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CANADA: Research organization releases two new reports on Basic Income

The Canadian Centre for Policy Alternatives (CCPA)–a national independent research institute studying issues related to social, economic, and environmental justice–recently released two reports on basic income:

– David Macdonald (October 5, 2016) “A Policymaker’s Guide to Basic Income

– Alex Himelfarb and Trish Hennessy (eds) (October 6, 2016) “Basic Income: Rethinking Social Policy

 

David Macdonald, a senior economist at CCPA, considers two general types of basic income policies (defining a “basic income” as “a ‘no strings attached’ transfer from government to individuals or families”): a universal basic income, in which cash transfers of equal value are distributed to all Canadians regardless of income, and a negative income tax, in which benefits are tapered so that the poorest Canadians receive the full amount while the richest Canadians receive nothing.

For each of these two general approaches, Macdonald simulates four different scenarios, which vary according to the amount of the basic income and which (if any) existing programs are eliminated. He then analyzes, for each scenario, the effect on poverty reduction (for children, adults, and seniors), the consequences for net earnings across income groups, and the cost of the program to the government.

Based on his analyses, Macdonald concludes that basic income programs that replace all current welfare programs in Canada would result in “dramatically higher levels of poverty”. Even at relatively high levels of the basic income, a policy that eliminates Canada’s pension program would require “ethically and politically unsupportable compromises where seniors are pushed into poverty to lift up adults and children” (p. 8). Thus, he believes that the preferred approach, should the Canadian government pursue a basic income, would be to introduce the basic income guarantee in addition to existing programs. Moreover, Macdonald favors the negative income tax approach, as opposed to universal cash transfers, due to NIT’s lower cost and comparative effectiveness in reducing poverty.

Press coverage of Macdonald’s report tended to emphasize his point that basic income is not a “silver bullet” against poverty (see, e.g., reports in The Star, CTV News, and Huffington Post).

 

Alex Himelfarb and Trish Hennessy provide an edited volume of twelve short essays (not including their own introduction to the volume), which encompass a variety of viewpoints on both the benefits and limitations of basic income.

In a series of essays in the first half of the volume, proponents of basic income lay out several cases in favor of the policy–invoking (in different contributions) such considerations as homelessness, seasonal work and cyclical unemployment, and the social and economic determinants of health. Other contributions are more critical, although rarely opposed to basic income (at least in its progressive variants). For example, Jennefer Laidley critically assesses whether a basic income can really alleviate poverty, and Margot Young discusses limitations of basic income with respect to the difficulties faced by lone mothers. Michael Mendelson points out differences between right and left proposals of “basic income” and urges Canadians not to blindly consent to any program that bears the name, preferring a gradual approach to a progressive basic income. Louis-Philippe Rochon and Toby Sanger, meanwhile, argue that the government should focus its attention on full employment–which, while not incompatible with a basic income guarantee (as they admit), is a goal they believe should take precedence.    

 

The CCPA was founded in Ottawa in 1980 by faculty Carleton University. Since this time, the organization has expanded, now holding branch offices in other cities and provinces, including Vancouver, Winnipeg, Regina, Halifax, and Toronto. While officially nonpartisan, the CCPA has been described as “left-leaning” and describes itself as “one of Canada’s leading progressive voices in public policy debates”.


Reviewed by Dawn Howard

Photo: “Toronto Homeless” CC BY-NC 2.0 Anton Bielousov  

Kate McFarland

About Kate McFarland

Kate McFarland has written 467 articles.

Kate has previously made a living as a professional student, with her most recent academic interests including philosophy of language and pragmatics. She has been a writer and reporter for Basic Income News since March 2016, and she received an Economic Security Project grant work 2017 in support of her work. She also accepts donations on Patreon (although she is in the process of moving to a platform for one-time donations), where she explains a little more about her role in the UBI community.

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6 comments

  • Natalie Anderson

    I fine it’s not fair the welfare ppl get and not pension ppl that will start a big argument it says everyone gets it how is that everyone

  • Andy

    Perhaps a basic income should start with the homeless. A program would need to be created to work on a project to seek out the homeless and re-house and provide the help to transfer to a life of not living on the street, the homeless would all need bank accounts opened to pay their basic income into.

  • Steve Godenich

    Canada has a relatively high poverty threshold compared to the USA. By generous EU standards, 60% of the Canadian median income of $27,600 is $16,560. ” In 2009, the low income cut-offs (LICOs) – also known as the poverty line – for after tax incomes were as follows:

    1 person: $18,421 (USA poverty threshold is $12,000)
    2 persons: $22,420
    3 persons: $27,918
    4 persons: $34,829 (USA poverty threshold is $24,000) ”
    ( http://www.ufcw.ca/index.php?option=com_content&view=article&id=2433:by-the-numbers-income-distribution-and-the-poverty-line&Itemid=306&lang=en )

    With a vailiant effort and bevy of statistics that may serve to preserve the status quo of the current Canadian welfare bureaucracy (less pronounced in Finland), we arrive at:

    Canada’s 34th program for NIT: 3.X.4.2.1.3.2.v4(Below poverty-threshold stipend, X, Distributed to households, Tapering income, Funded by taxation, Funded at national & local level, Excludes cost of public schools and medical goods & services)

    Fortunately, there are other models that have yet to be explored, and this is just one:

    2.1.2.2.1.3.2.v4(Poverty-threshold stipend, Available to resident citizens, Distributed to adults, Tapering Stipend, Funded by taxation, Funded at national & local level, Excludes cost of public schools and medical goods & services)

    Given that public schooling and medical goods & services be provided domestically to all citizens, as well as nurseries and boarding schools[1] be provided domestically to orphans and foster children of all citizens, the remaining welfare bureaucracy may be phased-out and bought-out (in real monies and real interest accrued recompensed for any social safety net stakeholder contributors,… at least this is the case in the USA where specific SS payroll contributions are deducted). Perhaps some option may be made available for single parents to enroll children to nurseries and boarding schools for orphans and foster children and optionally bring them home for the weekends. I don’t think that is too far fetched

    An analysis of that $108.7 billion savings from cancelling 33 income support programs needs to be more carefully scrutinized, as well as other programs arbitrarily exempted from examination. Beyond that, child-support and alimony payments, divorce costs, etc., are not included in these figures, which may be considered off-budget government expense items indirectly targeted at maritally-challenged couples. The irony is that many of these unreported costs may be linked indirectly to growing family expenses from higher costs of government on the economy,… and that doesn’t include additional indirect social and economic costs for the provision of government to deal with people falling into the underground economy(drugs, prostitution, theft, black market, etc) whether they have a family or not. It is impossible for me to imagine that these children , who are now grown, aspired to such a life. In all fairness, wasteful government expense is not limited to the welfare bureaucracy, but that’s a story for the other side of the welfare-warfare state.

    [1] Residential Education: An Emerging Resource for Improving Educational Outcomes for
    Youth in Foster Care? |Lee, Barth | 2009
    http://www.educationcoordinatingcouncil.org/ECC_DOCS/Media_Reponse_Articles/PrePubResEd.pdf

  • “(1) the one-size-fits-all (universal) basic income, where all Canadians receive an identical cheque in the mail at regular intervals (probably annually);”

    How quaint, a cheque, annually. I wonder if that is how David Macdonald receives his annual salary.

    From there the slant only increases. I admire your integrity in including both sides of the argument, but the output of think tanks, funded by those with the money to spend on such things is unlikely to be as even-handed.

    I haven’t read it, I’m pretty sure it’s as slanted as intellectually honesty permits, but fighting half-truths is very difficult, with both truth and falsehood on the oppositions side, just telling the truth is rarely sufficient.

  • Steve Godenich

    [Resubmission of shorter version without URLs to avoid manual screening]

    Canada has a relatively high poverty threshold compared to the USA. By generous EU standards, 60% of the Canadian median income of $27,600 is $16,560. ” In 2009, the low income cut-offs (LICOs) – also known as the poverty line – for after tax incomes were as follows:

    1 person: $18,421 (USA poverty threshold is $12,000)
    2 persons: $22,420
    3 persons: $27,918
    4 persons: $34,829 (USA poverty threshold is $24,000) ” [1]

    With a valiant effort and bevy of statistics that may serve to preserve the status quo of the current Canadian welfare bureaucracy (less pronounced in Finland), we arrive at:

    Canada’s 34th program for NIT: 3.X.4.2.1.3.2.v4(Below poverty-threshold stipend, X, Distributed to households, Tapering income, Funded by taxation, Funded at national & local level, Excludes cost of public schools and medical goods & services)

    Fortunately, there are other models that have yet to be explored, and this is just one:

    2.1.2.2.1.3.2.v4(Poverty-threshold stipend, Available to resident citizens, Distributed to adults, Tapering Stipend, Funded by taxation, Funded at national & local level, Excludes cost of public schools and medical goods & services)

    Given that public schooling and medical goods & services be provided domestically to all citizens, as well as nurseries and boarding schools[1] be provided domestically to orphans and foster children of all citizens, the remaining welfare bureaucracy may be phased-out and bought-out (in real monies and real interest accrued recompensed for any social safety net stakeholder contributors,… at least this is the case in the USA where specific SS payroll contributions are deducted). Perhaps some option may be made available for single parents to enroll children into nurseries and boarding schools for orphans and foster children with options for parents to bring them home for the weekends. I don’t think that is too far fetched

    [1] By the Numbers: Income distribution and the poverty line | UFCW
    [2] Residential Education: An Emerging Resource for Improving Educational Outcomes for
    Youth in Foster Care? |Lee, Barth | 2009

  • In the US, the only way to pass an Unconditional Basic Income is to pair it with a flat tax. This gives conservatives an efficient tax, which should improve national productivity by +1% by eliminating significant compliance cost; and it puts a cap on the marginal tax rate. The UBI makes the effective tax rate highly progressive.

    The next question is how high should the tax rate be and what level of UBI payment? A 25% rate will bring in the current amount of revenue (FICA for Social Security and Medicare will be eliminated). The UBI should be targeted at the poverty line ($10,000 per adult and $2,000 per child). Both are “Goldilocks” levels.

    The cost of the UBI can be paid by reducing current safety-net programs. On the federal level, welfare will be eliminated; while unemployment, disability, Medicaid, Medicare, and Social Security will be reduced dollar for dollar. All of the current tax deductions (tax expenditures) will be eliminated. Effectively the UBI puts a cap on deductions for the wealthy and shifts the benefits to those with lower income, to assist with income inequality complaints.

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