Well, the money has to come from somewhere!
Doling out a Universal Basic Income of $12,000 a year to every American citizen would cost taxpayers $3.8 trillion, according to a new study by investment management firm Bridgewater Associates.
That’s roughly one-fifth of the nation’s entire annual economic production — or 78 percent of all the taxes collected for social programs, according to Bridgewater co-chairman Ray Dalio, who published the study “Primer on Universal Basic Income” to LinkedIn on Thursday.
The premise of UBI is that every citizen receives regular, no-strings-attached payments from the government that, when paired with minimum-wage work, yield a livable income.
In New York City for instance, a full-time worker earning the 2018 minimum wage of $13.50 an hour and also receiving $12,000 in UBI would have a gross yearly income of $40,080.
MIT estimates it costs at least $33,000 a year to live in the Big Apple.
UBI has been hotly debated, with proponents charging it will level out economic inequality and buffer against automation-related job losses, and detractors arguing it will be too costly and encourage laziness.
Dalio didn’t pick a side, but instead ran the numbers to determine how much it would cost and how it could be paid for.
The conclusion: It would not be cheap, and there’s likely no way to fund such a program without cutting existing social programs and raising taxes.
“Even the most generous welfare states would struggle to cover the cost of a poverty-line basic income,” Dalio wrote. “Not to say it isn’t possible – just that incremental change in our social/taxation systems wouldn’t get you there.”
In the “highly unlikely” event every penny of government social spending — except for infrastructure and education — was redirected toward UBI, it would only cover 92 percent of the $3.8 trillion-a-year price tag, Dalio wrote.
If social income programs — such as disability, social security, pensions, welfare and unemployment benefits — were axed but health care and medical social spending preserved, the savings would account for 37 percent of the cost of UBI, researchers found.
Basic income payments become more feasible if people on the upper end of the income spectrum receive little or none of the free money, according to Dalio.
For instance, setting UBI payments on a sliding scale and withholding checks from anyone who earns $120,000 or more annually through work would reduce the overall cost of implementing UBI in the US by about half, Dalio said.
“While this is technically not a Universal Basic Income, it may offer a compromise solution between securing the underlying goals of UBI and the constraints/concerns surrounding financing it,” he said.
Cities in the US, Canada, Finland and the Netherlands have announced pilot programs to test the basic tenets of UBI.
The city of Stockton, Calif., is testing the notion by giving 100 residents $500 a month for 18 months. The scheme is being funded with $1 million from the Economic Security Project — a pet project of Facebook co-founder Chris Hughes, according to CNN.
Other tech-bro UBI supporters include Facebook co-founder Mark Zuckerberg and Tesla founder Elon Musk, Dalio noted.