Negative income tax rates? Fight poverty?

[16hypen3sp]

Interesting times await AB with Joe Ceci as finance minister.


With its economy tethered to oil prices, Alberta is known for unconventional, even experimental economic policy.

When he was Alberta’s finance minister, Stockwell Day implemented Canada’s only flat tax. Ralph Bucks, also called “prosperity bonuses,” redistributed a massive temporary surplus through payouts to citizens, while also respecting the province’s value of freedom from government bureaucracy.

Now, with oil prices in the tank and the NDP holding a new majority, a new experiment may be in the works.

A guaranteed minimum income, known as a mincome, has long been a pipe dream of economists across the political spectrum, but especially left-wing anti-poverty activists, people like Joe Ceci, a former Calgary alderman who was a star NDP candidate — and is Alberta’s new finance minister.

The idea of traditionally conservative Alberta as a testing ground for a left wing social policy might seem strange, but it has increasing support.

“The frustrating thing is that we know what the answers are,” Calgary Mayor Naheed Nenshi told the National Poverty Reduction Summit last month, referring to the idea of negative taxation, which is one way to create a guaranteed minimum income. More recently, he told reporters he hopes Ceci will be bold.

“I am really, really interested if he will bring that to bear in terms of some really significant changes to the taxation system that would really help us manage poverty in a brand new way,” Nenshi said.

Edmonton’s mayor, Don Iveson, has likewise indicated that Alberta’s two major urban hubs would be willing to host pilot programs to evaluate the consequences of guaranteeing income to adults, whether the social benefits outweigh the possibility of exploitation.

Canada has been a leader in this kind of experimenting, but it has been four decades since the last large scale effort, when everyone in Dauphin, Manitoba, was guaranteed a minimum income as a test case. The program ended without an official final analysis, but Evelyn Forget, an economist at the University of Manitoba, did her own analysis and found minor decreases in work effort but larger benefits on various social indicators, from hospitalizations to educational attainment.

“These results would seem to suggest that a Guaranteed Annual Income, implemented broadly in society, may improve health and social outcomes at the community level,” she wrote.

Mincome is an idea that has had many champions over the ages, but few pioneers.

American Founding Father Thomas Paine, in an idea later echoed by Napoleon Bonaparte, argued that, because everyone is entitled to share in general prosperity, states should pay citizens a bonus, perhaps on their 21st birthday, which would minimize the “invidious distinctions” between rich and poor.

Milton Friedman, the American icon of free market economics, liked the idea of simplifying welfare with a guaranteed minimum income and a flat tax, and argued for it in his book Capitalism and Freedom.

In the U.S., parallel experiments to the Dauphin one, aimed at measuring labour market reactions, were overseen in the 1970s, curiously, by Donald Rumsfeld, who headed Richard Nixon’s poverty program, with his aide, Dick Cheney. But nothing was ever put into wide practice.

In Canada, ill-fated Progressive Conservative leader Robert Stanfield was a booster, as is former Tory Senator Hugh Segal, and parliamentary committees have recommended it various times, from 1971 to 2009.

A mincome is most associated with the modern left, though, as a way to eliminate the welfare trap. François Blais, for example, the Quebec MNA and former employment minister, wrote a book on it called Ending Poverty: A Basic Income for All Canadians.

In a 2011 report for the Conference Board of Canada, Glen Hodgson called it a big idea whose time has yet to arrive, and advocated it as an alternative to the mishmash of social programs, for “solid economic, fiscal and social reasons.”

Federal Liberals have resolved to study it in a federal pilot project, and P.E.I.’s new premier has offered to host one.

But it is Alberta that has the momentum, and increasingly, the political will to bring a mincome to reality.

It is unlikely to be an easy task, though. There are dangers and criticisms for the idea, often articulated from the political right.

As The Economist magazine described it last month, in discussing a similar Swiss proposal, a “generous basic income funded by very high taxes would be self-defeating, as it would reintroduce the sort of distortions that many of its advocates hope to banish from the welfare system.

‘‘Loafers could live comfortably without lifting a finger.”


http://news.nationalpost.com/news/canada/canadian-politics/old-anti-poverty-idea-guaranteed-minimum-income-getting-new-life-in-alberta

[jacky4566]

I am a big supporter for Basic Income. Many places are starting to look at options like this and there are many examples of it working.

A negative tax bracket means we can get rid of the administrative overhead for both the pension plan and unemployment system.

Since I have first post here is an FAQ full of information (biased) in support of this style.
http://www.reddit.com/r/basicincome/wiki/index

[rage2]

Leased BMW's for everyone! You think traffic is bad now, wait until everyone moves here haha.

[M.alex]

it's going to be an interesting few years to see how much of a sh!thole Alberta turns into. :rofl:

[hampstor]

Originally posted by rage2
Leased BMW's for everyone! You think traffic is bad now, wait until everyone moves here haha.

Incorporate, become a consultant, pay yourself just enough to get mincome as well as the fat consultant fees.

I might actually be able to afford a BMW!!

[kenny]

Looking forward to Sugarphreak's revised real estate forecast for 2016 and beyond :D

[Type_S1]

Isn't this what the retarded minimum wage increase is doing? Is this only going to be for those born in alberta or are we allowing bums from all over canada come here to prosper. If this goes through I promise all of you I will leave alberta and never come back. US or Middle East here I come for good. This will do nothing but push business and educated people out of the province and will end up with a bunch of retards left, kind of like the ones elected as MLAs recently.

[Sugarphreak]

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[ZenOps]

If its good enough for Napoleon, what could possibly go wrong?

[schocker]

Originally posted by rage2
Leased BMW's for everyone! You think traffic is bad now, wait until everyone moves here haha.
No traffic if noone is working :D

[16hypen3sp]

I don't really get how this would really work...

If they say that everyone in AB needs $30k as a living wage, then would we see an increase in the Basic Personal Amount (BPA) exemption?

In 2014, the BPA was $17,787. So if they say everyone needs $30k, then the BPA would have to rise to $30k... so really, less of my income would be taxed then.

So for myself, I'm not quitting my job and taking a massive paycut to live at the mincome and live off the government, but I'd love a larger BPA.


But if you make, $25k a year, the government would cut you a cheque for $5k to bring you up to the mincome, correct? Why wouldn't you just quit that job and have the government cut you a cheque for $30k per year?

All things considered, I'd hate to see people just sitting around doing nothing and getting paid by the government to do nothing.

[rage2]

Originally posted by 16hypen3sp
So for myself, I'm not quitting my job and taking a massive paycut to live at the mincome and live off the government, but I'd love a larger BPA.
Don't worry, at the taxes you'll be paying to support this, your take home will be pretty close to the mincome anyways, as the wealthy shuffle their income out of the province. :rofl:

[kenny]

Originally posted by 16hypen3sp

But if you make, $25k a year, the government would cut you a cheque for $5k to bring you up to the mincome, correct? Why wouldn't you just quit that job and have the government cut you a cheque for $30k per year?

All things considered, I'd hate to see people just sitting around doing nothing and getting paid by the government to do nothing.

You need to be employed to get topped up.

[Khyron]

It's welfare, or the minimum safety line. We already have one for medical issues - we don't balk at cost when some homeless guy keeps getting a ride in an ambulance. YOU pay for it. So it's not a stretch to have a basic minimum living standard for everyone that lives in a multi-billion dollar province. You may actually save money, especially when you consider the likely reduction in crime and policing.

I'm also in favor of minimum housing condos as well.

And don't work Sugarphreak it's not going to be 27K so your EI benchmark would be safe.

[16hypen3sp]

Originally posted by rage2

Don't worry, at the taxes you'll be paying to support this, your take home will be pretty close to the mincome anyways, as the wealthy shuffle their income out of the province. :rofl:

Figured so.

[sabad66]

Originally posted by Type_S1
If this goes through I promise all of you I will leave alberta and never come back. US or Middle East here I come for good. This will do nothing but push business and educated people out of the province and will end up with a bunch of retards left, kind of like the ones elected as MLAs recently.
bye Felicia

unless you have a US citizenship already, good luck immigrating there now... so have fun in the middle east. watch out for isis

[ZenOps]

Might as well just throw money out of a helicopter.

Arguably, that might be a far better way than *they* have been doing it so far.

As is now, when money is created - Usually the government gets to spend it first, oftentimes being spent to buy national bonds locally or sometimes overseas.

Things become more interesting when the suggestion is made that when money is printed, it should go to the people initially. IE: If when the US decides to announce QuantitativeEasing4 at say $1.6 Trillion dollars, why not give $5,000 to every man woman and child in the US instead of giving it initially to the banks?

I'm astonished that in a Democratic society like the US, that they haven't as a collective demanded that any extra money printed each year be divvied up fairly across all citizens. In Canada, since we aren't a democracy (constitutional monarchy) its a little more understandable that the citizens do not own the copper pennies or nickel nickels.

The US already has a system similar to this, the foodstamp system of giving each citizen $133 per month has done astounding things to the american level of consumption - That is the morbidly obese population has exploded. In Canada, we pay tax on foods FFS - I think we can shift a little bit left without going full welfare state like the US.


BTW: I don't know what you people are talking about, moving away from Canada to avoid welfare. The US is the ultimate welfare state, as any Hawaiian welfare recipient collecting benifits of $60,000 US or more per year can attest to.

http://www.forbes.com/sites/theapothecary/2013/09/02/on-labor-day-2013-welfare-pays-more-than-minimum-wage-work-in-35-states/

In pure dollar terms, the US has already instituted this exact idea in 35 states.

[HiTempguy1]

Originally posted by 16hypen3sp

But if you make, $25k a year, the government would cut you a cheque for $5k to bring you up to the mincome, correct? Why wouldn't you just quit that job and have the government cut you a cheque for $30k per year?

All things considered, I'd hate to see people just sitting around doing nothing and getting paid by the government to do nothing.

The assumption you are making is that everyone in this world fits into the "box" labelled "potential to earn more than minimum living wage".

For whatever reason, there are plenty of people who do not do so.

Now for the big BUT; what is a minimum living wage? By my calculations, you should need about $1500/month net to live comfortably. That gets you a shitty used car, insurance, food, a newer room rental (probably even with your own bathroom), and even some play money/savings. Most certainly enough to live.

So that is what, $18k per year net? So the BPA is actually dead accurate because that $18k isn't taxed.

In short, fuck this noise. Man alive, we may end up regretting voting the NDP in yet...

[16hypen3sp]

Originally posted by HiTempguy1


The assumption you are making is that everyone in this world fits into the "box" labelled "potential to earn more than minimum living wage".

For whatever reason, there are plenty of people who do not do so.

Now for the big BUT; what is a minimum living wage? By my calculations, you should need about $1500/month net to live comfortably. That gets you a shitty used car, insurance, food, a newer room rental (probably even with your own bathroom), and even some play money/savings. Most certainly enough to live.

So that is what, $18k per year net? So the BPA is actually dead accurate because that $18k isn't taxed.

In short, fuck this noise. Man alive, we may end up regretting voting the NDP in yet...

The first part of your comment... I have no problem helping people who can't work. Some people genuinely need social assistance.

Second part of your comment... I respectfully disagree. A living wage in AB is considered $15 an hour. This amount at 40 hours per week amounts to $600 a week. Bi weekly paycheques amount to $1200. There are 26 bi weekly paycheques in the year, so that equals a "living wage" of $31,200. Hence Notleys plan of $15 min wage.

And that is using the average living wage across AB. In the cities, it's higher obviously.

http://livingwagecanada.ca/index.php/living-wage-communities/alberta/

http://myunitedway.ca/a-living-wage

[kaput]

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[you&me]

It's different because the AB Gov't would be the 'employer', and the 'employee' wouldn't need to actually work to 'earn' it.

I find it surprising (not really) that there was absolutely no mention of costs to this program. Now I know it's not (entirely) the same, but Ralph Bucks was widely considered to be one of the dumbest economic moves this province has made in recent times. And it cost, what, $1.4B?

A 'living wage' for everyone that 'needs' it? Excuse the super-rough back-of-the-napkin calcs here, but let's see...

Say there are 4 million people in Alberta. Roughly 25% of the pop is under 18, so that leaves about 3 million people of 'work force' age.

Say only 10% of the population of that 'work force' age group is either unemployed or earning less than a living wage (and it'll be far higher since unemployment alone is ~5%); that's 300,000 people.

Say a living wage is deemed to be $30,000 per year. That's 300k people 'earning' $30k per year. That's $9,000,000,000 (BILLION!)

And as noted above, this would also likely de-incentivize a large part of the population that's already in this income bracket that would make the easy choice to sit on their ass and 'earn' the same income.

[rage2]

Originally posted by kaput
How is this different from minimum wage?
Minimum wage doesn't fix employees that can't get full time work.

[HiTempguy1]

Originally posted by 16hypen3sp


The first part of your comment... I have no problem helping people who can't work. Some people genuinely need social assistance.

Second part of your comment... I respectfully disagree. A living wage in AB is considered $15 an hour. This amount at 40 hours per week amounts to $600 a week. Bi weekly paycheques amount to $1200. There are 26 bi weekly paycheques in the year, so that equals a "living wage" of $31,200. Hence Notleys plan of $15 min wage.

And that is using the average living wage across AB. In the cities, it's higher obviously.

http://livingwagecanada.ca/index.php/living-wage-communities/alberta/

http://myunitedway.ca/a-living-wage

Well I disagree with $30k, and I have proven with my numbers it is not necessary. $2400 gross a month is waaaay more than necessary, and most of that isnt taxed.

If you earn minimum wage, you dont get your own place, even to rent. You get room. That is the number 1 expense of anyone, shelter.

[Sugarphreak]

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[jacky4566]

16hypen3sp there is 2 ways systems like this can work.

The discussed negative tax rate means income under the minimum Basic Personal Amount would receive a tax rate of -15% on those earning under BPA. This would require other changes to legislation like minimum wage.

Universal Basic Income is a more intense system where every adult in the province would receive BPA or some other set amount of tax free income. If you want to live comfortably then you would need a job where you would earn income to supplement your BPA. The logic is that A. Who wants to live on 14k a year? and B. We can remove administratively expensive systems like homeless shelters, and pension plan.

As Sugarphreak said, people making minimum wage are the exception not the majority. With a UBI system people will still have jobs but they might pay 6$ an hour less because they receive the government income.

[rage2]

Originally posted by jacky4566
We can remove administratively expensive systems like homeless shelters, and pension plan.
EI and CPP are federal, so unless this whole experiment is rolled out federally and not provincially, those programs are not going away.

[SmAcKpOo]

Correct me if I am wrong here, I may be off base.

Most people who are poor are poor for a reason. Bad decision making, spending habits, substance abuse, mental illness. The list goes on....

Won't giving more money to this demographic just perpetuate their situation? Without the means to improve yourself, this would just make them fall even further in to the shit whole no?

[birdman86]

Originally posted by SmAcKpOo
Correct me if I am wrong here, I may be off base.

Most people who are poor are poor for a reason. Bad decision making, spending habits, substance abuse, mental illness. The list goes on....

Won't giving more money to this demographic just perpetuate their situation? Without the means to improve yourself, this would just make them fall even further in to shit whole no?

These are my thoughts as well.

I'm completely against holding peoples hands when they're just lazy or unambitious, that should be on them. But the ones that have genuine mental/health/addiction issues need HELP, not money. Giving them a guaranteed sum of money is going to make things a LOT worse for those groups, not better. At least when they use drop in shelters or whatever they have to follow the rules.

[sabad66]

Not saying i necessarily agree with this, but i think there are some indirect economic benefits outside of just strictly helping poor people. These people will be spending every single penny of the money they get in the community, so i think this will have a positive impact on the economy. More spending/money moving around = good for everyone.

[kenny]

Originally posted by SmAcKpOo
Correct me if I am wrong here, I may be off base.

Most people who are poor are poor for a reason. Bad decision making, spending habits, substance abuse, mental illness. The list goes on....


Can't be further from the truth. People that are well off are often raised in environments that provide that opportunity to do well in life. They'd like to think it was because they worked hard or were smart to get where they are, but reality is their success was largely in part to the life they were born into.

A comic that highlights this:
http://thewireless.co.nz/articles/the-pencilsword-on-a-plate

[ZenOps]

$9 Billion CAD isn't *all* that much money.

In Nov 2008 the US printed an extra $600 Billion to buy mortgage backed securities (held by banks) to help ease the shock of the ridiculous numbers of mortgage defaults that would have occured had they not done anything.

Should those that got tricked into believing that their 30-year mortgage at 6% while making minimum wage was sustainable - Be the only ones that get bailed out? It seems a little unfair, but not entirely unjust. Just like how if the US decides with QE4 (Possibly up to $1 Trillion) to wipe out some student debts by simply nullifying them.

Last year Japan printed about $720 Billion US equivalent, because of weakness in the overall market, and the now perpetual Fukushima disaster.

[suntan]

I'm okay with this. It's way better than the current crazy system of min wage and a massive array of subsidies.

It also keeps unemployable people out of the workforce. This is good.

Friedman's proposal would be awesome but I can't see someone like Ceci ever implement it in that fashion.

[FraserB]

Originally posted by sabad66
Not saying i necessarily agree with this, but i think there are some indirect economic benefits outside of just strictly helping poor people. These people will be spending every single penny of the money they get in the community, so i think this will have a positive impact on the economy. More spending/money moving around = good for everyone.

That extra money they are spending in the community first comes out of your pocket. Where do you think the billions of dollars that this requires will come form?

Not to mention all the people from other provinces coming to Alberta if this goes into effect.

The only way to come close to managing it is to apply it to people who have been in province for a minimum amount of time and to mandate a minimum number of hours worked per week. However, if you do that, you'll be accused of bias and discriminating against the poor.

[Khyron]

Originally posted by FraserB


Not to mention all the people from other provinces coming to Alberta if this goes into effect.


It can't be a large sum of money. It has to be the MINIMUM - like enough that you don't starve to death and can put a roof over your head. Similar to AISH levels. Not enough to make people move here over it. They will probably tack on a "resident for x years" anyway.

[Sugarphreak]

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[ercchry]

perfect... liquidate... pay off mortgage, quit job, get a 3hr a week shift doing something for $15/hr (minimum future wage) and have more than enough to live it up! retirement here i come, thanks NDP!

[rage2]

Originally posted by ercchry
perfect... liquidate... pay off mortgage, quit job, get a 3hr a week shift doing something for $15/hr (minimum future wage) and have more than enough to live it up! retirement here i come, thanks NDP!
haha, we'll just get the equivalent of France's ISF, a yearly tax on assets.

[vengie]

Its awesome how we have become a society that punishes an individual for wanting to work hard, become successful, etc.. and instead reward complete and utter mediocrity.

Its a result of the entitled mindset of people. If this goes through, I will lose all hope for Alberta for the next 4 years.

Also, those of you saying this will solve a ton of homelessness are naive at best... Alcoholism and drug addiction are rampant among the homeless population, hand them $30k and you may as well hand them a hand grenade with the pin pulled. It will do nothing but create further issues/ entitlement.

[bjstare]

Good job NDP :clap:

Glad I work for a global company. If things are as bad as I think they're going to be, I'm gonna try and transfer to the US or Australia. I already miss the AB that I grew up in :(

[sabad66]

Originally posted by vengie

Also, those of you saying this will solve a ton of homelessness are naive at best... Alcoholism and drug addiction are rampant among the homeless population, hand them $30k and you may as well hand them a hand grenade with the pin pulled. It will do nothing but create further issues/ entitlement.
if this goes through, invest in liquor stores and drug dealers?

[ZenOps]

It would definitely keep those who shouldn't really be employed out of the workforce.

I mean: There are an awful lot of parents who hire their kids just so they have a reason to give them a wage. Cutting a lawn seven times a week and getting 7x the wage, is in no way more productive than cutting a lawn once a week.

And there are definitely a lot of "filler" jobs out there. Paper shuffling, number shuffling, digital keystroke shuffling.

Use water and natural gas to produce oil, ship oil to US to power factory that produces water from the ocean. Dig hole by day, fill pothole at night, Haha!

[Mibz]

Originally posted by sabad66
if this goes through, invest in liquor stores and drug dealers? "Yes, I'm having trouble finding a stock symbol"
"Which company were you looking for?"
"Tyrone, over on 3rd, behind the 7/11"
"Just a moment.... TSX:SWAG"
"Thank you"

[BerserkerCatSplat]

Originally posted by Mibz
"Yes, I'm having trouble finding a stock symbol"
"Which company were you looking for?"
"Tyrone, over on 3rd, behind the 7/11"
"Just a moment.... TSX:SWAG"
"Thank you"

:rofl: Sheeeeeiiiiiiit.

[Sugarphreak]

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[01RedDX]

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[bjstare]

Originally posted by Mibz
"Yes, I'm having trouble finding a stock symbol"
"Which company were you looking for?"
"Tyrone, over on 3rd, behind the 7/11"
"Just a moment.... TSX:SWAG"
"Thank you"

:rofl: :rofl:

[max_boost]

You can do that? Minimum income?! :eek:

[M.alex]

How do they plan to fund this and all of their other ideas? They already mis-calculated on raising taxes this year, so what are they going to do, run a $20B/yr deficit in order to roll out all of their programs?

[FraserB]

Originally posted by M.alex
How do they plan to fund this and all of their other ideas? They already mis-calculated on raising taxes this year, so what are they going to do, run a $20B/yr deficit in order to roll out all of their programs?

Tax those of us who make too much right now. In today's society, success and prosperity are dirty things that you should be ashamed of.

[ZenOps]

Print more money?

[Cos]

.

[Sugarphreak]

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[Cos]

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[rage2]

Originally posted by Cos
Yeah a high social safety net and high social taxes are really known to drive educated people and high tech industry out of a country..........
It happened in France with their 75% tax. Their ability to bring people in stagnated, the rich shuffled their money out, revenues dropped, and they ended up dropping the tax this year because it hurt their bottom line in taxation.

[Cos]

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[Sugarphreak]

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[rage2]

Originally posted by Cos
That's a good point, wasn't really the example I was thinking of with the huge increase. I more meant a jurisdiction that has higher taxes and better social reforms (read most of Europe) compare to somewhere like Mexico it seems to me that highly educated and high tech industries go to the locations that support it. Manufacturing go to places like Mexico and the US.
Is Quebec a better example? If it wasn't for equalization payments, their model would fall apart. Quebec isn't bustling with tech jobs there either. I would know, we had a Quebec office (tech sales) for a few years before we shut it down.

[suntan]

Originally posted by rage2

It happened in France with their 75% tax. Their ability to bring people in stagnated, the rich shuffled their money out, revenues dropped, and they ended up dropping the tax this year because it hurt their bottom line in taxation. Funny, because some economists consider 70% the highest taxation rate you can charge before the Laffer Curve starts sloping downwards.

[ImTherious]

From Milton Friedman:

There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money.

Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.

Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!

Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income.

No. 4 is what Notley and her gang are doing so that No.3 becomes reality.

[Adrenaline101]

Forgive my ignorance but I have a question on the minimum living wage. Do they consider that the income required to live by yourself and support your life or is that an estimated sum of how much it takes for you to find a room, food and whatever way you get to work etc?

[Sugarphreak]

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[codetrap]

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[ZenOps]

Originally posted by Sugarphreak


In the NDP's eyes, Minimum wage is the amount required for somebody with no skills and no motivation to ever do more than the minimum, to be able to; purchase their own home, lease a new car, raise 2.5 kids, and support stay at home spouse.

That is the american dream. They came pretty damn close in the 60's, but they might have done it on the backs of future generations.