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. http://www.ft.com/cms/s/0/bcb49c94-d0d3-11da-b160-0000779e2340.html
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. http://www.ft.com/cms/s/0/7b1bb5be-2b5a-11dc-85f9-000b5df10621.html
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. http://www.ft.com/cms/s/0/69762636-c02b-11db-995a-000b5df10621.html
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. http://www.nytimes.com/2006/11/23/business/23scene.html?_r=2&scp=1&sq=negative%20income%20tax&st=cse
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. http://www.aei.org/book/846
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Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.
Public policy should be designed to decrease inequality before the law and increase equality of opportunity.
Capitalism is not the problem; the problem is what we do with capitalism.
Content is always more difficult to argue than conspiracy.
Let the state regulate and the market operate (most things).
Welfare strategies are best designed as a hand up, not as a hand out.
Political debate should not be fact free fighting.
Explanation lasts longer than eloquence.
Always favour empowerment over dependency.
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Find your voice and don't be the echo of somebody else.