), summarising work by Mullally, added that neo-liberalism’s emphasis “on ‘individual responsibility’ for poverty” contributed to this persecution of workers, where we tend “to blame individuals for their ‘failure’ to succeed in the market economy rather than consider the structural impediments to achievement”.
Professor Widerquist said a shift away from labour prosperity to capital prosperity has led to an “incentive problem” where employers don’t have an incentive to treat their employees appropriately since employees don’t have any power to refuse their conditions. The universal nature of a UBI, as such, would allow for a “voluntary participation economy instead of a mandatory participation economy”. Dr Frances Flanagan agreed that “capital accumulation” was central to the problem of “acute inequality”, however she expressed concerns that discussions around UBI focused too heavily on wage leverage and monetary incentive. Citing “care work” as an example “utterly antithetical” to the taylorisms of tasking and efficiency, Dr Flanagan said we need a more positive definition of ‘work’ since there are always ‘jobs’ that “require empathy, judgement and relationships”. UBI, consequently, needs to be “supportive of the fight for better jobs” and “[be] supportive of the fight against marketisation”. Professor John Quiggin (UQ) echoed Dr Flanagan’s concerns that UBI risks the possibility of replacing social services with a single payment, though he did point out that an unconditional stipend could destigmatise the concept of welfare payments to individuals, undermining the concept of the “deserving and undeserving poor”. Professor Eva Cox (AO) was also critical of UBI as a means to empowering a “protestant, male, Anglo” market system, where humans are economically judged as being good or bad “consumers”. She reiterated the need to revisit the concept of ‘work’ through a lense where humans were considered “social”, “dependent” and “interdependent”, advocating a UBI that was used to redefine “the social contract between the nation state and the individual”, with “reciprocity built into it”.
On the subject of evidence to support a UBI’s practical plausibility, both Professor Widerquist and Professor Greg Marston (University of Queensland) said that trials investigating the effects could be strategically dangerous since the trial conditions are often neither unconditional nor universal. Marston pointed to climate change as an example of where the accumulation of data has brought about, in many cases, confirmation bias in support of inactivity rather than impetus to instigate change. It was generally agreed that the issues of design and implementation were not, therefore, easily separated. Professor Quiggin, Troy Henderson and Dr Ben Spies-Butcher advanced the idea of a staged introduction, a “stepping-stone” approach which would retain the “big idea” excitement for voters and simultaneously satisfy technocrats. Quiggin’s preferred model was to favour the “basic” over the “universal” through various mechanisms and adjustments to tax regimes, introducing a full UBI payment to selected, vulnerable populations, and then gradually increase the number of people covered. The cost of everyone in Australia receiving a full UBI was estimated to be around 5-10% of GDP. Henderson and Spies-Butcher offered modelling that began by universalising the age pension, and by also introducing an “unconditional Youth Basic Income paid to those aged 20-24 based on a negative income tax model.”
In conclusion, the consistent theme of the two days was that UBI cannot be offered as a silver-bullet solution to issues around inequality, welfare, social security and the potential growing precarity of work. So while there is a tendency amongst advocates (worldwide) to present UBI as a single policy response for addressing many of the problems societies have with these issues, the very strong feeling of the workshop was that this could be a dangerous over-reach.
You can view some of the contributors speaking here.
More information at:
Kate McFarland, ‘NEW BOOK: Why the Future is Workless’, Basic Income News, November 5th 2016
Hilde Latour, ‘KARL WIDERQUIST: About Universal Basic Income and Freedom’, Basic Income News, July 31st 2017
Homepage of the International Labour Organization
James Manyika, Michael Chui, Brad Brown, Jacques Bughin, Richard Dobbs, Charles Roxburgh, Angela Hung Byers, ‘Big data: The next frontier for innovation, competition, and productivity’, McKinsey Global Institute, May 2011
Karl Benedikt Frey and Michael Osborne, ‘Technology at Work: The Future of Innovation and Employment’, Oxford Martin School, University of Oxford, February 2015
Oxford University Press, ‘The New Structural Social Work: Ideology, Theory, Practice 3rd Edition’, Bob Mullaly
The 24th BIEN CONGRESS in Maricá & Niterói – Rio de Janeiro, Brazil – 27-29 August 2025
Linkedin, Instagram, X – biencongress25 (at) gmail [dot] com
BIEN2024 was August 29–31 (Pictures and more coming soon)