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What is the Essential Difference Between a Basic Income and an Income-tested Benefit System?

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  • Miller Anne Glenda

    (Edinburgh Business School, School of Social Sciences, 3120 Heriot-Watt University , Edinburgh, EH14 4AS, UK)

Abstract

A basic income (BI) is defined by its characteristics, in contrast to a means-tested benefit, or more accurately here, an income-tested benefit (ITB). Both are tax-exempt. However, the ITB recipients’ gross incomes are taxed in two stages. An ITB is defined by the mechanism (a taper) used to ensure that a recipient does not profit unduly from the benefit. The special case of an ITB that is ‘a periodic cash payment unconditionally delivered to all on an individual basis’ would still not be categorised as a BI when gross income is zero, because ITBs are means-tested. The BI’s essential characteristic ‘without means test’ is identified as ‘it is separate from, and paid prior to, any taxation of incomes or wealth’. The consequences of this essential difference are summarised here. The effects of the characteristics of a BI and the structural features of a typical ITB system are also explored.

Suggested Citation

  • Miller Anne Glenda, 2025. "What is the Essential Difference Between a Basic Income and an Income-tested Benefit System?," Basic Income Studies, De Gruyter, vol. 20(1), pages 23-36.
    • Handle: RePEc:bpj:bistud:v:20:y:2025:i:1:p:23-36:n:1001
    DOI: 10.1515/bis-2023-0010
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