ELI5: How does Universal Income work?

With UBI, everyone doesn't get cash, just the people who need it.

Think of it this way. Right now, if you make $0, you owe $0 in taxes. But, what if instead, you collected $10,000 in a tax refund when you made $0? You have to rebalance the tax brackets a little bit and make it so that you owe $0 at (for example) $20,000, allowing people to work their way out of the UBI bracket. People making more than $20,000 wouldn't get any net income from the government.

This also replaces a large number of programs. Welfare, subsidized housing, disability benefits, social security pension, etc. All of them can be collapsed into one program.

Another flip side is that things get priced around that UBI amount. For a real-world example, look at some apartment prices in cities that have a lot of posted military. Oftentimes, military members get a set amount for subsidized rent in a posted city. You'll see apartments that are rented for exactly that amount, since they know if they go above it, they lose potential tenants. Of course, there are still higher quality apartments that will rent for more, and cheaper apartments that will rent for less, but that set amount will be a guiding light on how much an apartment is worth in that city.

/r/explainlikeimfive Thread