The Canadian Citizenship Wage


One simple step to an excellent Canadian future is to provide sufficient income to every Canadian in order to eliminate poverty if only because of the high cost of persistent worst in class education, health, community and economic outcomes that poverty breeds. Building on the ideas of a negative income tax, guaranteed annual income, guaranteed adequate income, and earned income tax credits we consider the Canadian Citizenship Wage.

With citizenship comes rights and obligations. The Canadian Citizenship Wage would confirm the right of every Canadian of a sufficient income to have a minimum standard of living which is regarded as acceptable by Canadian society. Quite simply an excellent future requires that working or not citizens will receive a minimum income.

The obvious direct benefits are that poverty would be eliminated immediately and the cost of delivering anti-poverty programmes would be reduced dramatically if not removed entirely. The indirect economic benefits include the removal of market distorting income programmes like the minimum wage, an income platform from which citizens that want to improve their lives may do so, and a twinning of social justice with the obligations of citizenship.

The standard objection to this type of programme is that it provides a disincentive to work. There is truth in this. There will always be a subset of people that do not want to work and are prepared to live their lives at the poverty line. Yet we know that these citizens can among other things be a social nuisance, tend to spend more time in jail, and develop chronic health problems that ultimately are very expensive to the taxpayer without providing the means or motivation to improving their lives. The conversation and moral imperative with a squeegee kid is different when they have an annual income from the state.

It has never made much sense to me to refuse citizens the means of the most primitive life on the premise that they should take of themselves but then extend access to the most expensive health treatments for problems bred by poverty that were preventable in the first place.

It may also be true that the Canadian Citizenship Wage may encourage people that are working today to leave the workforce and live at the poverty line. There will always be a subset of citizens like this mostly ill of mind, lazy or incompetent. Not to mention struggling writers and artists. But by focusing on this subset of people the unintended consequence is to make it difficult for people who do want to improve their lives to do so. Poverty is not always a choice.

There are four classes of people that live in poverty: first, people that can not work for physical often mental reasons; second, people that want to work do work but are still poor; third, people that want to work but are unemployed; and fourth, people that can work but do not want to. Currently, our social income policies are so complicated that they deal ineffectively with all four classes and ultimately compound the costs to our society in terms of economic and social health in part because we are so caught up in the moral hazard of letting those that do not want to work off the hook but make it difficult for the other three classes to hope for a better life.

There is a mean-spiritedness to our social income policies that actually makes those policies less efficient, more costly, and as the persistence of poverty and its consequences demonstrate, ineffective.

A more sophisticated objection to this type of programme is that it will not encourage people to move beyond the income level set by a Citizenship Wage. For example, in the case where the income threshold is passed and the tax system is designed where there is a dollar for dollar exchange this is true. For example, if the poverty income threshold was set at $20,000 and if a person earned a dollar more ($21,001) resulting in a dollar of the Citizenship Wage being clawed back. This problem of course is easily corrected by making, for example, the next $10,000 or so non-taxable allowing a person to add to their Citizenship Wage without any income impact and presumably without a disincentive to earn more money and live a life with more not less means.

An indefensible objection is that it would break up families because adults would have the economic means to live separately. The objection is indefensible not because this would not happen, there are studies that show this is a result of guaranteed incomes, but indefensible because it is evil when poverty is the only thing keeping a marriage intact. There are also studies that show that in families with children that guaranteed incomes result in the male working more and the female working less confirming that such an income increases choice.

In the end the most powerful incentive for the poor to get out of poverty is to participate in all that modern Canada has to offer. A Canadian Citizenship Wage would be a simple step to make that a reality.

And the obligations? There are many. At the judge's bench economic victimhood would cease being a defence for crime and the claim of the society on the citizen for civil and socially responsible lives are two.

But the real benefit is to give people who want to improve their lives the opportunity to do so without the stigma of being on welfare.

The starting point of an excellent Canada is that all citizens are treated equally, under the law, and with the means to live a basic life, with hope and dignity.


Many people who have struggled with the complexities of income tax and state social services must have wondered whether there might be a simpler way: net off the benefits against the tax bill and have a single financial transaction. Properly designed, this reform could combine redistribution with greater freedom for both rich and poor to spend their resources in their own way.

Among the political cognoscenti the role of tax credits is often cited as Gordon Brown's biggest mistake as chancellor of the exchequer. On the contrary I believe that they are among his achievements.

When the cream of the French left gathered last week to listen to Ségolène Royal’s 100-point manifesto, the works of Milton Friedman were probably far from their minds. Social justice and greater equality, they may argue, are anathema to the market-based beliefs held by Friedman’s followers. Yet if these people really wanted to help those languishing at the bottom of society, they would advocate not the Socialist presidential candidate’s huge, 20 per cent increase in the minimum wage but more government-funded wage subsidies. This is a truly Friedmanite idea.

Milton Friedman, who died last week at 94, was the patron saint of small-government conservatism. Conservatives who invoke his name in defense of Social Security privatization and other cutbacks in the social safety net might thus be surprised to learn that he was also the architect of the most successful social welfare program of all time.

America's population is wealthier than any in history. Every year, the American government redistributes more than a trillion dollars of that wealth to provide for retirement, health care, and the alleviation of poverty. We still have millions of people without comfortable retirements, without adequate health care, and living in poverty. Only a government can spend so much money so ineffectually. The solution is to give the money to the people.

The idea of a negative income tax (NIT) is commonly thought to have originated with economist Milton Friedman, who advocated it in his 1962 book, Capitalism and Freedom. Others, notably the late Joseph Pechman, long-time tax dean of the Brookings Institution, credited the University of Wisconsin's Robert Lampman with at least simultaneous discovery and with bringing the concept to the attention of government policy planners in 1965.
How many Canadians are really living in poverty today? How much money would it take to lift them over the poverty line? Regrettably, no one can say for certain because Canada lacks an official measure of poverty.
Models of the labor supply of an individual family member's response to a Negative Income Tax (NIT) have often ignored family labor-supply interactions. This paper presents results indicating that, accounting for cross-substitution effects, an NIT has different impacts on the labor supply of family members. The female tends to reduce her labor supply at all levels of tax rate and guaranteed income, while the male increases his labor supply at certain program parameter levels. This seems to suggest that the work disincentive effect and the aggregate cost of an NIT may be less than has previously been thought for males. The empirical results also show that an NIT has different effects on the labor supply of family members working in different segments of the labor market, and that the measured effects are sensitive to choice of functional form.
Any company, domestic or international, that invested $150-billion annually in a specific project and saw no change in the quality of results would initiate a serious review or serious staff changes at the top. And if it did not, investors, both individual and institutional and shareholders generally would justifiably complain. That is where the federal and provincial governments now find themselves on the challenge of poverty.
Hugh Segal: Guaranteed Annual Income, The Proposal and Guaranteed Annual Income (Debate)
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