Scott Sumner on universal basic income (UBI

See The hardest problem in public policy.

"I haven’t studied this issue in detail, but given the US population (330 million, and perhaps half as many households) it’s obvious that a UBI of $12,000 per person and significantly more per household would cost trillions of dollars.  There is no plausible income tax increase that could raise that sort of revenue.

Defenders of the UBI would correctly point to the fact that you can supplement the income tax boost with a 20% VAT, and for many middle class families the extra UBI benefits would roughly offset the extra VAT and income tax.  But it doesn’t end there.  European countries with high levels of government spending and taxes typically have economies where GDP/person is 20% to 40% lower than in the US, mostly due to less work effort, although productivity is also lower in some cases. 

Basic economic theory predicts that Europe’s high taxes should result in substantially lower GDP/person, mostly due to less work effort, but also less productivity.  The UBI can be seen as a gamble that these basic economic theories are wrong, even though the stylized facts strongly support the claim that taxes reduce output in the long run.  Even within Europe, less taxed areas such as Switzerland tend to have higher output.

If standard economic theory is correct, then a UBI will not merely redirect money from the rich to the poor, it will dramatically reduce (material) living standards for average Americans.  There will be more leisure, but it will be unevenly distributed."