It would also be better, I think, if the first dollar gained above UBI is more or less untaxed. Less incentives for gray market. (Otherwise I expect at least 5-10% of population living on UBI + some undocumented income.) Which implies some kind of progressive taxation. (Which has its own bad incentives.)
The ideal, at least as I approach it, is the combination of the UBI with a flat tax, wherein the flat tax applies to the UBI as well as all additional income. You use the UBI to offset the flat tax's regressive tendencies.
This has an additional nicety in that everybody is equally affected by taxation and government spending, so you don't up with moral hazards where the people voting for stuff aren't the people who have to pay for it.
The actual research into welfare-maximizing tax systems argues for a UBI plus roughly U-shaped marginal tax rates, i.e. relatively high phaseout rates on the UBI itself, then low but mildly progressive rates for folks making more than the breakeven point. The point, I think, is that this strongly incents folks to become net contributors, since at that point they will be paying lower marginal rates. Your point about whether the UBI should be taxed is interesting. Of course at any given time it's a wash, but you might be right that taxing the UBI itself (say, depending on tax revenue as a fraction of GNP) is a good institutional choice.
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