by Kate McFarland | Nov 22, 2016 | News
Former MEP Christian Engström has written a “concrete proposal” for a basic income guarantee in Sweden. Originally published online only in Swedish, Engström’s paper is now available in English.
Christian Engström, a former Member of the European Parliament 2009-2014 for the Swedish Pirate Party, has prepared a detailed proposal for an unconditional guaranteed income of 900 EUR (8333 SEK) per month, tax-free, for every Swedish resident between the ages of 19 and 65.
The basic income would replace Sweden’s current social assistance programs, student aid, and unemployment benefits, but no other government-funded programs. Disability and sickness benefits, child benefits, and the state pension would remain in place.
Engström’s basic income guarantee is designed as a negative income tax rather than as a universal grant, with the amount of the grant tapering off as the recipient earns income. Specifically, Engström proposes a 33% income tax with a reduction of the basic income grant by the same amount. (For example, someone who makes 300 EUR would pay 100 EUR in income taxes, and see their basic income lowered by 100 EUR, but would still net 100 EUR.)
Engström proposes no increase in income taxes, and points out that 33% is Sweden’s current normal marginal tax rate for low- and middle-income earners.
The basic income grant would be financed in part through money saved on the social assistance programs to be replaced. The rest of the funds, according to Engström’s proposal, would come from eliminating certain industry-specific discounts on value-added tax (VAT), such as those enjoyed in the food and restaurant industry.
In presenting his specific plan, Engström is motivated by concerns about political feasibility. He states that, ultimately, he would prefer a higher level for the guaranteed minimum income–and that his “concrete” proposal might be seen as an initial step toward bigger and more refined variants of the basic income:
“I hope that in time we will see a basic income of maybe 1,100€ or more in Sweden. But it is not strictly necessary to start at such a high level. It is enough that the basic income is livable, and not lower than today’s social assistance benefits. Then we can introduce the new system, which is the big and complicated step. Once we have done that, and can see in practice how it works and what it costs, we can continue improving the basic income through the ordinary political process.”
To date, basic income has received little mainstream political support in Sweden — unlike neighboring Finland, where an experiment on the effects of an unconditional basic income will begin next year.
Read the details of Engström’s proposal in the full report, available here:
Christian Engström “Basic Income: A concrete and financed proposal for basic income in Sweden“.
Video of Engström presenting his proposal at Finland’s International Basic Income Seminar in Turku, August 2016.
Reviewed by Genevieve Shanahan
Stockholm photo CC BY-NC-ND 2.0 Stina Stockholm
by Kate McFarland | Nov 4, 2016 | News
The latest step to Ontario’s basic income pilot occurred on Thursday, November 3, 2016, when the Ministry of Community and Social Services released a call for public input on the design and objectives of the study and published a new comprehensive report from Project Adviser Hugh Segal.
In February 2016, the provincial government of Ontario, Canada announced a budgetary commitment to finance a pilot study of a basic income guarantee. In June, the government appointed former senator Hugh Segal — who has been promoting basic income in Canada for more than a decade — as the project’s Special Adviser. (For some of Segal’s past writings on basic income, see here.)
Segal has now released a detailed and comprehensive discussion paper in which he lays out his recommendations for the design and administration of the pilot. The government is soliciting input from the public before it makes its final decision.
This release of this proposal for Ontario’s basic income study closely follows the publication of details about the upcoming pilots in Finland and the Netherlands, as well as the charity GiveDirectly’s study in Kenya.
A Negative Income Tax Model
If the provincial government of Ontario decides to adopt Segal’s newly announced proposal, it will test a basic income guarantee (BIG) — wherein cash payments are disbursed automatically and unconditionally to individuals whose income falls below a certain threshold — as a replacement to its Ontario Works program and Ontario Disability Support Program.
Segal recommends that participants in the pilot be guaranteed a monthly income of at least $1320, or 75 percent of the province’s Low Income Measure, with an additional $500 supplement to those with disabilities.
In Segal’s proposal, the BIG is to be structured as a negative income tax (NIT), in which the amount of the subsidy is tapered off for higher earners, in contrast to a “demogrant” model wherein all participants would receive a fixed monthly payment regardless of other earnings. That is, the government would “top up” the earnings of pilot participants whose incomes fall beneath $1320 (or other level chosen for the basic income guarantee). Those who earn more than $1320 per month would receive smaller benefits or, depending on earnings, none at all.
Eligibility is to extend to all residents of the selected communities between the ages of 18 and 65, regardless of current income. All participants will be guaranteed a minimum income, as per the NIT model summarized above. However, depending on their initial and subsequent earned income, some participants may not receive any payment during the course of the experiment. As Segal’s discussion paper notes, “even though the program is based on a principle of universal access, not all participants will receive symmetric payments or any payment at all.”
Segal offers two reasons for his recommendation that the pilot test a negative income tax rather than a universal demogrant. First, this makes the design unique: no other planned trial of a basic income guarantee will employ the NIT model; thus, outside of Ontario’s pilot, no data on the impact of this specific model will be collected. Second, Segal believes that a demogrant, unlike an NIT, is not realistically affordable in Canada (nor in other developed nations).
Experimental Design
Segal recommends two types of studies:
(1) A randomized control trial, to be conducted in an urban center, in which different treatment groups receive different levels of guaranteed income and/or pay different rates of taxes on additional earned income. Subjects will be randomly sampled from all residents (of at least one year) between the ages of 18 to 65, with participation in the experiment being voluntary. Participants would then be randomly assigned to one of four groups, including a control.
(2) “Saturation sites” in which all members of a community receive the basic income guarantee (and are subject to corresponding changes in the tax schedule). Ideally, according to Segal’s report, “one saturation site would be located in southern Ontario, one in northern Ontario, and one would be chosen and planned in close collaboration with First Nations communities.”
In each case, the study is to last a minimum of three years.
Measured Outcomes
According to the discussion paper, the “core question” that Ontario’s pilot endeavors to answer is, in Segal’s words, “Is there a more humane and efficient way to reduce poverty, a way that better respects the rights of those in poverty to make their own life choices, reduces stigma and growth in bureaucracy, yet produces improved outcomes in terms of work and life prospects?”
In order to answer this question, Segal lays out many variables that he urges researchers to monitor and analyze in the pilot, including the following:
- Administrative costs or savings to the government.
- Health outcomes, as measured by (for example) prescription drug use or number of visits to primary care physicians, emergency departments, and hospitals.
- “Life choices” such as career decisions, education decisions, family decisions, and choices in living arrangements.
- Education outcomes of participants and their children, including completion, attendance, and standardized test scores.
- Work behavior, including employment status, hours worked, number of jobs, and participation in job-search activities. The report mentions participation in the underground economy as another outcome of interest.
- “Food security” status as assessed through the Canadian Community Health Survey and the researchers’ own surveys or interviews.
- Subjects’ “perceptions of their place in society, their capacity to contribute, their social environment’s capacity to protect them” as collected through interviews.
- Interactions between the basic income guarantee and other welfare programs (e.g. the Canada Child Benefit).
- In saturation sites, community-level impacts such as changes in rent and prices of goods and services, crime and incarceration rates, civic participation, and the use of public services.
Thus, the Ontario pilot is likely to examine a much wider and more diverse range of outcomes than the impending basic income pilots in Finland and the Netherlands, which focus more narrowly on assessing the impact of a basic income guarantee on employment.
This difference follows in part from a deliberate decision not merely to reproduce these studies. Segal states Ontario should not duplicate research being conducted elsewhere, for the sake of “maximiz[ing] the diversity of various different data sets generated by such endeavours.”
National Context
Segal recommends that Canada’s federal government “consider partnering with any willing province on any Basic Income pilots now being considered or contemplated.”
As Segal describes in the report (links added), Ontario is not alone in Canada in its interest in pursuing a basic income pilot:
“[T]he federal government introduced an enhanced child benefit in July 2016, with the objective of constructively increasing the income of low and middle-income Canadian families with children. Moreover, the House of Commons Finance Committee recommended in its pre-budget report that the government of Canada move forward with a pilot project on Basic Income.
“In its most recent ministerial mandate letter, the government of Quebec instructed the Minister of Employment and Social Solidarity to modernize income support programs and embrace better ways of reducing poverty, including a Basic Income guarantee. The Quebec Liberal Party Youth Wing, in August 2016, summoned the government to implement a Basic Income guarantee in lieu of the province’s current welfare system. The government of Nova Scotia has initiated a comprehensive social support review looking for better ways to eliminate the welfare wall and to better support the working poor. The mayors of Calgary and Edmonton have welcomed the idea of a Basic Income guarantee and associated pilot projects, as has Alberta’s Minister of Finance. In August 2015, the Government of Saskatchewan Advisory Group on Poverty Reduction also recommended a Basic Income pilot.”
Call for Input
As announced on November 3, 2016, Ontario’s Ministry of Community and Social Services will be conducting consultations to solicit public input on the basic income trial, guided by Segal’s discussion paper. Consultations will run through January 2017.
Those who want to provide input may contribute in one of two ways: attend an in-person meeting (see the schedule here) or share feedback online (until January 31, 2017).
The first stage of the pilot study — selecting the sites, obtaining access to data sources, and selecting and obtaining consent from participants — is slated to commence before the end of March 2017.
More Information
News release from the Ontario government (Ministry of Community and Social Services): “Ontario Seeking Input on Basic Income Pilot”
Discussion paper: “Finding a Better Way: A Basic Income Pilot Project for Ontario” by Hugh Segal.
Thanks to Jenna van Draanen for proofreading a draft of this article.
Cover photo: “Terminally Invisible” CC BY-NC 2.0 Kat Northern Lights Man (taken in Toronto, Ontario).
by Toru Yamamori | Oct 29, 2016 | News
As we have reported, at the General Assembly (GA) of BIEN held in Seoul on 9th July, BIEN clarified the definition of basic income that had been used on its formal documents unchanged for past 30 years. The GA also voted on the type of basic income BIEN supports. This is the detailed report on how decision was made.
Clarification
What BIEN had in its statues was:
[Basic Income is] ‘an income unconditionally granted to all on an individual basis, without means test or work requirement’
What BIEN has now in its amended statues is:
[Basic Income is] “a periodic cash payment unconditionally delivered to all on an individual basis, without means test or work requirement”
The following clarification of that definition has been put on BIEN’s website:
That is, Basic Income has the five following characteristics:
1. Periodic: it is paid at regular intervals (for example every month), not as a one-off grant
2. Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not, therefore, paid either in kind (such as food or services) or in vouchers dedicated to a specific use.
3. Individual: it is paid on an individual basis—and not, for instance, to households
4. Universal: it is paid to all, without means test
5. Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work.
Also, the following resolution was passed at the GA:
A majority of members attending BIEN’s General Assembly meeting in Seoul on July 9, 2016, agreed to support a Basic Income that is stable in size and frequency and high enough to be, in combination with other social services, part of a policy strategy to eliminate material poverty and enable the social and cultural participation of every individual. We oppose the replacement of social services or entitlements, if that replacement worsens the situation of relatively disadvantaged, vulnerable, or lower-income people.
In keeping with BIEN’s charter (as an organization to “serve as a link between individuals and groups committed to, or interested in, basic income”), this motion is not binding on BIEN’s members or affiliates.
Behind the scene
A proposal to change the description of basic income in the statutes was submitted to the 2012-14 Executive Committee (EC) of BIEN, but because of time constraint the proposal was tabled in GA in Montreal 2014. Then the proposal was discussed among wider affiliates and life-members, and the modified proposal was submitted to the 2014-16 EC, by 17 life members (Lieselotte Wohlgenannt, Margit Appel, Manfred Füllsack, Adriaan Planken, Katja Kipping, Michael Opielka, Choi Gwang Eun, No-Wan Kwack, Kang Nam Hoon, Ahn Hyo Sang, Gunmin Yi, Cho Sung Hee, Popho E.S. Bark-Yi, Andrea Fumagali, Robin Ketelaars, Matthias Dilthey, Toru Yamamori) and 6 affiliates (UBI Europe, Network Grundeinkommen [Germany], Network Grundeinkommen und sozialer Zusammenhalt [Austria], Vereniging Basisinkomen [Netherlands], Basic Income Korean Network, BIN Italia). The detail of this proposal can be read at here.
Another proposal to change the description of basic income was also submitted to the 2014-16 EC, by Louise Haagh and seconded by 3 life members (Pablo Yanez, Toru Yamamori, Malcolm Torry). The detail of this proposal can be read at here.
A workshop to discuss this definition issue was chaired by Toru Yamamori who was involved in both proposals, on 8th July with the support by EC and the congress organiser. The workshop was attended by about 30 people including Philippe Van Parijs who was one of founding members, and dedicated for every voice to be heard. Some participants of the workshop (especially Karl Widerquist, David Casassas, Télémaque Masson, Adriaan Planken, Gabriele Schmidt, Olaf Michael Ostertag, Gunmin Yi, Louise Haagh, and Toru Yamamori) voluntarily worked together after the workshop, and finally agreed on a compromise proposal which was then proposed for the GA by Toru Yamamori and seconded by Gabriele Schmidt. GA unanimously approved this third proposal as minor changes to the other proposals and to replace the other two proposals. The proposal was approved by a majority after a slight modification of wording.
Reasons, Concerns, and Discussions
The regular participants of BIEN congresses have known what conception of a basic income is shared by a majority of participants, if vaguely. The readers of academic writings by some of the founders of BIEN will easily recognize some general conception of basic income which is commonly shared by them, even though they tend to disagree at some particular aspects, the ways of justification, and the way of implementation, etc.
However, BIEN’s formal documents (either online or not) have sometimes been helpless to correct misunderstandings or misuses of the term by some media, politicians, activists, opponents, etc. Especially for recent several years, as mainstream media and politics started to pay more attention to a basic income, the misunderstanding and confusion has become greater. For example, one version assumes that a basic income means total abolishment of any other social spending. Some endorsements and oppositions have been voiced based on this version as if it is the only model of basic income. Although people and groups who favor this model of basic income are welcome to join or affiliate with BIEN, the majority of BIEN members and groups prefer a more generous basic income—usually without entirely replacing other social welfare spending. Indeed individual membership in BIEN requires only interest in basic income.
This unfortunate situation made some of us in BIEN recognized a need for developing our commonly shared perception from a tacit spirit to a clear statement.
Adriaan Planken, who has been involved in raising motions at both 2014 and 2016 as a spokesperson for UBIE reflected:
When we propose a Basic Income that will make it possible for all not to be “trapped” by poverty and to develop ourselves in following our hearts then it is inevitable from my point of view to strive for a Basic Income that is high enough to provide for a decent standard of living, which meets society’s social and cultural standards in the country concerned. It should prevent material poverty and provide the opportunity to participate in society. This means that the net income should, at a minimum, be at the poverty-risk level according to EU standards, which corresponds to 60% of the so-called national median net equivalent income. So we stated it in our European Citizens Initiative in 2013 and is it in accordance with the resolutions of the European Parliament.
At the same time, BIEN’s having had a quite thin description of a basic income in its statutes and official documents without any change for 30 years is not a consequence of laziness or something similar. Rather it is a result of deliberative consideration on how it could offer a venue where people who are interested in the concept can gather the maximum possible number of people who are interested in discussing any form of basic income or related policies. There had been concerns that a thicker description could end up excluding or discouraging some basic income supporters, especially people who work on partial basic income either as an experimental proposition or as a policy recommendation. Guy Standing, one of founding members, did his effort to convey this concerns during the 2016 congress. Haagh’s mortion was in line with this spirit. She reflected:
While more clarity was preferred, we would like to remain a very broad church of plural debate—something of quite unique status and importance in today’s world. I really hope we shall not try to reduce the whole of BIEN to the definition of BI preferred in one perspective or setting.
A particular concern for Louise Haagh was to clarify that in common understanding a basic income is a permanent grant, meaning it is a right for life and thus in principle cannot be taken away, except as provisions related to any residence requirements might in effect terminate the payment if someone moved away from a relevant jurisdiction. She was concerned that the original formulation on the website did not fully set this common understanding out. However, at the workshop in Seoul the concern was expressed that stating in some jurisdictions, e.g. the French, citizens retain rights even when non-resident, and so stating life-time entitlement, even in principle, might cause confusion. The matter could not be fully clarified at the Seoul workshop or GA, and thus this dimension of the definition and description was not included in the end. Louise Haagh notes the precedent set by the UK Citizens’ Income Trust web-site, which specifies that a Citizens’ Income ‘would never be taken away’, suggesting this indicates the common understanding that a citizen’s income or BI is permanent. This aspect of the definitional debate however continues, as the Seoul workshop and subsequent compromise proposals for a definition and a motion came to concentrate on other things, including in particular the question of a BI’s level.
The workshop was originally set for aiming to reach some compromised proposal, which could converge two initial proposals on the one hand, and which could reflect some concerns against having narrower definition. However, the chair immediately recognized that it wasn’t possible to reach this initial aim truly democratically by about 30 diverse people in a limited time. So instead the workshop was dedicated for consolidating mutual trust by sharing everyone’s reasons and concerns. The point we anticipated for the strong difference of opinions, which then turned out the anticipation was real, was whether BIEN should mention the size of the BI in its definition. Some argued BIEN should stick to a ‘broad church’ approach where diverse views should be welcome, and some replied that the size does matter because reliability of amount is essential even in a ‘broad church’ thin description. Some suggested that the size should be ‘highest sustainable’ which might be higher or lower than the poverty line. Others suggested that the size of basic income should be coupled with the existence of other social services. As far as the concerns that a thicker definition involving size could discourage people who are working on a partial basic income is concerned. Some raised the question whether there is really a contradiction because a partial basic income is step on the way to a full basic income that is defined in a thicker description. Other than the size issue, the following points were raised (according to the minutes taken by James P. Mulvale):
- The definition should state that basic income is non-foreclosable – cannot be seized for non-payment of debts (inalienable) / it is paid in regular interval / its size should be regular / it is ‘inflation proof’
- Does ‘cash payment’ include electronic currency (such as bank deposits) and crypto-currency (e.g. bitcoin)?
- Does ‘universal (not means tested)’ include or rule out an income-tested negative income tax delivery mechanism?
- Who is entitled to it within the country? Only citizens? Permanent residents?
- How do we understand “basic”?
- Should the definition explicitly state that the basic income is life-long?
At the end of the workshop, the chair called participants to join a voluntary working group for making an agreeable proposal. The discussion continued in breaks, at night, and in the morning during the rest of the congress. Participants finally agreed that
- The definition in the statutes should be as concise as possible
- BIEN’s website should have further clarification of the above definition
- The size issue should not be included to the above definition, but it should be expressed in the separated resolution on what the majority of the GA endorses and opposes
- Haagh’s proposal should be used as a base document to draft the above because the structured feature of her proposal is suitable for sorting the above 1, 2, 3.
From these efforts, over a long weekend, the final proposal was crafted.
Drafted by Toru Yamamori
Caucused with Louise Haagh, Télémaque Masson, Philippe van Parijs, Adriaan Planken, Guy Standing, Karl Widerquist
Author’s note: Those finally put forward the proposal appreciate the effort of many people during the process. We do hope this clarification will be helpful for facilitating worldwide discussion and for eliminating unnecessary misunderstanding and confusion.
by Kate McFarland | Oct 28, 2016 | News, Research
The Niskanen Center, a libertarian think tank based in Washington DC, has produced a new report on the potential of universal child benefit: “Toward a Universal Child Benefit” by Samuel Hammond and Robert Orr. The report proposes an unconditional benefit of $2000 annually for every child under the age of 18, which would be phased out for higher-income families.
Although clearly not universal, Hammond and Orr’s proposed policy might be considered a “basic income guarantee for children”. Significantly, the benefit is paid in cash rather than in kind (as discussed at length in the report), and it is distributed to all families in need–irrespective of whether a child’s parents or legal guardians in the workforce, seeking work, or able to work. As the authors note, the latter is a significant difference from the Child Tax Credit supported by front-running US presidential candidate Hillary Clinton, which is only available to households with earned income (leaving households without income to rely solely on in-kind benefits).
Hammond and Orr’s proposal is modeled after Canada’s Child Benefit program, previously covered in Basic Income News.
Hammond has previously written for the Niskanen Center in support of a basic income guarantee in the form of a negative income tax. He believes that a universal child allowance could provide a bridge to a guaranteed annual income for adults as well.
We might note that Hammond is not alone in envisioning this path toward a basic income in the US. Progressive commentators such as the Roosevelt Institute’s Mike Konczal and New York journalist Joel Dodge have advocated a universal child allowance as a policy that is both desirable in itself and a possible route to a universal basic income.
Shortly after the publication of the Niskanen Center report, Michael Tanner, a senior fellow at the Cato Institute (another DC-based libertarian think tank), published a response in which he expressed sympathy for the proposal but called for caution in pursuing such a policy. (Tanner is the prior author of a similarly cautious policy report on basic income guarantees for the Cato Institute.)
Founded in 2014, the Niskanen Center says that it “works to change public policy through direct engagement in the policymaking process” — targeting Washington insiders such as legislators, presidential appointees, congressional committee staff, interest group analysts, and civil servants in planning, evaluation, and budget offices. It branched into welfare policy earlier this year. For information about the think tank’s specific libertarian approach to social welfare, see Will Wilkinson (March 29, 2016) “Libertarian Principles and Welfare Policy“.
More Information and Background:
Samuel Hammond (October 25, 2016) “Toward a Universal Child Benefit” Niskanen Center blog.
Samuel Hammond (June 9, 2016) “‘Universal Basic Income’ is just a Negative Income Tax with a leaky bucket” Niskanen Center blog.
Michael Tanner (October 27, 2016) “Not So Fast on Universal Child Benefit“ Cato at Liberty blog.
Reviewed by Genevieve Shanahan
Photo CC BY 2.0 Pedro Ribeiro Simões
by Kate McFarland | Oct 15, 2016 | News, Research
As previously reported in Basic Income News, Kela, the Social Insurance Institution of Finland, submitted a report on basic income experiments to the Finnish Government on March 30. Previously released to the public only in Finnish, the report is now available in English.
Kela’s report describes and analyzes several basic income models, including a “full” basic income of at least 1000 EUR per month, which would replace all existing social insurance programs, a “partial” basic income of under 800 EUR per month, and a negative income tax. It additionally examines conditional programs such as a participation income.
In the conclusion of its report, Kela advises the Finnish government to adopt a partial basic income model for its experiment.
In August, Finland’s Ministry of Social Affairs and Health drafted a bill authorizing the basic income experiment. This bill revealed that the government plans to test of a partial basic income of 560 EUR per month, distributed to a random sample of 2,000 individuals who are between the ages of 25 and 58 and currently receive unemployment assistance. The Ministry’s proposed legislation also made clear that experiment will be designed specifically to test whether a partial basic income incentivizes employment.
The English version of Kela’s 62-page report is now available as a free download from its website (see link below). This version also includes a postscript concerning the bill drafted by the Ministry of Social Affairs and Health, including a summary of criticisms of the bill and an explanation of the government’s decision to adopt the chosen experimental design.
Kansaneläkelaitos Kela; Social Insurance Institution of Finland Kela (2016) “From idea to experiment. Report on universal basic income experiment in Finland”
Link: https://helda.helsinki.fi/handle/10138/167728
Photo: CC BY-NC 2.0 Aaronigma
