The Case Against A Universal Basic Income
There are a number of different ideas on how to implement a basic income. The most popular these days is to have a substantial basic income in addition to the modern welfare state. Let’s say about $2,000 a month for guesstimating 10 million low-income Canadians. This is a pretty conservative estimate. It’s called a universal basic income because everyone gets it, but presumably, the additional taxes levied would be so high that a substantial portion of the population would pay more in new taxes than they receive from the stipend. And this is assuming that children under eighteen are exempt. So that would be 20 billion a month or 240 billion a year. This is almost the total amount of government revenues. Now we could probably eliminate welfare and disability, but that’s probably no more than 10 or 15 billion.
So taxes would have to double. So what, you jack up the marginal rate to 80% and soak the guys making six or seven figures a year? Do you institute high corporate taxes? Do you start taxing wealth? But the problem is that insanely high tax rates can be counterproductive. This would have a chilling impact on immigration, as high-income individuals would opt for jurisdictions with a less oppressive tax system, and would bolster emigration as high-income individuals fled the country. This in turn would place an increasingly higher burden on the remaining tax base. There are also many people who would opt for early retirement, content to live out their days fishing or engaging in other leisure activities, content to live off the basic income. And why not? If your house or farm is paid off, why bust your butt fifty hours a week when you could stay at home and enjoy television or spending time with your family. Learn to sew. And as more and more people chose to simply live off the basic income, instead of working hard and bearing a brutal tax burden to finance both the welfare state and the basic income, the taxes on the remaining taxpayers would continue to increase.
A more barebones guaranteed income, along with substantial reductions in government spending might be more reasonable. Why not cap it at $500 a month, not enough to live off but a nice healthy boost to low-income earners. This would give substantial assistance to individuals who were working part-time and also trying to start their own business or hone their own artistic pursuits. Alternatively, we could have a basic income of say $1,000 a month, but at the same time make massive reductions to government spending. Eliminate the whole notion of socialized…