Politics is less and less about substance, and more about “flair” nowadays. When we identify based on party, and party ideas don’t overlap all that often, it becomes surprisingly refreshing to see a policy proposal laid out (at least, for geeks like me). Still, I sometimes like to read through the actual proposal because I believe in evaluating candidates on more than “rah rah [insert party]”, and on what they actually propose doing. This is despite knowing full well that most will be unable to do much of anything, given the filibuster, split control of Congress, and often different parties controlling the White House and Congress as well.

Still, I like to look things up, so I decided to take a look at a candidate getting a decent amount of buzz from people around my generation: Andrew Yang.

Andrew Yang’s big proposal is universal basic income, a policy that would give $1,000 per month, every month, to every U.S. citizen over the age of 18. This would, he claims, “guarantee that all Americans benefit from automation, not just big companies,” and “provide money to cover the basics for Americans while enabling us to look for a better job, start our own business, go back to school, take care of our loved ones or work towards our next opportunity”.

Sounds great, in theory. And his proposal even attempts to address all the drawbacks, while claiming that funding it would be “easier than you might think.”

But the more I looked at the numbers, the more I realized they weren’t adding up.

Mr. Yang’s proposal rests on four pillars:

Reductions in current welfare and social safety net spending. A new value-added tax. UBI growing the economy and increasing tax revenues. Additional taxes like a “carbon fee”, removing the Social Security cap, a financial-transactions tax, and closing the carried gains loophole while raising the tax rate for capital gains.

The problem with his proposals is that the funding just doesn’t add up, and the areas where it might bridge the gap remain vague and unclear. How much would it cost? Well, Andrew Yang’s proposal applies to anyone over the age of 18, and 77.4 percent of the 327.2 million American citizens would be offered UBI. That’s 253.3 million Americans, so up to $3 trillion could be necessary to fund this proposal.*

*One commenter noted that the population estimate includes non-citizens, who make up roughly 7 percent of the U.S. population. I included those folks in part because Mr. Yang has proposed a pathway to citizenship for undocumented immigrants, but it’s true that they would not be added to the cost until they reached citizenship, which would take a significant number of years. Adjusting for non-citizens, the cost of the proposal mentioned above would go down by approximately $170 billion per year. Please keep this in mind in light of the numbers below.

Social Spending Won’t Decrease Enough

The first aspect of the funding is supposed to be money already spent on welfare programs. The factsheet estimates that the United States spends “between $500 and $600 billion a year” on various social safety net programs, and that some folks would opt to take UBI instead of keeping their existing social safety net programs, which would be an option for those currently receiving more than $12,000 per year.

Let’s assume, however, that existing spending is entirely retained, and so only $2.4 trillion remains. That’s the most generous assumption to Andrew Yang, so we’ll leave it in. $2.4 trillion must still be funded.

Andrew Yang assumes that people will take better care of themselves with UBI, reducing spending on things like emergency care and incarceration, resulting in $100-$200 billion in savings per year. Let’s assume $200 billion is saved, once again to be generous. That leaves $2.2 trillion in costs to be figured out.

Of course, this is all with the most generous assumptions. Andrew Yang provides no explanation for his numbers, but they’re probably more optimistic than reality will be. That aside, let’s move on.

Value-Added Taxes Don’t Work That Way

The second pillar of Andrew Yang’s funding proposal comes from his desire to add a value-added tax (“VAT”). For those who don’t know, a VAT is a tax on consumption. It exists in most countries worldwide, and is somewhat similar to a sales tax, though obviously it has key differences.

The Tax Policy Center does a good job of explaining a VAT:

[S]uppose a farmer grows wheat and sells it to a baker for $40. The baker turns the wheat into bread and sells it to consumers for $100. The baker’s value added is $60 — the difference between sales and purchases. Let’s further assume that the farmer has no input costs so that his value added is $40. The sum of value added at each stage of production is equal to the retail sale price of the good, in this case, $100.

In short, the value-added at each stage of a product’s creation gets taxed. This is different from a sales tax, where the tax is added on at the end, when you buy the good (at checkout, in the United States). There are some other key differences, but now that you have the basics, we can move on.

Andrew Yang says that a VAT at “half the European level” would generate $800 billion in revenue. That would be one-third of the remaining cost or so, but the problem is, he’s wrong.

The average VAT in Europe is around 21.3 percent. When the Congressional Budget Office did an evaluation of a 5 percent VAT proposal in 2016, even with a “broad base” (applying to most goods and services) it would raise an average of $267 billion per year. Put simply, doubling the VAT to 10 percent to be around half the European rate, would not lead to doubling the revenue (as taxes go up, people spend less money, meaning less revenue for a higher tax rate). But even if it did, it would still be only around $534 billion per year, which is nowhere near Andrew Yang’s claim that $800 billion would be raised. Even the Tax Policy Center, which leans left, estimated that a 5 percent VAT would have raised $355 billion with a broad base in 2012, and that’s presuming other favorable tax adjustments that would reduce the overall revenues. $800 billion at 10 percent or so is unlikely based on these studies.

So where did Andrew Yang get his idea? Unclear. But it doesn’t seem to add up.

This chart depicts where the VAT tax burden falls on UK households.

Nor is a VAT necessarily a good idea, even if it did add up. A VAT, being a tax on consumption, places a higher burden as a percent of income on those who are poorer. Or, as the Congressional Budget Office put it:

[I]t would be more burdensome for individuals and families with fewer economic resources than it would be for individuals and families with more economic resources.

Even with a UBI, many of those receiving the benefits of the UBI’s additional money would then have to pay a portion of it back to the VAT’s costs, reducing its overall impact. Which brings up to point three:

The New Revenue Is Overestimated

Let’s assume, for a moment, that tax have no effect on the economy. Let’s assume that the Congressional Budget Office estimate of a VAT at 5 percent means that a VAT at 10 percent would raise $540 billion per year, even though as I explained above, the math doesn’t work that way. That still leaves Andrew Yang’s proposal $1.6 trillion short. That means $1.6 trillion per year still needs to be found to fund the program. And that’s assuming the most generous of circumstances, and that a VAT doesn’t decrease consumption, even though it obviously will.

Andrew Yang’s third pillar is that a UBI would grow the economy, resulting in $2.5 trillion of growth and 4.6 million new jobs, as well as $800 to $900 billion in new revenues. That would close a huge chunk of the remaining gap, so it’s a good thing Andrew Yang cited his source: a study from the progressive Roosevelt Institute. The only problem is, he’s either deliberately or unintentionally lying about what the study says.

Read the study for yourself.

It’s true that on page 12 of the report, scenario 9 lines up with what Andrew Yang mentions. A UBI in this scenario ($1,000/month per adult) would, if you account for uncertain “distributional effects”, increase real GDP by 13.10 percent (the $2.5 trillion Mr. Yang mentions), as well as increasing employment by 4.7 million jobs.

There’s only one problem with this analysis: Scenario 9, the scenario it happens under, is what happens when you fund a UBI by deficit spending. That means that you get 4.7 million new jobs and $2.5 trillion in growth only if you don’t raise taxes to fund the program.

It’s been awhile since pillar two, but you may remember that a key part of Mr. Yang’s proposal is increasing taxes. And guess what? When Roosevelt Institute estimated what would happen under a UBI with fully tax-funded mechanisms (scenario 12), it found that real GDP would only go up 2.62 percent ($520 billion, not $2.5 trillion as Mr. Yang claimed) and employment would increase by 1.1 million jobs, not 4.7 million.

The gains, in short, are close to 20 percent of what Mr. Yang estimated. That means that he’s not getting $800-$900 billion out of UBI’s increasing the economic revenues; under an optimistic assumption from a favorable think-tank, he’s getting at best $250 billion, and that’s by assuming he gets 25 percent of the $900 billion original estimate.

We were at $1.6 trillion left in costs with the most optimistic assumptions. Now, we’re barely down to $1.3 trillion, and this analysis is still being overly generous to Mr. Yang. You may be getting a sense already: the numbers don’t add up.

The Final Smorgasboard

The final pillar of Mr. Yang’s plan would have to come up with $1.3 trillion to close the gap. Heck, even if he got all $800 to $900 billion out of his previous proposal, he’d still need to find another $800 billion to close the gap.

But here at the end, Andrew Yang’s plan gets dicey on the details. He proposes to remove the Social Security cap, which would raise just $78.5 billion per year if the cap was raised to 90 percent of taxable earnings (around $250,000). If the cap was removed above $250,000, then $120 billion per year would be added. All told, Andrew Yang’s proposal there still gets him just around $200 billion in the best of circumstances.

Then Mr. Yang proposes a financial transactions tax. That would raise just $60 billion per year under the Bernie Sanders proposal, which would be a 0.5 percent tax on all transactions. Even under Mr. Yang’s own numbers, he’s $540 billion short still. Under the most generous assumptions provided above but using real numbers, Mr. Yang is $1.04 trillion short.

He next proposes ending the carried interest loophole, and treating capital gains the same as normal income. The carried interest loophole brings all of $1 billion a year to the table, so that’s not making up the difference.

Taxing capital gains as normal income doesn’t make a whole lot of sense, since that can double-tax income (tax it once under corporate income taxes, and then again when it gets paid out by a company as a dividend, and you’ve now taxed the same income twice). Even so, when Bernie Sanders proposed doing precisely that for anyone making a large amount of money, it raised just $330 billion per year. And since capital gains are predominantly made by the wealthy, that captures most of what revenues would be gained.

Under Mr. Yang’s numbers, he’s still around $200 billion short. Under real numbers, he’s still around $700 billion short.

Finally, Mr. Yang points to a carbon “fee” as his final plan proposal. But no details are given on how high the fee would be, or how much it would raise. $43/ton of carbon emitted would be a pretty high fee by world standards, and that would raise just around $180 billion in 2021.

So even with high taxes, even with made-up numbers, Andrew Yang’s proposal just barely adds up. But if you bother to look into the numbers, you can see he’s playing fast and loose with studies, with unspecified proposals, and with a lot of his claims.

Sadly, this is all too common in today’s discourse. I congratulate Mr. Yang on putting out a serious proposal for UBI; I may not personally favor any proposal containing it so far, but I do appreciate that he’s trying to put out a fresh idea. I only wish that we got to a world where people could back up their own claims without the types of mistakes that lead people to have so much less trust in politicians. True, no one will sit down and distrust Andrew Yang because of this analysis. But more problematic, the inability to be fully concrete and clear on his own proposal, a problem even more common with a variety of other candidates for elected office, leaves huge amounts of room for confusion and arguing on the margins. And that does lead to the lack of trust, at least in part, that we see today. I hope Mr. Yang takes that to heart, and fixes his proposal so it starts to add up.