Lhe proposal for a universal income (RU), ie a public allowance paid unconditionally to every individual, is widely debated by economists and politicians. According to some, it could be the solution to the growth of income inequalities and the insufficiency of existing allowances.
For others, it would be a way to reduce the inefficiency of the current benefit system, which generally consists of a patchwork of numerous programs run by a bloated bureaucracy. Social spending accounts for around 20% of gross domestic product (GDP) in Organization for Economic Co-operation and Development (OECD) countries.
In France, their share is about 30%, the highest rate among OECD countries, while in the United States it is 18%, barely below the average. Health and pensions take the lion’s share, and the rest, ie 8.1% of GDP in France and around 2.7% in the United States, corresponds to allowances paid to the population of working age.
Special conditions
These allowances are generally means-tested, ie only individuals with an income below a certain threshold are entitled to receive them. These allowances can be either monetary benefits, in cash or in cheque, paid directly or in the form of tax credits, or services in kind, such as social housing or crèches paid for by the government.
If we distributed the current amount of these allowances among all the inhabitants, children and adults, this would represent 3,100 euros per person and per year in France, and 1,400 euros in the United States. Today, of course, not everyone receives this amount, as many people have incomes high enough to be ineligible, while those who qualify for public benefits generally receive a relatively larger sum.
Let’s imagine that a universal income is put in place. France would then pay 3,100 euros a year to everyone, and the United States 1,400 euros, by simply eliminating all existing benefit programs and sending an annual check to their citizens. But such a device would generate the dissatisfaction of many people with low incomes, who perceive more with the current system!
Assess alternative fiscal policies
Imagine then that a more generous RU is set up, at 5,000 or 10,000 euros per person, for example. This increase in benefits will certainly satisfy a greater number of people, but will also be much more costly for the public budget. Where will the extra money come from, knowing that it is not always easy to raise taxes?
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