
Activists push for guaranteed minimum income for Canadians - faraday
http://www.ctvnews.ca/business/are-canadians-worth-20k-a-year-guaranteed-1.1891794
======
ppereira
I once calculated the tax implications of a basic income where everyone
received a lump sum paid for by a flat income tax. A basic income at the
current welfare rate seemed to be easily achievable. I seem to recall that a
20k basic income was at the upper limit of what would be achievable without an
exorbitant income tax rate.

Many comments on the web are dismissive of a basic income because they simply
multiply the per-person dollar figure by the total population and say that it
is way too expensive. One needs to look at the current distribution of income,
the existing level of welfare and subsidies, and the progressive income tax
schedule to compute how much the basic income is likely to cost. The final
pre-tax distribution of income will also change, but that is much more
difficult to estimate.

This idea dates back to at least Thomas Paine's Agrarian Justice and is
supported by many (at least 1/2 a dozen) nobel prize winning economists. A
basic income is interesting to study and has many compelling features, but it
is complicated enough that it is not possible to easily debate its overall
merit via comments on hacker news.

~~~
forrestthewoods
I'd genuinely like to see your numbers because I've not seen a single napkin
math calculation that makes is even remotely feasible. (for the United States)

~~~
eru
In Europe it's entirely feasible, if your whole goal is to more or less keep
the same post-tax, post-welfare distribution of income. You just do away with
the traditional combination of means tested welfare and means tested taxes,
and replace it with means testing for the taxes only.

In the US that would also be possible, but the level of basic income you
arrive at might be bloody low. I don't know the data. At least, you'd save on
bureaucracy.

~~~
forrestthewoods
This may sound rude, but I literally do not care about any response that does
include napkin math. The concept of basic income has been quite popular on HN
and elsewhere for the past 6-12 months. I have asked for napkin math probably
two dozen times. No one has ever been able to provide it.

I love the concept of basic income. I've played with the numbers quite a bit
myself. I've tried to make it work. I can't do it. Not even close for the US.
I'm desperate for someone to post some basic of basic back of the napkin level
math. So far no one has done it. I do not consider that a good sign.

~~~
learc83
US GDP ~16 trillion. Government social spending 20% of GDP[1] or about 3.2
trillion dollars. US population about 320 million.

That's right at about $10k per year to every American if we capped it at
current government social spending.

So a family of 4 would get $40k a year.

You could make that 3.2 trillion go a lot further by raising taxes gradually
so that when you reach say $75k you're paying as much extra taxes are you
receive in Basic Income.

I'm pretty sure [1] includes state and local spending as well so this would be
tricky.

[1] [http://www.oecd-ilibrary.org/social-issues-migration-
health/...](http://www.oecd-ilibrary.org/social-issues-migration-
health/government-social-spending_20743904-table1)

~~~
forrestthewoods
Here's a good resource with more data. Including federal vs state.
[http://www.usgovernmentspending.com/current_spending](http://www.usgovernmentspending.com/current_spending)

I'm curious what that 20% of social spending covers. It certainly includes
health so we can't say "eliminate medicare/medicaid, but you get a yearly
check for $10,000!". That's not gonna cut it. Federal+State+Local welfare
spending is only 8% of total gov. spend and only ~3.1% of GDP. A long, long,
long ways from being able to cut a $10k check per person.

Edit: Why on earth would anyone downvote that? It boggles the mind.

~~~
learc83
>I'm curious what that 20% of social spending covers.

I'm sure there are plenty of things in that 20% that can't be replaced with
$10k per person--things like extra equipment for poor schools. However this
was just napkin math to show that it's within an order of magnitude of doable.

> "eliminate medicare/medicaid, but you get a yearly check for $10,000!".

For the vast majority of people that would be a huge net gain. The UK only
spends about $3k per year on each person for health care, so I think the vast
majority could get by on the insurance they could afford with $10k per person.
You'd still have to account for the edge cases. This would probably work
better in a country with a single payer system.

For the sake of argument, remove medicare/medicaid from the equation. That
still leaves about 2.2 Trillion on other social spending. Let's subtract some
other unknowns and leave it at just 1 trillion.

You can stretch that 1 trillion pretty far if you adjust it so that children
don't get the full amount, and add extra graduated taxes so that households
making over $45k (the national median) have a zero net benefit with only
people making below the poverty line receiving the entire benefit.

I think it's very doable especially if you're willing to consider tax
increases at the top. It's definitely not something outside the realm of
possibility, and with demographic and labor changes in the United States over
the next 50 years, I think something like a Basic Income is probable.

------
Scoundreller
I think a "guaranteed minimum income" can be re-phrased as "Giving everyone,
at no charge, the things they'll be dead without in a week (food, water,
shelter), but it's up to you to buy them on the open market".

I've never understood why one has to pay for the bare essentials, while piles
of other things, like health care, transportation, parks, police, fire, etc.
are highly/wholly subsidized through general taxes.

We already provide health care at no charge in most nations with reasonable
efficiency, leaving one less reason for people to put up with crummy employers
and removing the bureaucracy of proving that you need something that you,
well, need. I like the idea of extending that path.

~~~
logicchains
Many would argue that the government is less efficient at providing various
goods. Where I live in Australia, for instance, public schools and hospitals
are generally regarded as being inferior to privately run ones. In such
circumstances it is more efficient for the government to give poor/unemployed
people money to purchase these things on the private market.

When the government has a monopoly on providing a service, they face no
competition, which reduces their incentive to provide a quality service. Some
services however, such as roads, are seen as natural monopolies, meaning even
if privately owned they would still be a monopoly. In such cases people look
more favourably upon government ownership as a government monopoly is seen as
superior to a private monopoly.

~~~
Scoundreller
Do the private hospitals and schools actually have better outcomes, after
controlling for the initially better socioeconomic status of their users?

I'm sure if you do a survey, the private organizations come out ahead, but
people will recognize and give good ratings to a nicer looking building with
prettier people running it, even if the results are poor, as long as they
aren't drastically poor.

But yes, for many things, giving people cash would be better than directly
providing the service. Monopolies, price takers, perfect competition (and I
think one other) are well identified in economics, but regulators still allow
harmful monopolies left-and-right, while intervening in highly-competitive
markets for seemingly no reason.

~~~
logicchains
>Do the private hospitals and schools actually have better outcomes, after
controlling for the initially better socioeconomic status of their users?

Regarding private schools, I'm not sure; I imagine it's hard to study as there
aren't many people of high socioeconomic status attending the 'worse' public
schools, and not many poor people attending expensive private schools. There
might be some data from countries like Sweden, where the government introduced
a voucher system allowing parents to send their children to whatever kind of
school they wanted and still get government support.

Regarding public hospitals here, they do have awful outcomes in terms of
waiting time compared to private hospitals. For instance, waiting over a year
for a procedure that could be arranged in a few weeks at a private hospital.
I'm not sure about other outcomes.

------
bayesianhorse
If an "unconditional basic income" is ever to be successful, it should be
tried first in a small, wealthy country, before being implemented in bigger
countries. Good candidates might be Switzerland, Norway, Iceland and so on.

Big experiments have a tendency to fail catastrophically...

~~~
grecy
See my other comment, Australia already has it.

~~~
gnerd
> See my other comment, Australia already has it.

No, your other comment just mentioned the dole, which is NOT the same thing at
all. Other countries have the dole, in fact, every country listed above in the
comment that states they don't have guaranteed basic income, all have wide
spread social protections including welfare (and often, quite a bit more wide
spread than Australia, whether you see that as a good or a bad thing is up to
you).

Sometimes definitions vary from place to place, for instance in Australia you
have to vote, it isn't a right you choose to exorcize like the world right is
used elsewhere, it is a government mandated obligation, well similarly, in
other places, welfare is not considered unconditional income, because well, it
isn't. There are barriers to qualification and there are certainly strings
attached (some places like the UK, the ASBO system coupled with the welfare
system is used like a carrot on a stick with a donkey).

TLDR: This is not about welfare, that exists even in 3rd world countries
(although not always to the same degree) it is about unconditional basic
income.

~~~
grecy
As I said, for all intents and purposes, the Australian Dole is the same thing
as "unconditional basic income".

In what way is it not?

~~~
gnerd
In the unconditional part? Some implementations might have a mean test for who
gets what (so a lot like welfare in Anglo and/or European countries) but there
is an unconditional part that means in the UK, an ASBO isn't going to be used
as a custom law against people needing help or in the US, instead of giving
rules about what people can or can't buy with food stamps. For me, that is the
interesting part. That is the game changer.

~~~
grecy
If you don't earn enough money, it is unconditional. So it's a guaranteed
basic income.

The money goes into your bank account, you can spend it on beer and smokes if
you want to.

~~~
dragonwriter
> If you don't earn enough money, it is unconditional.

No, its not, even per the official-source article you cited in your other post
describing it [1]. In addition to "earning enough money" (income test), you
must:

1) Also meet an "assets test", and 2) Be "looking for paid work", and 3) Be
"prepared to meet the activity test while you are looking for work".

And that's just the short version: the linked "Eligibility Requirements" page
[2] has a longer list.

[1]
[http://www.humanservices.gov.au/customer/services/centrelink...](http://www.humanservices.gov.au/customer/services/centrelink/newstart-
allowance)

[2]
[http://www.humanservices.gov.au/customer/enablers/centrelink...](http://www.humanservices.gov.au/customer/enablers/centrelink/newstart-
allowance/eligibility-for-newstart-allowance)

~~~
grecy
> _1) Also meet an "assets test"_

Yep. If you have lots of assets, you don't get this money. I'll bet any
Guaranteed basic income would work the same - i.e. you don't want to pay it to
people that have a $300k house.

> _2) Be "looking for paid work"_

You fill in a form every 2 weeks that takes 5 minutes.

> _3) Be "prepared to meet the activity test while you are looking for work"._

Again, it takes 5 minutes every two weeks.

It's hilarious to see so many people debate Minimum Basic Income as
financially not viable or that it would destroy the economy because nobody
would be motivated to work. Here I am pointing out that Australia already
essentially has it, and those two problems are not real. And here you are nit-
picking the fine details. Look at the big picture here. It works, Australia
has it.

~~~
dragonwriter
> ll bet any Guaranteed basic income would work the same - i.e. you don't want
> to pay it to people that have a $300k house.

An _unconditional basic income_ would, _by definition_ have neither an assets
nor an income test.

A _guaranteed minimum income_ would only actually be a guaranteed minimum
income if it had an income test, but not asset test.

> You fill in a form every 2 weeks that takes 5 minutes.

The amount of time spent is not the issue. The fact is that you have to be
looking for work, prove that you are looking for work, and _not turn down
work_. Its essentially an program to protect against involuntary unemployment,
_not_ either a basic income or a guaranteed minimum income. Its essentially a
guaranteed _employment_ program with some other conditions.

> Here I am pointing out that Australia already essentially has it,

Australia has neither a guaranteed minimum income nor an unconditional basic
income. It has a fairly generous means/asset/behavior-tested welfare program,
which is not the same thing at all.

------
fidotron
It's fairly interesting the way this idea, and similar ones, connect some of
the more intelligent fringe people from both right and left ends of the
spectrum.

Famously Friedman's answer to what would be better than minimum wage was a
negative income tax bracket, and Nixon, of all people, almost implemented it.

~~~
tempestn
How exactly would a negative tax bracket work? Taken literally, this would
mean that up to a certain income level, the government would pay you an amount
proportional to how much you make. Presumably what it actually means is that
you would be paid inversely proportional to how much you make.

At first glance it seems to me that this would have one of the same problems
as the current system, which a guaranteed basic income is intended to solve -
a high effective marginal tax rate at low (or no) income levels. (Unless the
payment actually is positively proportional to earnings, in which case it has
the obvious problem that it provides less benefit to those who need it most.)

Either way, I'm not clear on how this would be superior to a fixed guaranteed
income with adjustments to the current tax rates such that the middle class
end up with approximately the same after-tax total income.

~~~
cdcarter
Negative income tax is just an implementation detail. This idea is not in
competition with GMI, it's a restatement of it, showing how it can exist on
the far right as well as the far left. Per the reputable wikipedia:

"Negative income taxes can implement a basic income or supplement a guaranteed
minimum income system.

In a negative income tax system, people earning a certain income level would
owe no taxes; those earning more than that would pay a proportion of their
income above that level; and those below that level would receive a payment of
a proportion of their shortfall, which is the amount their income falls below
that level."

~~~
tempestn
OK, that matches what I was thinking. The trick is that to make it equivalent
to basic income, the threshold level you describe would be different from the
equivalent basic income level.

For example, if you take a basic income system with a $20k guaranteed minimum
income - if you tried to recreate that with a negative tax bracket and a
threshold of $20k, you would need to pay 100% of the shortfall. And even then,
you would effectively have a 100% marginal tax rate; until you make $20k there
is no financial incentive to work at all.

Instead, to get the equivalent of a $20k GBI, you would need to do something
like, set a $40k threshold, with a negative tax of 50% of your shortfall. So
at 0 income you get $20k. (And at 10k income you get 15k in negative tax, for
a total of 25k, etc.) Of course, your marginal tax in that example is still
very high at 50%. To make the marginal tax rate low, which is desirable at low
income levels, you would either need to set a very high threshold, or more
likely, have multiple negative tax brackets at different rates.

What I still fail to see is how this is "better" than a standard guaranteed
income. It just seems like people will find it much more confusing than
providing a fixed amount to everyone and having positive tax brackets as we do
already (albeit different ones).

------
RivieraKid
BI is a change of how money is redistributed in society – it would lead to
some people becoming poorer and other people becoming equally richer.

I'm quite sceptical about BI because I haven't seen any analysis that would
answer the question who exactly would get richer / poorer and how much.
Unemployed people get money from the government in Canada – will they get more
or less after implementation of BI? What about teachers, software developers,
bus drivers, lawyers, etc?

AFAIK, the main claimed benefits of BI are:

– The system would be simpler and cheaper. True, but only negligably.

– It removes disincentives to work. I'm not convinced about this, you could
argue the opposite is true actually.

~~~
learc83
Guaranteed Minimum Income and Basic Income are 2 different things (this
article discusses GMI).

GMI means that you will get enough money to bring your income up to X (in this
case $20k.)

BI means that every citizen gets Y dollars per year unconditionally.

GMI is only a net benefit if you make less than X. BI is more complicated
because you have to decide at what income level should the BI be income
neutral, i.e., how much do you have to make before the BI you're receiving and
the extra income taxes you're paying are equal.

> I haven't seen any analysis that would answer the question who exactly would
> get richer / poorer and how much.

The reason you haven't heard this is because it's completely up to the
implementation details.

If for example the government decided that for people making $50k a year the
BI should be income neutral, then it would be a net benefit for all people
under $50k and a net detriment for everyone over that.

>What about teachers, software developers, bus drivers, lawyers, etc?

In this hypothetical scenario some teachers, software developers, bus drivers,
and lawyers would benefit, and some wouldn't.

>It removes disincentives to work. I'm not convinced about this, you could
argue the opposite is true actually.

This is only true for BI, not GMI. GMI adds a huge disincentive to work for
less than (or close to) whatever the guaranteed minimum is set at.

------
grecy
Australia already has basically this. It's called 'welfare', but anyone that
doesn't have a job gets a touch over $1000AUD/mo (so just over $12kUSD/year)
for life [1]. It doesn't matter if you've never had a job, or have, or
whatever. They will encourage you to get a job, and you might have to work a
little bit to get that money, but you'll get it.

If you've got a partner, or dependent(s), you'll get more. Likely if you're
living on this, you also qualify for Rent Assistance, which means more money.

You also get paid like this while going to University.

Australia has been doing this for decades (my Goole-fu fails me for the exact
number of years), and it appears to be perfectly financially viable.

Read more about Australia's policy at [2]

[1]
[http://www.humanservices.gov.au/customer/services/centrelink...](http://www.humanservices.gov.au/customer/services/centrelink/newstart-
allowance)

[2]
[http://en.wikipedia.org/wiki/Unemployment_benefits#Australia](http://en.wikipedia.org/wiki/Unemployment_benefits#Australia)

~~~
rjtavares
You are saying that the benefic is reserved to those that don't have a job.
That is not an unconditional income.

~~~
grecy
Well, it's only cancelled completely if you earn too much money.

So let's say you earn $5k/year, you'll get the dole to top you up to
$12k/year.

So you get a guaranteed income.

------
transfire
It certainly makes a lot of sense. Just consider the reduction in crime it
could bring about. That alone is nearly enough to make it worth it.

However, 20k is a bit too high. You don't want to discourage people from
working altogether. After considerable thought, I think the equivalent of a
part-time job at minimum wage makes the most sense.

~~~
mhurron
> You don't want to discourage people from working altogether.

20k is basically poverty, you are not going to remove any desires at that
level.

> I think the equivalent of a part-time job at minimum wage makes the most
> sense.

The idea is to make sure that when all else fails, you can still cover the
necessities of life, things like eating and a place to sleep. Part-time
minimum wage doesn't come close to that.

~~~
pbhjpbhj
20k CAD ~= 19k USD ~= 11k GBP ~= 14 EUR

If this was per adult in the UK then I'd be getting a substantial income boost
over what I'm earning at present.

~~~
DanBC
These are the UK minimum wage rates: [https://www.gov.uk/national-minimum-
wage-rates](https://www.gov.uk/national-minimum-wage-rates)

    
    
        21 and over:    £6.31
        18 to 20:       £5.03
        Under 18:       £3.72
        Apprentice*:    £2.68
    

* This rate is for apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age.
    
    
        6.31 * 40 * 52 = £13,124.80 per year  - for over 20s.
        5.03 * 40 * 52 = £10,462.40 per year  - for 18 to 20 year olds.
        3.72 * 40 * 52 =  £7,737.60 per year  - for under 18 year olds.
    

I have no idea when tax credits or income support or housing benefit kick in.
But if you're getting less than this you should probably speak to an advisor
somewhere to make sure you're getting everything that you're entitled to.

~~~
pbhjpbhj
Lol, yes, doesn't apply to directors ... it's partly by choice, in that we've
chosen a lifestyle that prefers family time over income. My point was more to
indicate that it's quite possible to live comfortably on these sorts of
incomes (we have a mortgage and run a car, have internet and a mobile phone
contract, go out on trips, have holidays [not abroad], can afford occasional
takeaways and meals out too, we're not destitute).

Thanks for caring enough to give that information though.

------
trothamel
As much as I like the idea of a basic income, it's hard to make the numbers
work.

Canada has 34,880,000 people in it, so a CAD 20,000 basic income would cost
CAD 697,600,000,000.

According to [http://www.fin.gc.ca/afr-rfa/2013/report-rapport-
eng.asp#a3](http://www.fin.gc.ca/afr-rfa/2013/report-rapport-eng.asp#a3),
Canada's total government revenue (at the federal level) was CAD
256,600,000,000.

So Canada would have to raise taxes by 170% to provide this basic income, and
raise them again if they want to provide any of the services they do today.
(National Defense, Healthcare, etc.)

~~~
sb23
You're including people who do not need the wage - people who already have a
job that pays higher than the $20k would not receive it.

~~~
ars
Is that the plan? Because that's not what basic income is. What you are
describing also exists, but it has a different name (Welfare, Earned income
credit, to list two examples).

~~~
learc83
It's called Guaranteed Minimum Income, which is what this article was talking
about, in contrast to Universal Basic Income.

------
caruana
I continue to see this idea grow in merit. It definitely seems if the trend
towards automation continues that governments around the world will have to
start providing a minimum income level to all their citizens.

~~~
derptacos
Well something will have to be done - as jobs become increasingly "automated".
I'm curious if there will be a large tax increase...

------
thatusertwo
20k would be great, I could cover my rent and have a few hundred dollars a
month left over. Thats not a lot, but its enough to assure I can continue to
live an not have to worry about what would happen if my job vanished, or an
emergency came up that prevented me or my girlfriend from working.

~~~
Scoundreller
I think that's the beauty of the concept. At the end of the day, most people's
lives won't change much. The welfare client will have roughly the same amount
of wealth. The middle-class earner will have the same level of wealth.

The power comes from: a) Removing the bureaucracy of having both a progressive
tax system (you make more, you pay more) and a redundant means tested benefits
system (you make more, you get less) b) Having security of the basic needs of
life, regardless of what happens.

