Guaranteed minimum income
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, 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 income tax would be chareged to all citizens. The current model of progressive income taxes used throughout the western world could be eliminated, the system would still be progressive, however, as 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 welfare, the minimum wage, and 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 progressive income tax.
- 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 discourages people from working.
- It would give enough money for every citizen to be able to receive a good education and give them the freedom to select jobs that are more pleasant, thus eliminating unpleasant tasks that the economy would thus be forced to automate.
The system has many opponents as well, however.
- The most common objection 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 successful working people to those who are lazy or less able
- It would damage the economy by removing the essential class of workers who are forced to unpleasant and menial jobs for low wages
- 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 participate in 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 and the New Zealand Democratic Party.
The world's most noted advocate of the guaranteed minimum income system is the Belgian economist Philippe van Parijs. Other advocates include Keith Rankin in New Zealand The system is supported by both left wing and right wing thinkers, but it is more popular among leftists and socialists. Right wingers 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. The U.S. does have the GMI inspired Earned income tax credit.
Similar concepts
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