Guaranteed minimum income

From Academic Kids

A guaranteed minimum income is a proposed system of income redistribution that would give each citizen a certain sum of money independent of whether they work or not. It is sometimes known as a universal basic income or just a basic income (the term guaranteed annual income is often used in the United States), but these systems also often include a method of paying for the income as well.

The system would be a government administered one that would allot every citizen a sum of money large enough to live on. A common amount proposed is 20% of per capita GDP. The wealthiest as well as the poorest citizens would receive this. Salaries from employment would be a supplement to this government income. A common way of paying for this system is through a negative income tax where a government flat tax would be charged to all citizens. The current model of progressive income taxes used throughout the western world could be eliminated, but the system would still be progressive, since those at the lower end of the wage scale would pay less in taxes than they would receive in guaranteed income. For the most wealthy members of society the few thousand dollars of the guaranteed income would only make a small dent in the taxes they have to pay.

Proponents of a guaranteed minimum income argue that the system has a number of advantages:

  • It would simplify the welfare state. The introduction of a guaranteed minimum income could also see the elimination of traditional welfare, the minimum wage, much of unemployment insurance, government pensions, and benefits for the disabled and ill. This would eliminate large amounts of government bureaucracy. It could also see the elimination of the progressive income tax with no adverse effects on the poor, as explained above.
  • It would prevent any citizen from falling into abject poverty. With a guaranteed minimum income, starvation and homelessness would be all but eliminated.
  • It would cure some of the major problems of the modern welfare state such as the welfare trap, that is assumed to discourage people from working.
  • It would give enough money for every citizen to be able to receive a good education and proper healthcare.
  • It would give each citizen the freedom to select jobs that are more pleasant (assuming they are available), thus potentially eliminating unpleasant tasks that the economy would thus be forced to automate.
  • It would allow citizens to do work that is productive but cannot provide income, such as caring for children or the elderly within one's own family, or providing public goods.

The system has many opponents as well, however. They raise a number of objections:

  • The most common of these objections is the so called Malibu surfer problem, where a certain section of the population would certainly elect not to work at all.
  • It involves a transfer of resources from the rich to the poor, which critics find objectionable as a matter of principle.
  • It would increase wages dramatically for the very large category of workers who are doing unpleasant, menial but essential jobs, thus potentially damaging the economy.
  • It would cost a large amount of money, which would necessitate raising taxes.

No country in the world has ever implemented a full guaranteed minimum income system. Portugal is by far the closest, with a guaranteed minimum income a legally enshrined right for the entire population since 1997. However, the amount guaranteed is well below the poverty line and other programs such as the minimum wage are thus still in place. The system also forces participants to attend social integration sessions.

Brazil has also just recently announced a limited system that will apply to the poorest members of society. Some European countries have reoriented their taxation systems to more closely reflect a guaranteed minimum income system, including Belgium, the Netherlands and the United Kingdom.

Many other countries have political parties that advocate such a system, such as the Canadian Action Party, the Danish Minority Party and the New Zealand Democratic Party. In 1972, members of the American Democratic Party wrote a proposal for a GMI into its official platform. However, that particular plank, along with numerous others, was removed following the landslide defeat of Senator George McGovern, the party's candidate in that year's presidential election.

The world's most noted advocate of the guaranteed minimum income system is the Belgian economist Philippe van Parijs. Other advocates include Keith Rankin (New Zealand), Herwig Büchele (Innsbruck) and Hans A. Pestalozzi. The system is supported by both left wing and right wing thinkers, but it is more popular among leftists and socialists. Right-wing advocates generally prefer the negative income tax model.

A negative income tax, proposed by Milton Friedman, came close to implementation in the United States under Richard Nixon. Also, the U.S. does have the GMI-inspired Earned income tax credit. The citizen's dividend is a similar concept, but the payment made to individuals is based upon the revenues that the government can collect from leasing and selling natural resources (such a dividend in fact exists in the state of Alaska). Also, some proposals which call for replacing the income tax with a national sales tax would provide an advance monthly rebate to each household based on the poverty line for that household size, in effect creating a guaranteed minimum income, although proponents do not generally characterize it as such.

External links

de:Grundeinkommen fi:Perustulo fr:Allocation universelle nl:Basisinkomen sv:Medborgarlön


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