Universal Basic Income, Taxes, and the Poor

Produced by: 
Tulane University
Available from: 
September 2022
Paper author(s): 
Nora Lustig
Valentina Martinez Pabon
Poverty - Inequality - Aid Effectiveness
Fiscal Policy - Public and Welfare Economics

A Universal Basic Income (UBI) is often seen as an attractive policy option to replace existing targeted transfer and subsidy programs. However, in a budget-neutral switch to a UBI there is a trade-off between the generosity of the universal transfer, and hence its poverty impact, and the implied increase in tax burden. We summarize our results for fourteen low- and middle-income countries. We find that, with the exception of Russia, a poverty reducing, budget-neutral UBI would entail a significant increase in the net tax burden of top deciles. The efficiency cost and political resistance for such a policy would likely be too high.


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