Universal basic income, rolled out across the U.S., would cost $3.8 trillion annually, or 21% of the nation's gross domestic product, if every American citizen were to receive $12,000 a year (the current threshold for poverty), according to a July 2018 paper, "Primer on Universal Basic Income," by Ray Dalio, co-chair of American investment-management firm Bridgewater Associates.
How to pay for all of that? Proponents of basic income have offered numerous ideas: a progressive income tax or a wealth tax; a carbon tax; or, as is done in Alaska, dividend distribution from the sale of natural resources.
Doing away with the country's non-health-related welfare programs could also partially fund a program: The Economist magazine created a basic-income calculator at basicincome.org that indicated the U.S. could pay $6,300 in basic income for each person if it eliminated those welfare programs. A $10,000-per-person program could be implemented with the infusion of the equivalent of an additional 7% of the gross domestic product.
Natalie Foster, co-chair of the nonprofit Economic Security Project, an advocate for universal basic income, notes that other resources also could be used as funding.
"If data is the new oil, we could harness some of the wealth from technology," she said, noting a recent proposal by California Gov. Gavin Newsom.
During his State of the State speech in February, Newsom proposed a "data dividend" to be obtained from the tech sector.
"California's consumers should also be able to share in the wealth that is created from their data. And so I've asked my team to develop a proposal for a new data dividend for Californians, because we recognize that your data has value and it belongs to you," he said.
Levying a tax on companies that most benefit from automation is another idea, according to Juliana Bidadanure, the founder and faculty director of the Stanford Basic Income Lab.
Another idea: a sales tax on luxury goods, an idea that the Swiss held a referendum on in 2016. The referendum — which would have provided 500 Swiss francs ($2,555 in 2016) for adults and also 625 Swiss francs for each child — failed, however, with only 23% of voter approval.
Some research suggests that universal basic income is financially feasible. In a 2017 study, the left-leaning, nonprofit American think tank the Roosevelt Institute looked at three theoretical scenarios for unconditional cash assistance: $1,000 a month to all adults, $500 a month to all adults and a $250 a month child allowance. The Institute estimated that the federal spending program, conducted over eight years, would cost between $208 billion and $1.5 trillion.
The study looked at the effects using two different financing plans: increasing the federal debt or fully funding the spending with increased taxes on households.
Overall, the study found that the economy "can not only withstand large increases in federal spending but could also grow thanks to the stimulative effects of cash transfers on the economy."
"In fact, their analysis found that a guaranteed income could expand the economy by up to 12.56% over the baseline after eight years," Foster said.
Researchers haven't come to any conclusions on the long-term viability of universal basic income, but a 2016 study of the Alaska model indicated there could be some hiccups.
The study "Permanent Fund Dividends and Poverty in Alaska," by the Institute of Social and Economic Research at the University of Alaska Anchorage, noted that per-capita payments in 2016 were smaller relative to personal income when compared to payments in the 1990s.
Over time, "the (Alaska) Permanent Fund principal and its associated earnings have increased. But the number of residents and their incomes have increased as well — although income growth just kept up with inflation.
"Recent (fund) payments, although generally larger than those in earlier years, have not increased as fast as inflation and therefore represented a smaller percentage of per-capita personal income than (dividends) during much of the 1990s," authors Matthew Berman and Random Reamey noted.
This article is part of a larger story on universal basic income, which can be found here.