<p>The answer there asked to consider only cost side and ignore benefits side of the problem.</p>
<p>Laffer curve is the relationship between tax rate and tax revenue. The idea is that at both 0% and 100% rate government collects 0 revenue (since nobody will work for free and we are asked to ignore any effects benefits have). Somewhere in between there is a peak where tax revenue is maximized (e.g maybe it’s at 70% income tax - that is empirical question, in different countries and across time it will be different).</p>
<p>Hence if you want to know generally how much government can at maximum spend on UBI, in sustainable fashion, you have to find peak of Laffer curve. That is maximum possible total spending government can devote to UBI assuming government doesn’t spend money on anything else just UBI.</p>
<p>In addition you could add any extra revenue from government operated enterprises, but in most cases such revenue is trivial. In US such revenue is it’s too small to even include in statistics - it’s just subsumed under other(see <a href="https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government#:%7E:text=TOTAL%20REVENUES,(in%202009%20and%202010)." rel="nofollow noreferrer">TPC</a>).</p>

CC BY-SA 4.0
2022-06-10T10:49:02.890Z
Comments are not for extended discussion; this conversation has been [moved to chat](https://chat.stackexchange.com/rooms/136963/discussion-on-answer-by-1muflon1-covering-cost-of-ubi-and-laffer-curve).
1muflon1
CC BY-SA 4.0
2024-04-03T11:33:58.933Z
Governments can have [other sources of income besides taxation](https://en.wikipedia.org/wiki/Non-tax_revenue), so the government can spend more on UBI than total tax income.
gerrit
CC BY-SA 4.0
2024-04-03T11:44:43.620Z
@gerrit That Wikipedia article is incorrect, bond issue is not a government revenue but the part about government run company’s revenue is correct I edited my answer although for most countries government run companies revenue is negligible. Only exception is maybe a small country with a lot of oil.
1muflon1
CC BY-SA 4.0
2022-06-09T15:30:03.447Z
2024-04-03T11:44:37.757Z
2024-04-03T11:44:37.757Z
1muflon1
<p>The top answer to the question <a href="https://economics.stackexchange.com/questions/33313/is-there-any-way-to-sufficiently-cover-the-cost-of-a-ubi">Is there any way to sufficiently cover the cost of a UBI?</a> spoke of the answer being trivial and just use the Laffer curve.</p>
<p>I'm wondering what that means given that a UBI is presumably more or less equivalent to zero UBI plus income tax which is a different function of income with zero net change to the tax revenue?</p>

<basic-income>
Covering cost of UBI and Laffer curve
Dbl
# Covering cost of UBI and Laffer curve

(Asked by: username_0 on 2022-06-09)

The top answer to the question [Is there any way to sufficiently cover the cost of a UBI?](https://economics.stackexchange.com/questions/33313/is-there-any-way-to-sufficiently-cover-the-cost-of-a-ubi) spoke of the answer being trivial and just use the Laffer curve.

I'm wondering what that means given that a UBI is presumably more or less equivalent to zero UBI plus income tax which is a different function of income with zero net change to the tax revenue?

**Tags:** basic-income


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## 1 answers

### Answer by username_1 on 2022-06-09. Score: 1

The answer there asked to consider only cost side and ignore benefits side of the problem.

Laffer curve is the relationship between tax rate and tax revenue. The idea is that at both 0% and 100% rate government collects 0 revenue (since nobody will work for free and we are asked to ignore any effects benefits have). Somewhere in between there is a peak where tax revenue is maximized (e.g maybe it’s at 70% income tax - that is empirical question, in different countries and across time it will be different).

Hence if you want to know generally how much government can at maximum spend on UBI, in sustainable fashion, you have to find peak of Laffer curve. That is maximum possible total spending government can devote to UBI assuming government doesn’t spend money on anything else just UBI.

In addition you could add any extra revenue from government operated enterprises, but in most cases such revenue is trivial. In US such revenue is it’s too small to even include in statistics - it’s just subsumed under other(see [TPC](https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government#:%7E:text=TOTAL%20REVENUES,(in%202009%20and%202010).)).

> **Comments:**
> **username_1**: Comments are not for extended discussion; this conversation has been [moved to chat](https://chat.stackexchange.com/rooms/136963/discussion-on-answer-by-username_1-covering-cost-of-ubi-and-laffer-curve).  
> **username_2**: Governments can have [other sources of income besides taxation](https://en.wikipedia.org/wiki/Non-tax_revenue), so the government can spend more on UBI than total tax income.  
> **username_1**: @username_2 That Wikipedia article is incorrect, bond issue is not a government revenue but the part about government run company’s revenue is correct I edited my answer although for most countries government run companies revenue is negligible. Only exception is maybe a small country with a lot of oil.  

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