Exploring a budget-neutral UBI

"In 2017, an AEI working paper by Will Ensor, Anderson Frailey, Matt Jensen, and Amy Xu, entitled “A budget-neutral universal basic income,” set out to calculate a budget-neutral UBI, funded by repealing benefit and transfer programs, such as Medicare and Social Security, and base-narrowing features of the individual tax system, such as deductions and credits. Assuming that minors receive half the UBI amount as adults and based on data from 2014, the AEI working paper found that these changes could fund a UBI of $6,894/year for individuals under 18 and $13,788/year for individuals 18 or older.

Much has changed in the tax code and in social program spending since 2014, notably the enactment of the 2017 Tax Cuts and Jobs Act (TCJA) and the growth of numerous benefits programs. TCJA introduced provisions modifying some credits and deductions, including the elimination of the personal exemption, the expansion of the standard deduction and child tax credits, and the introduction of a cap on state and local tax deductibility. Meanwhile, the total cost of federal benefit and transfer programs grew by more than 20% between 2014 and 2020. Because of these major changes, we reran the numbers from the AEI working paper to calculate the budget-neutral UBI amount for 2020. The complete list of tax, welfare and transfer programs repealed is available here.

[2020 UBI (per year) $7,923 under 18, $15,8545 18 and older]"