Actually, a Universal Basic Income Will Solve Poverty

Eduardo Porter’s “Why a Universal Basic Income Will Not Solve Poverty” contains many common misperceptions about basic income that it’s important to clear up.

The first misperception is in the unfortunate title attached to his essay. A basic income would in fact eliminate poverty if set at a level high enough to do so, which Mr. Porter himself acknowledges. This is true by definition, of course, but worth pointing out, since no other U.S. social policy implemented since poverty was officially defined in the 1960s has been able to durably lower the poverty rate below 15%.

The second misperception is that basic income is unaffordable. It’s true that basic income is expensive, but calling it unaffordable short-circuits the discussion we should be having about the costs and benefits of a basic income. Raising taxes is never an easy sell, but might it be worth it if the additional revenues were spent on a program guaranteed to eliminate poverty?

This leads to the third misperception, which is that a basic income could be financed by replacing current social spending with a flat check to all. Mr. Porter is right to point out that doing so would redistribute income upward, which is exactly the goal of Charles Murray’s plan–not a basic income at all, but a thinly veiled attempt not only to dismantle the safety net but also to privatize Social Security.

The only basic income that makes any sense, and is affordable, is one that is financed through higher taxes–on income, wealth, estates, or some combination of the three. If the basic income is financed through progressive taxes, its net cost decreases from the scary math of $10,000 times the population. By how much? It depends on how much we’re willing to tax.

Thinking seriously about a basic income means coming to terms with the “r” word–redistribution. If we were willing to acknowledge the need for redistribution in a country in which more than 20% of children live in families with incomes under an outdated and inadequate poverty line, then we could debate whether a basic income makes more or less sense than subsidized jobs, subsidized wages, or something else.

If we had that debate, we could consider whether a basic income might actually encourage work if recipients could keep the full benefit as they earned wages–which no current anti-poverty program, including the EITC, allows; whether cash rather than in-kind benefits (like food stamps and housing subsidies) might enable the unemployed to move to where there are jobs, better schools, or safer communities; and whether a steady stream of unconditional income might incentivize investment in the training and education that will be required for the higher-skill jobs of the future.

As Mr. Porter notes, more income for the working class is not only more equitable, but would provide a boost to the economy, since people at the lower end of the income scale spend a higher proportion of their money. Basic income is not the only way to get more money into their hands, but it does so without the poverty traps and disincentive effects of our current anti-poverty measures–the ones that have kept millions of citizens in the richest country in the world stranded in poverty.