Finland may have given up on their guaranteed annual income pilot, but Ontario’s similar program is still getting positive reviews from GAI fans like Andrew Coyne at the National Post. Colby Cosh isn’t quite as impressed with the program or the chances of it being expanded beyond its current small scale:
The Ontario plan is giving randomly selected low-income working-age individuals $16,989 a year in free money. That’s the basic story, with the detail that couples are eligible for a combined $24,027. This amount replaces provincial welfare, employment insurance, or early Canada Pension Plan payments, dollar-for-dollar; Canada Child Benefit cheques are strictly separate, however, and if study members go out and earn some income, their payment is reduced by 50 cents for every dollar they make until the supplement hits zero.
This is the “negative income tax” model of guaranteed income, intellectually pioneered by the Austria-Mont Pelerin-Chicago strain of economic thought that is my personal heritage and Coyne’s alike. The conclusion of the PBO paper is that the total cost of such a program for the entire country, applied to this year’s economy, would come to about $76 billion.
[…]
Kevin Milligan, a UBC economist who is skeptical of GAI, often points out that GAI advocates face the challenge of reconciling three conflicting elements of such a program: we want it to have a reasonable overall cost, we want it to be generous enough to bother with, and we want it to impose a low “clawback” rate on earned income so as not to discourage that.
The “Ontario model” sort of resolves the “trilemma” by being soggy on all three fronts. The $17,000 basic amount was chosen specifically to come to 75 per cent of Statistics Canada’s “low-income measure”: it is a guaranteed not-even-low income. (At the same time, I notice that the basic personal exemption on federal income tax forms is just $11,809 this year. Before we hurl ourselves headlong at a new social program of a relatively untested nature, maybe we could explicitly just stop taxing the poor first?)
Three points of GST may seem like a reasonable overall cost, if it could be realized, but an entitlement such as this is bound to be a one-way street: by the time we decide we do not like the effects, it will have become the next thing to a sacrament. (Canada’s guaranteed federal income defines us as a country!) Meanwhile, the 50-per-cent clawback in the Ontario model is fairly dramatic, and, moreover, under the model, couples who begin cohabiting would stand to lose up to $10,000 a year of GAI payments between them.
