Basic Income: Reduce Inequality and Poverty

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Photo by Marie-Michèle Bouchard on Unsplash

“Would we rather have tax breaks for wealthy Canadians, or dignity and security for low-income Canadians and the middle class?” Sheila Regehr, Basic Income Canada Network

Basic income (BI) schemes are a political and social issue. BI addresses inequality and could help to eliminate poverty. Doug Ford cancelled the Ontario BI Pilot program. 

On January 23rd, the Basic Income Canada Network (BICN) released its “Basic Income: Some Policy Options for Canada” report. The researchers were Chandra Pasma and Sheila Regehr. 

The BICN report describes BI as: “A basic income is an unconditional cash transfer from government to individuals to enable everyone to meet their basic needs, participate in society and live with dignity, regardless of work status.”

According to the BICN report, a BI unconditional stipend for adults 18 and older would cost between $134 Billion and $637 Billion. Depending on three different proposed options.

The report chose a $22,000 BI amount for individuals because that’s Statistics Canada’s Low-Income Measure after taxes. BICN used Statistics Canada’s Social Policy Simulation Database and Model to provide the report’s analysis. 

Of the three BI options, it ties the first two to an income test. Middle and higher incomes would not receive any money or a clawed back amount.

Option 1: only the 18-64-year-olds, a maximum of $22,000 for individuals and $33,113 for couples with an income test. No change to seniors who keep both Old Age Security (OAS) and Guaranteed Income Supplement (GIS). Approximate cost of $134 Billion.

Option 2: All adults and seniors receive money with an income test. OAS and GIS discontinued and funds go towards BI. Approximate cost of $187 Billion.

Option 3: No income test. Everyone over 18 years old receives the same amount regardless of income. Approximate cost of $637 Billion.

The report converts money from GST/HST credits and provincial social assistance programs such as Ontario Works into the BI program. Those conversions would not be enough to pay for it. The government needs to increase taxes for both wealthy corporations and individuals, end income-splitting for seniors, and for higher-income individuals it would eliminate some tax credits which favour them. 

Some BI costs could be offset in saving money on public health and criminal justice. The theory is people will eat better food to be healthier, and fewer crimes because people have more money and less inclination to steal. There is no solid data to back up those assumptions.

Who benefits from BI? Anyone earning below $47,000 sees an increase in their income across all three options. The middle-class as defined by incomes between $36,000 and $79,000 are all better off or the same depending on other tax benefits.

Who loses from a BI scheme? People earning over $148,000 will have an increased level of income tax under all three options. 

The main argument against BI, is its not free money. Taxes pay for it. However, the current tax system gives away $122 billion annually to middle and high-income individuals. Closing those tax loopholes would almost pay for Option 1 in the BICN report.

Doug Ford cancelled the Ontario BI Pilot program in 2018 after promising on the campaign trail to allow the pilot program to finish. Early results showed how it improved recipients’ quality of life. 

The pilot paid $17,000 to each participant helping to lift them out of poverty. To implement a national $17,000 BI, the annual cost would be $76 billion.

Michael Coteau, MPP for Don Valley East and former cabinet minister in the Wynne Liberal government will restart Ontario’s BI Pilot if elected Premier in the next provincial election. Presently, the leaderless Liberals are on track for a majority government with 71 seats if an Ontario election happened today.

Talking about BI, Michael Coteau said, “It was a shame to cancel that research that was being conducted…Everything is changing so drastically around us that understanding the basic income and being ahead of the game of other jurisdictions in understanding the concept of basic income and how it is being used to mitigate some of the disruption that may occur with the change in economy…in the long term by putting the money in the hands of people versus systems. I was a big supporter of it and, if I was elected premier of Ontario, I would reinstate that project and expand it for research purposes.”

Is BI just socialism with another name? 

Canada already has BI schemes for children and seniors. The government does not call it BI. For children, the federal government has the Canada Child Benefit. For seniors, there are Old Age Security, Guaranteed Income Supplement, and the Canadian Pension Plan. All could be considered a form of BI.

A favourite economist of libertarians and conservatives and a Nobel laureate Milton Friedman was an ardent supporter of BI. Friedman advocated for open free markets without government interference. Yet, he felt BI was the best way to lift people out of poverty. 

Prominent poverty advocate John Clarke of the Ontario Coalition Against Poverty (OCAP) said, “The problem with notions of a progressive basic income is that they assume their version is likely to be adopted. In the prevailing context of austerity and privatization, the policy will be used to commodify social provision, ensuring a meagre cash payment replaces, rather than augments, existing public services. This cash payment would also be used as a de facto wage subsidy to low paying employers, depressing wages and blocking increases in the minimum wage. It’s a case of the road to neoliberalism being paved with good intentions.”

The Sault does not produce many well-paid middle-class jobs. Most of the well-paid jobs that do exist go unfilled, such as doctors and nurses. Middle-class jobs being proposed come with possible negative consequences such as the ferrochrome plant.

The big job announcement this month was Giant Tiger. Few if any middle-class jobs would be generated from Giant Tiger. The Sault mainly creates low-income jobs.

For low household income cities such as the Sault. A BI would inject much needed financial stimulus into the local community. Unfortunately, Doug Ford stopped the Ontario BI trial. Ontario could have been at the forefront of creating an equitable society that works for all.

40 COMMENTS

  1. Here in the Sault there is mainly part time employment if u are lucky. Try to pay rent and bills on 12 hours a week. I’m not able to and I’m looking for a second job but employers don’t want to work around my current job so I’m not having any luck. The cost of living needs to go down so people can afford to survive let alone live

  2. Elon Musk on Universal Basic Income

    Elon Musk doubled down on his initial support for the concept.

    “I think we’ll end up doing universal basic income,” Musk told the crowd at the World Government Summit in Dubai, according to Fast Company. “It’s going to be necessary.”

    The economic forecasts for the next several decades don’t bode well for the American worker. Several reports that found that as much as 50% of jobs could be replaced by robots by 2030.

    The downside of that projection is that millions of people would wind up out of a job — a possibility Musk discussed at the summit.

    “There will be fewer and fewer jobs that a robot cannot do better,” he said. “I want to be clear. These are not things I wish will happen; these are things I think probably will happen.”

    Executives who have endorsed UBI — a group that includes Y Combinator President Sam Altman and Facebook cofounder Chris Hughes — also say automation would dramatically increase a society’s wealth.

    “With automation, there will come abundance,” Musk said. “Almost everything will get very cheap.”

    That money theoretically could be redistributed to give people financial security even if they didn’t work. UBI advocates often point to reduced costs as a reason the system could be cheaper to implement than most might assume.

    “Because a very small amount of people have an almost unimaginable amount of money at the very top, a basic income could actually decrease almost everyone else’s income tax burdens except for theirs,” Scott Santens, a UBI advocate, wrote for The Huffington Post.

    Musk retains some skepticism about the effects of UBI. He has voiced concerns about what would happen to people’s sense of purpose if they had less of a need — or no need — to work.

    “If there’s no need for your labor, what’s your meaning?” Musk said. “Do you feel useless? That’s a much harder problem to deal with.”

  3. Judging less fortunate people is the pŕoblem here! I cannot believe why a lot òf people are so judgemental of people on odsp or other government programs. Trust me it’s no life for people who want a life. Some people have circumstances and issues that makes working a full time job or any job at all far too difficult! There are numerous ways the government misuses money. Helping the less fortunate isn’t one of them. I’m all for a basic income!

  4. Andrew Yang on Universal Basic Income:
    “When Donald Trump became president in 2016, I was convinced that the reason why he won the presidency is that we automated away four-million manufacturing jobs in Michigan, Ohio, Pennsylvania, Wisconsin, Iowa, Missouri. And we’re about to triple down on that by blasting away millions of retail jobs, call-center jobs, fast-food jobs, truck-driving jobs.

    It’s been tempting, especially from a political view, to blame all this job loss on global trade, immigrant labor, and offshoring. But most economists argue that the much larger driver of job loss is technology, and automation in particular.

    Now, I studied economics. And according to my economics textbook, those displaced workers would get retrained, re-skilled, move for new opportunities, find higher-productivity work, the economy would grow. So everyone wins. The market, invisible hand has done its thing. So then I said, “Okay, what actually happened to these four-million manufacturing workers?” And it turns out that almost half of them left the workforce and never worked again. And then half of those that left the workforce then filed for disability, where there are now more Americans on disability than work in construction, over 20 percent of working-age adults in some parts of the country.

    So the former manufacturing workers, a lot of them are on disability, a lot of them are also — especially if they’re younger men — they’re spending 25 to 40 hours a week playing video games.

    Half of them leave the workforce never to be heard from again. Half of them file for disability and then another significant percentage will start drinking themselves to death, start committing suicide at record levels, get addicted to opiates to a point where now eight Americans die of opiates every hour – deaths of despair. When you say, “Am I for automation and artificial intelligence and all these fantastic things?”, of course I am. I mean, we might be able to do things like cure cancer or help manage climate change more effectively. But we also have to be real, that it is going to displace millions of Americans.

    People are not infinitely adaptable or resilient or eager to become software engineers, or whatever ridiculous solution is being proposed. And it’s already tearing our country apart by the numbers, where our life expectancy has declined for the last two years because of a surge in suicides and drug overdoses around the country. The fantasists — and they are so lazy and it makes me so angry, because people who are otherwise educated are literally wave their hands and be like, “Industrial Revolution, 120 years ago. Been through it before,” and, man, if someone came into your office and pitched you in an investment in a company based on a fact pattern from 120 years ago, you’d freakin’ throw them out of your office so fast.

    So to me, the rubber hits the road with the truck drivers. I mean there are three-and-a-half million truck drivers in this country, only 13 percent of them are unionized. The odds of there being a collective negotiation are very low. Eighty-seven percent of them are part of small firms of, let’s call it 20 to 30 truckers, and 10 percent of them own their own trucks. So think about that.

    If you borrow tens of thousands of dollars to be your own boss and be an entrepreneur and then your truck cannot compete against a robot truck that never stops. The odds then of these truckers showing up at a state capitol saying, “F— this, let’s get 30 guys together with our trucks and our guns” and show up and protest the automation of their jobs. So we’re disintegrating by the numbers. You can see it in our political and social dysfunction. Expecting that disintegration process to be gentle would be ignoring history.

    I don’t know thousands of truck drivers, but I do know some. And they do not strike me as the sort who will just shrug and say, “Okay, I guess that was a good run. I’m going to go home now and figure out what job is there for someone who’s a 50-year-old former truck driver.”

    But you also are going to see call-center workers, fast-food workers, retail workers — I mean there are 8.8 million people working in retail in this country. The average retail worker is a 39-year-old woman with a high-school degree who makes $11 to $12 an hour. When 30 percent of malls close in the next four years, what is their next opportunity going to be?

    Capitalism is a wonderful, magical, powerful thing. But it optimizes for capital efficiency and capital gains above all else, really. And that worked well for a long time, because in order for capital efficiency, workers needed to benefit, the consumer economy needed to benefit, the middle class needed to benefit. It’s like Henry Ford and his, “How can my workers buy my car?”

    But we’re now at a point where Ford does not need those humans to build that car and that they can have markets all over the place and don’t really care what’s going on in their own backyard. There are just these big changes afoot, and the question is how we’re going to manage them as a country.

    • You mentioned truck drivers will be affected. All the gov. has to do is pass laws that even though it is a self driving vehicle there must be a qualified driver in the seat, in case of emergencies. I do not see any jetliners flying with no pilots.

  5. I worked 25 years of my life, sadly, Disability is now my income because of Cancer and now brittle bones (which i’ve broken, from my wrists, to dislocated both shoulders, broken ankle, knee, lower back bones crushed…from the Cancer treatment of Radical Radiation and Chemotherapy. . The income currently does not even come close to taking care of my “basic needs” considering my rent is 80% of my income. You get $1200, $1000 is for rent.I will say this here, when all the companies came here from Toronto and Mississauga, then bought up all the apartment buildings, then skyrocketed rent..they really REALLY made it hard for a lot of people. When the roof over your head dictates how much food you can buy, IF you can buy any, it’s disgusting in the Sault atm for rent/housing. Ford wonders why so many are complaining. Trust me, making 5x that working is what i’d rather do, but no longer can. Not to mention my medications I will need to be on for the rest of my life, which are $100 per month and are not covered. It’s one thing to say, Forcing people to get a job which is why BI is so low..
    I can understand if I was a leech, just wanting to have babies and “mooch” off the system, but WHO can really WANT to live like this. Hunger is a monthly problem, and getting help , every so often when you need it, well, lets just say the “drug addicts” make it hard for Seniors or ODSP persons to get anything after they’ve taken most of it. And the answer we get, sorry we don’t have enough…..So for those who have paid into the system, and who have no choice now…I say BI is much better than regular Cpp/ODSP I do, despise those who abuse it and make it hard for those who really need it…as to the comments about the bias reporter, NO, I’ve been to the hospital more than I care to admit, and everything he said, was right on the money. It’s easy to judge people, way harder to live it!The Sault has nothing for those who need help medically. You either get on a dam list and wait years for an opening for a GP/FP or you go to the walk in clinic, which…we all ready know, a few doctors have now been removed because of well, just because, we all know why. Getting on that waiting list is a brutal way for anyone to live, and when it’s closed the ER Fast track is the ONLY way, and if you’ve EVER had to use it, good luck!! Bring breakfast, lunch and dinner with you…So again the reporter is right on the money. I was born and raised here, traveled all over Canada and the USA..(Thankfully I was in Tennessee at the Sarah Cannon Cancer Center and Vanderbilt hospital when I got Cancer..or I’m afraid to say, I would NOT be here. Having to pussy foot it to Sudbury for treatment, AS IF!!! with that brand new hospital which WE HAD TO HAVE, and yet it has nothing to treat the Cancer patients in the Sault LOL is this why we loose so many? Anyway.. so again…I concur with the reporter…I love this city..it will always be my home, but things NEED to change drastically and without feedback, this will never happen, THank you Sault Online for allowing us to do this..you know I love you <3 <3 Especially my brother in law <3 When BI had an application online, when it was first introduce, I applied but they went to Thunder Bay…SMFH!! Because well no one in the Sault needed it right..

  6. I hate it when they throw CPP in the conversation. It is not a government funded program at all. We and our employers put money in CPP, the board manages it.
    Interesting thought on option 2 to include senior and stop OAS anf GIS.
    I would hope that this woukd also include the same benefits thst recipients of OSDP receive of medical/dental etc. Those who fall under the 33k income test cannot afford health care if they have no private plan. Income test would be good as you need to have a check and balance. Also the higher incone earners and definitely corporations should pay more taxes.

  7. Imagine thinking that everyone could be helped in the exact same way by a few blanket policies?
    As if people don’t have individual needs or different barriers to success.

    I get that people want to help everyone at the same time, but it’s impossible. You can’t help everyone in the way they need to be helped with one or two policies.

    The best way to do that is help them help themselves. Handouts are not it.

  8. The reason Doug, and the country as a whole, doesn’t like this brainless idea is that it doesn’t help anyone but effects everyone. Remember how good raising minimum wage went?

    If it cannot be given to every single Canadian/Ontario citizen, then stop wasting tax dollars and time with mindless ideas. I’ve heard better ideas from a 3 year old.

  9. No, I don’t think a basic income plan is doable.. We have so many now that just keep having kids to take advantage of our generous baby bonus plan… I do believe that there needs to be a means test for old age and Canada pension plans.. Even millionaires get an old age check…And while I realise that CPP is something that we pay into, if we reach a certain criteria in income and the CPP payout isn’t need, it should be discontinued… Hell, the guy that just won 70 million dollars in the lottery is still gonna get a CPP check and an OAS Check under our screwed up system………

  10. EDIT with apolgies to journalist. I jumped the gun and assumed the report the article mentions as Jan 23, was Jan 23rd last year. He has confirmed with me this report is new, this Jan 23rd .

  11. Welfare (aka ODSP/OW) is not a career and the reason Doug Ford cancelled it is the point of forcing people to suffer while on welfare is to force them to get a job. I get it some people just can’t work but many people can with the proper treatment for their illnesses but they chose to collect welfare instead. I was on Sault Transit and some guy said to a lady you should look for a job to help you out and she legitimately said I do not have to work because I qualify for ODSP why would I work when I can get money for free? It’s idiots like her that make others look bad

    • Trust me, many of us DO suffer. The legit ones, i’ve gone hungry almost every month, because rent is so dam high, cost of living is well, *insert eye roll here* Cost of living goes up %2+ every year, and guess what RENT goes up the exact amount, so no one is getting more except the rental greeds. I’ve gone hungry more times than I like admitting, but anyway, I’ve already said it up there, but please, don’t judge us all like the lady on the bus, I dislike them too!!

    • Well do you know this so called “idiot. Despite what she said it’s not right to judge her over a few words. Who knows what her circumstances are? This is the problem. Picking on the poor.

    • Brandon Gough you’re absolutely right. It’s a delicate situation and we need to look more closely at what could happen if someone on rock bottom waiting for that next hit suddenly finds themselves with $1000 in spare change. There are a lot of different ways that could go.

      I don’t think basic income is wrong per say, but there are measures that would need to be in place long before that world can exist.

    • Ryan Gagne there was a British documentary where they gave welfare recipients the entire annual amount they’d otherwise receive over the course of a year in one lump sum (worked out to around $30k cdn). Many of the people who got this money ended up finding meaningful employment or started their own business, was an interesting show and wish they did more of it and/or something similar as a pilot project here in Ontario

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