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UBI: Universal Basic Income w/ Ben Phillips, ANU - EP126

Economics Explored

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Work Incentives and the High Linear Tax Rate

High linear tax rate required to finance UBI may increase work disincentives across the population. That's because it increases effective marginal tax rate for many people who are working and aren't receiving welfare benefits. So therefore if they work in additional hour, they don't get to keep as much. And so what does that mean? Well, that means that the relative price of leisure, the opportunity cost of leisure, if I take an hour off, then I don't lose as much due to high taxes.

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