Public Economics in Action: The Basic Income/Flat Tax Proposal

by Anthony B. Atkinson

This book surveys recent developments in public economics by studying the proposals for a basic income/flat tax scheme. It discusses various approaches to taxation and presents a framework for a system which would affect both personal income and the social security system, replacing the one by a flat-rate income tax and the other by a guaranteed income. The idea has generated wide interest in a number of countries, and is being actively discussed by a number of political groups. This book explains how these changes would benefit a wide variety of social groups, but asks how a single reform can meet the very different objectives of different supporters.

184 pages, Paperback

First published January 1, 1995

Reviews

[Otto Lehto · Rating 3 out of 5]

From a purely neoclassical point of view, in a rigorous and formalized manner, Atkinson's competent book showcases some of the most important trade-offs and challenges involved the UBI debate. These include the trade off between efficiency and equity, the labour supply effects of different taxation and benefit schemes, the optimal level of taxation and basic income under various voter preference models, the trade off between incommensurate social values such as liberty and justice, etc. Any attempt to design robust criteria for a universal basic income / flat tax scheme (or, for that matter, a negative income tax scheme) must take these issues into account.

Aside from the fact the book is slightly out of date (although not as much as one might fear), the three biggest shortcomings with Atkinson's book are the following: 1) The exclusive reliance on neoclassical models of public economics and welfare economics means that many of the unrealistic assumptions of those fields are given undue weight. The excursion into public choice, while laudable in itself, is brief and only suggestive. There is very little on dynamic, disequilibrium, or complex effects; and nothing on nonlinear, emotional, irrational, or evolutionary behavioural responses. 2) The mathematical nature of the models used is both a boon and a curse. On the positive side, it can be used to clarify, in a helpful and information producing way, the logical interrelationships between the variables. On the negative side, it often adds to the jargon heavy mystique of the discipline while obscuring the unreasonableness of the working assumptions. 3) And lastly, the book adds very little exposition to its arguments. And the arguments themselves are scientifically cautious to the point of not saying much of anything. The author is careful not to take sides in the debate, which is good, but he also fails to provide a coherent narrative around the various working assumptions and their interrelationship in the public economics literature. This lack of editorial commitment is evident in the competent but humdrum introduction and the paucity of (non-trivial or non-desultory) conclusions in the final chapter.

Overall, the book carries little use for the average reader, but it remains of vital interest to economists and political scientists thinking about the implications of various UBI models. Back when it came out, the book was an important contribution to the debate. My three star rating represents its diminished value for the advanced UBI debate today, but this should not take anything away from the importance of the book as a historical and living document.

[Christopher · Rating 4 out of 5]

Well written book that doesn't take sides in an arguably controversial recommendation to overhaul the tax and benefit system. Focuses on the effects of Basic Income/Citizen's Income in the UK, something that not well covered in more recent literature. The figures are slightly dated with the book being published in 1995, but the discussion is well thought out.

Very technical and more appropriate for someone with a familiarity of the tax system, then a fleeting reading.