INTRO - Here are my thoughts on basic income in light how what we are experiencing now.
Voici ma réflexion sur le revenu de base à la lumière de ce que nous vivons actuellement
(La chaîne sera reproduite en français ce soir ou demain).
Voici ma réflexion sur le revenu de base à la lumière de ce que nous vivons actuellement
(La chaîne sera reproduite en français ce soir ou demain).
1) Since the pandemic and the CERB payments, there’s been much interest for basic income… and also lots of confusion of what it is and what it is not. As I said in prior tweets, words matter.
2) First of all, a Universal Basic Income (UBI) is a basic income, but basic income is not necessarily a UBI. The “Universal” in UBI means everyone gets a cheque, regardless of income.
3) In theory, universality might be desirable. I personally like the idea of a citizenship’s right or dividend. But in the case of basic income, I don’t believe UBI can be achieved in a way that would seriously address poverty.
4) Take the NDP proposal for the crisis, i.e. a monthly $2,000 per adult and $250 for every child under 18. The proposal is certainly defendable during the crisis. But it would be unsustainable on a permanent basis.
5) There are about 30 million adults and 7 million children in Canada. A UBI would cost Canada $750 billion per year. That is more than twice its annual budget ($335 billion) and 43% of Canada’s GDP of $1,770 billion.
6) UBI Myth #1: We can get back much of what we would give to high income earners through taxation. That’s wishful thinking. (a) If you tax it at current tax levels, you can only get back about $120 billion (and provinces would share another $80 billion).
7) (b) If you claw it back at 100% for higher-income earners, it’s no longer a UBI; (c) Scaling the clawback complexifies the tax system in a way that the inefficient Canada Revenue Agency cannot cope with, and I am speaking from experience.
8) To be truly non-stigmatizing, basic income has to be treated as any other income and transfers, and subjected to the same tax levels and, say, working income. In addition, to work as intended, basic income has to be as simple as possible.
9) UBI Myth #2: We could afford a UBI if we scrap the provincial and federal social programs and the various tax credits. It’s completely wrong. The cost of programs like OAS/GIS ($50 billion/yr), Canada Child Benefit ($22 B) and EI ($20 billion) are insufficient to fund a UBI.
10) In fact, the total amount of federal and provincial social programs, federal and provincial social tax credits and deductions (including basic exemption and the age credit) and the “administrative savings” of slashing all programs is roughly $200 billion.
11) Total cost of a UBI, if we tax it at current rates and if we slash every single social program in Canada, would thus be around $430 billion. For a UBI of $1,000 a month to every Canadian and $250 per kid, the net cost would be in the $140-$170 billion range.
12) Progressives must move away from UBI, both the idea of it and the name of it. However, I am still convinced Basic Income is the future of the fight against poverty, especially after the pandemic showed the inadequacy of our current mosaic of programs.
13) Despite our social safety net, too many Canadians fall through the cracks. A basic income doesn’t replace the social safety net: it ought to patch the cracks. That’s the goal to achieve!
14) I proposed this in the 2017 NDP leadership race was a Guaranteed Minimum Income (GMI), by which the federal government unconditionally guarantees that NO household in Canada will live with less than the after-tax Low-Income Cut-Off (LICO).
15) It is unconditional in that there are no strings attached, unlike most means-tested benefits. No requirement for you to sell assets, to actively search for work, etc., to get the income.
16) The LICO level varies depending on family size and the size of the community you live in (as the cost of living is more expensive in a large city than a rural one). For a town of 50,000, it is around $19,000 for a single person and $34,000 for a family of four.
17) For a city over 500,000, it is around $22,000 for a single person and $41,000 for a family of four. (Yes, I know, adjustments would have to be considered for Toronto and Vancouver… but also for the territories where the cost of living is way above this.)
18) Example 1: single person living in Moncton (Pop: 86,000) working part-time and earning $15,000 per year after tax, would get monthly payments from the federal payments totalling $4,000, helping her to get to $19,000.
19) Example 2: A family of four in Winnipeg, where both adults earn a total of $30,000 after tax (through contract work and EI benefits, for example), federal payments totalling $11,000 would be given in monthly installments.
20) Let’s not get lost in the minutiae for now, but I see applying for BI similar like EI, where after a change in your situation (e.g. job loss), you apply through to Service Canada. Evaluation of your future income is made and BI determined.
21) If a positive change happens afterwards (e.g. you find a well-paying job), it is your responsibility to report that change. If it is not done, the money would be recouped at tax time.
22) The GMI I propose would basically cover what is called the poverty (or low-income) gap, i.e. the difference between the income of those under the “poverty line” and the level of that poverty line. The current gap ranges from $28-35 billion. That is the cost of GMI.
23) With such a basic income, there is no need to slash social programs. BI would be paid over and above the total income coming from wages, EI benefits, social assistance, etc. Provisions could be made to have a supplementary BI for people with disabilities.
24) Some programs and tax deductions could be integrated within BI without adverse effects… because they are a form of basic income at a lower level or because they duplicate the function of BI, such as OAS/GIS, CCB and the WITB (now CWB), for example.
25) There would be a need for federal-provincial negotiations, to ensure that provinces aren’t abolishing their social programs (such as social assistance), and to ensure that income-gouging doesn’t take place (e.g. rent controls).
26) To those who oppose basic income because it is a disincentive to work, I say: the evidence is against you. No pilot program showed any ill-effect, except for women who took longer to get back to work after a birth and youth, who stay in school longer.
27) If you live on BI at $20,000 a year, while applying for jobs, are you going to decline a $50,000/yr job in a field you like? Of course not. And BI might allow you to continue your studies to get a job that fits your interests.
28) To those who say basic income will drive wages lower because the Walmarts of the world will use BI as wage subsidy, I say: if you have at least enough to provide for your basic needs, you can afford to wait longer for the job you really want.
29) Minimum wages would still be in force, but wages would have to be adjusted upwards because frankly, instead of being forced to take on a shi**y job at minimum wage to survive, you’ll have the possibility of waiting out for a better opportunity.
30) Basic income will mean that artists and those want to create will not have to fear abject poverty to do so. Starting a business will be more attractive because failure will not bring poverty. Volunteering will also be made more attractive.
31) Basic income will mean that post-secondary students will have an income when they study, and thus, will be relieved of these increasingly crushing debt loads they have to incur.
32) To those who say that we should spend that money to enhance social assistance and other existing income assistance, I say: like health care, we don’t have a single social safety net, we have 10. The levels and characteristics are quite different from province to province.
33) Negotiations to ensure provinces keep the social safety net they provide now, supplemented by a federal basic income provided through the income tax system, will be much easier and faster than negotiating a federal transfer to provinces with conditions demanded federally.
34) What if provinces want to slash social assistance because they believe the federal basic income will take over? The Canada Social Transfer to that province could be reduced AND the residents of that province excluded from basic income. Imagine how that would fly politically!
35) On the other hand, the elimination of poverty will have a relieving effect on provincial finances, especially on their health care system. It is now well known that poverty to be the single largest determinant of health. It will reduce the strain on the justice system.
CONCLUSION - No, basic income will not bring heaven on Earth. But it is the single most tool that the federal government could put in place to eliminate poverty and patch the cracks of our social safety net with minimal negotiations with the provinces.
Apologies... : "single most USEFUL and EXPEDIENT tool that the federal government could put in place to eliminate poverty..."
