Universal basic income is here–it just looks different from what you expected(technologyreview.com)
technologyreview.com
Universal basic income is here–it just looks different from what you expected
https://www.technologyreview.com/2021/05/07/1024674/ubi-guaranteed-income-pandemic/
2 comments
Bit behind the curve here? Canada has had an equivalent refundable child benefit since the early 1990s. It's a permanent, ongoing policy, not in place for just one year, and it's far more generous.
For example, with two children under the age of five, a couple at the poverty line or less will receive some $13,500 a year in a refundable credit, falling to about $8000 a year at $80,000 a year, $3500 at $160,000 and to $0 above $200,000 a year. (Figures in CAD so multiply by about 0.8 for USD amounts.) As a refundable tax credit, it interacts with your tax deductions/obligations, so you obviously won't see all of that amount unless you're very poor and not paying any taxes.
It has, generally, been considered to be effective in reducing child poverty, which was the reason it was originally instituted by the Progressive Conservatives in the early 90s, and then underwent bipartisan expansion under the Tories and Liberals with governments since. No surprise there, I guess. Hard to imagine how giving every poor parent with kids up to $7000 a year per child wouldn't reduce child poverty at least a bit, really.
Every once in a while someone goes "Canada already has a basic income!": https://basicincome.org/news/2019/10/canadas-child-benefit-i... This view is generally then promptly shot down by economists, wonks and other critics. (For example, if this is a basic income, then welfare is arguably a basic income too. Given that one can work, albeit with a high effective marginal tax rate with clawbacks, while on welfare in Canada.)
Also, now that it's been in place for some 30 years now, the policy has been widely studied and there is piles of analysis on it, should you want to see the outcomes and consequences of such a policy. Expensive but moderately effective with relatively few downsides (aside from the expense) would be my take on it. The largest criticism is probably the effective high marginal tax rate it creates.
For example, with two children under the age of five, a couple at the poverty line or less will receive some $13,500 a year in a refundable credit, falling to about $8000 a year at $80,000 a year, $3500 at $160,000 and to $0 above $200,000 a year. (Figures in CAD so multiply by about 0.8 for USD amounts.) As a refundable tax credit, it interacts with your tax deductions/obligations, so you obviously won't see all of that amount unless you're very poor and not paying any taxes.
It has, generally, been considered to be effective in reducing child poverty, which was the reason it was originally instituted by the Progressive Conservatives in the early 90s, and then underwent bipartisan expansion under the Tories and Liberals with governments since. No surprise there, I guess. Hard to imagine how giving every poor parent with kids up to $7000 a year per child wouldn't reduce child poverty at least a bit, really.
Every once in a while someone goes "Canada already has a basic income!": https://basicincome.org/news/2019/10/canadas-child-benefit-i... This view is generally then promptly shot down by economists, wonks and other critics. (For example, if this is a basic income, then welfare is arguably a basic income too. Given that one can work, albeit with a high effective marginal tax rate with clawbacks, while on welfare in Canada.)
Also, now that it's been in place for some 30 years now, the policy has been widely studied and there is piles of analysis on it, should you want to see the outcomes and consequences of such a policy. Expensive but moderately effective with relatively few downsides (aside from the expense) would be my take on it. The largest criticism is probably the effective high marginal tax rate it creates.
> “universal basic income” aimed at counterbalancing the automation of work and toward “guaranteed income” aimed at addressing economic and racial injustices.
The problem that UBI solves neatly is the very high effective marginal tax rate for the poor. NIT (Negative Income Tax) can also be designed to have the same effects (only the transfer mechanism is different.
The guaranteed income leaves this intact. It helps with absolute poverty, but poor people get easily 70-90% effective marginal tax rates for work.
You can adopt any system and have exactly the same amount of transfers, but UBI and NTI are harder to justify for the conservative layman despite the fact that prominent economists like Milton Friedman were big on NTI.
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A simple UBI can be framed as
* Everyone receives $X per year after taxes and pays a tax rate = t.
* Income = (1-t)Pretax + UBI (eq1)
A simple NIT can be framed as
* Define a cutoff income. Call it a "standard deduction" if you wish.
* If you make more than the cutoff, then you deduct the cutoff from your pretax income and pay tax rate = t on the remainder. So Income = pretax - t(pretax-cutoff)
* If you make less than the cutoff, you pay no taxes, and in addition you get some fraction k of the difference back. Income = pretax + k(cutoff-pretax)
* If you earn exactly the cutoff, then nothing happens. You keep your pretax income.
We can do some simple algebra to rewrite NIT income as
source https://www.reddit.com/r/Economics/wiki/faq_basicincome