Chapter 19: UBI

All tax-compliant resident citizens aged 18 and over receive the same Universal Basic Income (UBI). Children receive a smaller amount, managed by a parent or guardian. UBI therefore only discriminates by age, tax‑compliance, residency, and citizenship, criteria explicitly permitted as exceptions of the NDP. Every person registers an account with the tax office to receive the UBI.

The UBI is automatically collected and distributed daily. UBI is unconditional and therefore can be fully automated, unlike welfare systems which require armies of public servants to administer (due to means testing - in other words, being conditional on factors such as income, assets, disabilities, dependents, marital status, underemployment, and job‑seeking).

Affordability

UBI is endogenous to daily economic activity, not an externally fixed promise. It is inherently affordable in this system because its value is calculated directly from the pool of revenue collected each day. The amount available for distribution rises or falls with aggregate daily consumption, so the UBI adjusts automatically to match what the economy can sustainably fund. When total consumption increases, the pool grows and the UBI rises; when consumption falls, the UBI decreases. At no point does the system promise more than what was actually collected, which is why affordability is guaranteed.

The consumption‑tax rate \( R_{\mathrm{ubi}} = 0.2 \) funds the UBI and produces a substantial income floor, even for households with no earnings. For a single parent with three children, this translates into roughly $38 000–$60 000 of disposable income, depending (only) on the children’s ages. In many cases this exceeds the disposable income delivered by Australia’s current welfare system, which provides around $44 000 for the same household (depending on complex eligibility rules) when child‑care subsidies and rent assistance are excluded.

The NDP does not prevent services for those with illnesses, injuries, infirmities, or disabilities. Someone can therefore receive an expensive medical procedure, such as a heart transplant, for free when it is needed to save their life.

Other essential services can be universal. Services providing basic food or shelter may be open to everyone, but in practice will be used mainly by people who cannot readily provide these things for themselves. They concentrate help where it is needed without means tests, eligibility categories, or bureaucrats deciding who deserves assistance. They have the effect of targeted welfare without violating the NDP.

Bryan Caplan argues that a UBI generous enough to replace the welfare state would be prohibitively expensive, while a smaller UBI would leave people with exceptional needs worse off. This assumes that UBI must replace essential services as well as welfare payments. VoTa makes no such assumption. The UBI provides a universal income floor, universal services provide essentials such as food and shelter, and services for illness, injury, infirmity, and disability remain available according to need.

This combination, an unconditional income floor plus unconditional access to essential services, is exactly what the Non‑Discrimination Principle requires. It eliminates the eligibility tests, behavioural conditions, and incentive distortions that characterise existing welfare systems worldwide, and replaces them with a system that treats all individuals equally while ensuring that no one is denied the means of basic survival.

The UBI is a constitutional baseline, not a complete State policy for poverty, unemployment, or social support. Beyond it, taxpayers may fund competing NDP-compatible approaches through tax choice, including universal essential services, training, rehabilitation, and public services containing low-skill work. VoTa allows these approaches to coexist and gain or lose support according to their practical results rather than selecting one political programme for the whole population.

UBI as percentage of GDP

If investment and net exports are set aside, UBI funding is approximately 15.4 per cent of market-price GDP. Let \(C\) be tax-inclusive taxable consumption. UBI receives \(0.20C\), while expenditure on public services is \(G=0.30C\). Under those assumptions, \(GDP_{\mathrm{market}}=C+G=1.30C\), and therefore:

\[ \frac{0.20C}{1.30C}\approx 15.4\%\text{ of market-price GDP}. \]

Market-price GDP includes the consumption tax contained in \(C\). In VoTa, \(0.50C\) is consumption tax: \(0.30C\) for public services and \(0.20C\) for UBI. Basic-price GDP excludes taxes on products, so:

\[ GDP_{\mathrm{basic}}=1.30C-0.50C=0.80C, \] \[ \frac{0.20C}{0.80C}=25\%\text{ of basic-price GDP}. \]

UBI itself is a transfer and is not counted separately in GDP. It enters GDP when recipients spend it, as part of \(C\). Basic-price GDP provides the fairer comparison with countries that raise most government revenue through income taxes, because income tax is not included in market-price GDP.