Universal basic income as a tool for tax and benefit reform

Tom Holden
SLF Publication Number 8, August 2017
Abstract BibTeX

Universal basic income (UBI) is often presented as a way of supporting an increase in the fraction of population not in full time employment. Here, I wish to outline an alternative vision based upon using UBI to simplify the tax and benefit system and enhance work incentives. Rather than funding an increase in the number of people without jobs, my proposed system is designed to produce higher levels of employment. By replacing many existing benefits with a UBI, families will no longer need to worry about their benefits being withdrawn as they start earning more, giving them stronger incentives to work, and pulling thousands out of the poverty trap created by the existing benefits system. Furthermore, while the poorest will obtain the largest direct benefit from the proposed system, its wider benefits will be shared by people of all incomes due to reduced economic distortions.