We need to get the big things right with a Basic Income Guarantee

By Robin Boadway, Alan Gummo, and Roderick Benns 

Andrew Coyne gets many things right about a basic income guarantee, writing this analysis for the National Post recently.

He gets that a basic income would not replace social insurance programs like Employment Insurance and Canada Pension Plan. He also gets, albeit with undue pessimism, that the provinces need to be involved. He acknowledges that the level of the guaranteed annual income program proposed by the Macdonald Royal Commission was inadequate, and he implicitly accepts that a basic income of reasonable scope could be afforded by combining the appropriate basic benefit amount with a suitable rate of claw-back as incomes rise. He even observes that a basic income need not deter work incentives; on the contrary, it will be enhanced compared with existing welfare schemes.

Most importantly, Coyne recognizes that mechanisms already exist for providing basic income to selected groups, especially the elderly through the OAS/GIS and for families with children with the Child Tax Benefit. These can be built on for other segments of the population by combining the Working Income Tax Benefit, federal and provincial tax credits, and social assistance into a ‘universal adult income guarantee.’

But, as Coyne says, the devils are in the details. One detail in his article that is troubling is the view that a basic income would take all cash and in-kind programs and rationalize them into one income-adjusted payment. Much of the purpose of basic income is to allow people to escape poverty. Forcing basic income recipients to purchase their own pharmaceuticals and to fend for themselves in finding affordable accommodation would be counter-productive.

Housing and drug programs are not ‘stand alone,’ unrelated programs. In fact they often intersect with each other and with other support programs such as disability support programs. Therefore they must be carefully considered in relation to a basic income program to ensure that individual needs are properly recognized.

By over-simplifying Coyne is able to edge housing and drug benefit programs toward market solutions and public choice options in situations in which market solutions are not in fact available and in which some individuals need help making good choices. This is the genesis of the need for public policy and programming.

Viewing basic income as simply a replacement for existing programs of support for the less well-off belies the fact that welfare recipients and many in low-income or precarious employment are well below accepted poverty lines. A suitable basic income must not only remove the stigmatizing shackles of existing income support programs with comparable income transfers, it must also provide adequate levels of support which the current programs fail miserably to do. And it must complement rather than replace at least some of these social programs. 

The assumption that in-kind benefits can be converted into cash overlooks the fact that many of these benefit programs involve and depend on the knowledge, expertise and simple human kindness provided by the persons who work in the programs. This type of benefit cannot be monetized and should not be eliminated in exchange for a basic income.

Public policy should always be based on real people, not theoretical people. With this in mind we have some doubt that real people make life decisions based on such arcana as marginal tax rates. They may well make decisions based on the net amount of money they can put in their pocket, or their take-home pay, but we doubt many people could identify their marginal tax rate if asked.

Understanding the needs and motivations of real people underlies our insistence that a basic income should be adequate at whatever level adequacy might be determined. Any discussion of marginal tax rates needs to be marginalized in the basic income discussion.

Robin Boadway is an economist at Queen’s University. Alan Gummo is a retired city and regional planner. Roderick Benns is the publisher of Leaders and Legacies. They all advocate for a minimum income guarantee through the Basic Income Canada Network.