Monday, December 23, 2019

Back of the envelope calculation for 9 African countries: it's not feasible to abolish even extreme poverty (less than PPP $1.90/day) with domestic taxes and transfers

See ARE INCOME FLOORS VIABLE IN SUB-SAHARAN AFRICA? by Jon Jellema, Nora Lustig, and Valentina Martinez Pabon of Tulane.
"ABSTRACT

In this paper, we build on results generated from policy scenarios attempting to generate sufficient internal resources for providing targeted and universal basic income packages in 9 different countries in sub-Saharan Africa.We add more countries from the same region as well as account explicitly for "missing" incomes, subsidy expenditures, and tax revenues in a way that reduces the burden of increased revenue collection on the survey population). While the new scenarios create smaller burdens from increased revenue collection on poor and vulnerable populations, it is still the case that setting income floors equivalent to international poverty lines funded by internally-generated revenues is often not feasible for two reasons: there is extreme reranking of individuals (from pre-to post-fiscal income) and the tax burden on the nonpoor would be significantly higher."

Hat tip:  Justin Sandefur

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