Free money from the government. It’s actually a serious idea. And Democratic presidential candidate Andrew Yang has dangled it like candy before voters.

Yang is a fan of “universal basic income,” which is a lump sum transferred by the government to every adult citizen, every month, with no strings attached. The idea is that people looking out for themselves will spend the money better than giant safety-net programs might allocate it, providing a buffer against poverty, job dislocation and people losing out in a tech-driven knowledge economy.

In theory, universal basic income would address worsening income inequality and provide money underprivileged people could use for education, investment or anything else they feel would help them get ahead. Working parents would have help paying for child care or taking time off to care for a newborn or sick child. UBI could help cover surprise medical bills or a furnace that conks out and needs to be replaced.

Yang calls his version of UBI the “freedom dividend,” and would set the payout at $1,000 a month for every American 18 and over, or $12,000 per year, no matter how rich or poor. People currently receiving some kind of welfare payment wouldn’t get both—they’d have to choose between their current benefits or the $12,000 annual payout.

Some voters love the idea. After Yang announced a UBI contest during the Sept. 12 Democratic debate, nearly half a million people signed up for the chance to be one of 10 winners receiving the Yang handout for a year. It’s gimmicky, but as the centerpiece of Yang’s presidential campaign, UBI has kept him on the debate stage and made him more popular than members of Congress and other presidential candidates becoming also-rans.

Not surprisingly, however, there are some major problems with Yang’s UBI. Here are four:

It’s enormously expensive

A $12,000 annual stipend for all 256 million adult Americans would run about $3 trillion per year. The government currently spends about $4.5 trillion per year, so Yang’s UBI would represent a 67% increase in federal outlays. There would be some offsets. Since current welfare recipients wouldn’t be allowed to double-dip, there’d be a decline in the $500 billion in annual welfare spending. But the increase in federal spending would still be epic, requiring...

Sharp tax hikes.

Yang wants to impose a 10% value-added tax, which would be like a federal sales tax. VATs are in effect in 168 countries and they’re proven revenue-generators. “A gradually phased-in VAT could have the potential to let us have our cake and eat it too, in terms of raising long-term revenue,” says William Gale of the Tax Policy Center.