IT'S JUST A MEANS-TESTED UNIVERSAL BASIC INCOME:

How should programs for the poor be changed to increase participation and avoid adverse effects on work incentives? One bad idea that is getting a surprising amount of favorable attention is the so-called Universal Income Benefit: providing enough money to all households (below the age of 65) to keep them above the poverty line, even if they had no other income. The amount given to each household would depend on the number of adults and children, but not on the household's income or wealth.

This unconditional transfer would solve the problem of lifting all Americans out of poverty. But it would be impossibly expensive. Even if it replaced all of the means-tested programs for the poor other than the health programs, its net cost would exceed $1.5 trillion a year, or more than 9% of GDP. To pay for that without raising the deficit would require doubling the personal income tax. So the Universal Income Benefit is definitely a non-starter.

The best way to help the poor is the negative income tax plan originally proposed by both Milton Friedman (the conservative economist at the University of Chicago) and James Tobin (the liberal economist at Yale University). All households below the age of 65 would receive an amount of money that would keep them out of poverty if they had no other income; but the amount of the transfer would decline gradually as their household income rose. Above a certain threshold, the household would pay an income tax as they do today; below that level, the "tax" would be negative.

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