ubekymret ubekymret - mangler interesse eller omsorg eller føler den gjennomsnittlige amerikanske. er ubekymret at hans eller hennes situasjon er et resultat av et kompleks av personlige og økonomiske og statlige tiltak. utover de vanlige innbyggernes forståelse og kontroll uten å være bekymret for vennene sine, uansett oppmerksomhet eller oppmerksomhet eller fortanke eller grundighet, ikke forsiktig uforsiktig om klærne glemte av en skødesløs person, en skødesløs husholderske, uforsiktig korrekturlesing, det var en uforsiktig feil skadet av en uforsiktig bemerkelsesverdig ubemannet - ikke opptatt av problemer eller forstyrrelser eller ubehag, syntes ubemerket av tvil om noe slags ubemannet søvn, en slags ubemerket ansikt - bekymring eller bekymring bekymret foreldrene til ungdommelige lovbrytere var bekymret for fremtiden vi føler oss bekymret for å utføre oppgaven for hånden stor bekymret for ikke å skuffe et lite barn ubekymret - lett i tankene ikke bekymret faren virker helt ubekymret med utfallet av undersøkelsen ubemannet - ikke opptatt av problemer eller forstyrrelser eller nød syntes ubemerket av tvil om noe slags ubemannet søvn en slags unbelubled ansikt ubekymret - ikke okkupert eller engasjert med lesere som ikke er involvert i stil uten å være involvert. Han forblir objektiv ubekymret (ukorrigert) x2192 unbekmmert (likegyldig) x2192 gleichgltig å være ubekymret om noe x2192 sich nicht um etw kmmern hvordan kunne han være så bekymret for hennes sikkerhetsproblem x2192 hvem kan jeg ikke si om det? Jeg er ikke bekymret for sikkerheten din x2192 ich habe mir Sorg for Sineer Sicherheit-agenten å være ubekymret av noe, å være ubekymret på noe x2192 von etw unberhrt sein unconcerned x2ccx28cnkx259nx2c8sx25cx2d0nd adj (uberørt) x2192 tranquilloa å være ubekymret om x2192 non darsi pensiero di, ikke preoccuparsi di eller per mangel på interesse eller angst. Han mottok nyheten om hans fiasko med tilsynelatende unconcern. kalmte desconcertante nezjem die Gleichgltigkeit ligegladhed. indiferencia kskiksus, muretus vlinpitmttmyys indiffrence, bezbrinost kzny ketidakpedulian afskiptaleysi, hugaleysi indifferenza abejingumas vienaldzba tdk mengambil berat onbezorgdheid likesle. ubekymrethet beztroska desinteresse indiferen nezujem brezbrinost ravnodunost likgiltighet, ointresse ilgisizlik. kaygszlk s v tnh onverskillig indiferente lhostejn gleichgltig ligeglad indiferente kskikne vlinpitmtn indiffrent, bezbrian gondtalan, kznys tidak peduli hugalaus indifferente abejingas vienaldzgs terabai onbezorgd uengasjert. ubekymret beztroski desinteressado indiferent ahostajn brezbrien ravnoduan likgiltig, ointresserad, obekymrad ilgisiz, kaytsz v TNH likegyldig (-nid-) adverb onverskillig, kalm indiferentemente lhostejn gleichgltig ligeglad con indiferencia kskikselt vlinpitmttmsti dun luft indiffrent bezbrino kzmbsen secara tidak peduli af hugaleysi con indifferenza abejingai vienaldzgi terabai onbezorgd likeslt. ubekymret besatt av uinteressant (ukjent) ukjent, uhyggelig, ubehagelig, ubehagelig, ubehagelig, kaytszca v tnh Link til denne siden: Den satt på baksiden av en ekspressvogn, og de var på sitteplassen så ubekymrede som noe. Under alle disse bevegelsene, og midt i det generelle opprøret, hadde Magua ikke bare opprettholdt sitt sete, men selve holdningen han opprinnelig hadde tatt, mot siden av hytta, hvor han fortsatte som fast og tilsynelatende som ubekymret . som om han ikke hadde interesse for resultatet. Hver eneste stund, da mannen snakket, eller flyttet, eller smilte, ville han begynne og fikse øynene på ham, og plutselig trekke dem tilbake, da de lyse, mørke øynene møtte ham med så uberørt kjølighet. Emma gjorde ikke noe svar, og prøvde å se muntert ubekymret. men var virkelig ubehagelig og ville ha ham veldig mye å være borte. Han, hennes far, en velmenende, men ikke en rasksynt mann, kunne egentlig, tror jeg, ikke gi noen informasjon for at han generelt hadde vært begrenset til huset, mens jentene var på tvers av byen og gjort det bekjente de valgte, og han prøvde å overbevise meg, så grundig som han var overbevist om, at hans døtre var helt ubekymrede i virksomheten. sa matronen og la bort boken hennes med en uopptatt avgang av en erfaren person som forutser en storm i en tekanne. Da jeg forsøkte å fange noen av disse fuglene, ville de dristig vende seg mot meg og forsøke å peke på fingrene mine, som jeg ikke våger å våge innen rekkevidde, og da ville de hoppe tilbake uten bekymring. å jakte på ormer eller snegler, som de gjorde før. Jeg antok de fleste ubekymrede holdninger og ventet med utålmodighet for at de skulle snakke først. Utropene, de fornærmelsene adressert til Benedetto, som forblir helt ubekymrede. de energiske bevegelsene, bevegelsen av gendarmene, snørren av skummet i mengden, er alltid sikker på å stige til overflaten i tilfelle eventuelle forstyrrelser - alt dette varte i fem minutter før dørholdere og magistrater kunne gjenopprette stillheten . Bennet, ser så ubekymret som mulig, og bryr seg ikke mer for oss enn om vi var i York, forutsatt at hun kan ha sin egen måte. Jeg er redd nå, mor, du tenker på Betts Shoreham, sa Julia, rødme, selv om hun kjempet kraftig for å virke ubekymret. Det er et bevegelig syn dette, av så mange jordens menn, jordiske, som aldri brydde seg om noe for et skip, trampet ubekymret. brutal og hob-nailed på hennes hjelpeløse body. Improving Social Security i Canada Garantert Årlig Inntekt: En Supplerende Paper Government of Canada 1994 MERK: Dette dokumentet ble hentet fra nettstedet Human Resources Development Canada SOCIAL SECURITY REFORM (SSR) og kopiert her for informasjon formål. SSR-siden er ikke lenger aktiv. Sosial sikkerhet Reform Diskusjon Paper utgitt I Quebec City 18. september 1994 skisserte statsministeren fire hovedkomponenter av regjeringens arbeids - og vekstagenda: - reformering av sosial sikkerhet - sikring av et sunt finanspolitisk klima - gjennomgang av regjeringens programmer og prioriteringer og - styrking av forestillingen av den kanadiske økonomien i investeringer, innovasjon og handel. Diskusjonspapiret, Forbedring av sosial sikkerhet i Canada. utgitt til offentligheten den 5. oktober 1994, gir kanadiere et rammeverk for å delta i reformen av vårt trygdeordning. Papiret tar en nærmere titt på hvorfor sosialsystemet ikke virker for mange kanadiere og for landet som helhet. Det setter en retning for forandring og tilbyr en rekke alternativer for omforming av føderale programmer innen arbeid, læring og sikkerhet. Disse programmene omfatter arbeidsledighetsforsikring, ansettelsesutviklingstjenester, barnepass og føderal støtte til etter videregående opplæring og sosialhjelp. Supplerende papirer gir analytiske detaljer Dette papiret er en del av en serie tilleggspapirer som blir utgitt for å gi kanadiere mer detaljert informasjon om det nåværende systemet og alternativene som er skissert i diskusjonspapiret. Dette materialet er ment å gi en dypere forståelse av problemene og å oppmuntre til mer informert deltakelse i debatten. Alle bidrag til diskusjonen er velkommen og oppmuntret. Det er bare med deltakelse fra alle kanadiere at vi kan designe et effektivt, rettferdig, fleksibelt og rimelig system, som vil reagere på kanadierees behov i dag og i fremtiden. Innholdsfortegnelse Den første GAI - Speenhamland Den canadiske konteksten - Sosialt minimum uten en GAI Revivalen av garanterte inntektskonsept på 1960-tallet De tidlige syttitallene - Manglende implementering av en GAI sen-sekstitall og tidlig åttiår - Skiftet til inkrementalisme Midt-åttitallet til Den nåværende - GAI Revived Konklusjon Relative Tiltak Adequacy Lav Inntektsmåling CCSD Fattigdomstrømmer Absolutte Tiltak Adequacy USA Fattigdomslinjer Sarlo Fattigdomslinjene Sammenligning Tiltaksstabilitet 1: Hva er en garantert årlig inntekt (GAI) En garantert årlig inntekt (GAI) er et flerårig midtpunkt i enhver diskusjon om reform av sosial sikkerhet. Moderne versjoner av ideen stammer fra over 30 år siden og beordrer fortsatt mye interesse og oppmerksomhet i dag. Det har vært et dominerende tema i sosialpolitiske debatter i Canada siden da. Ulike mennesker betyr forskjellige ting når de snakker om en GAI. Felles for alle begreper er en gulvinntekt som tilbys på en kontinuerlig basis, noe som kan variere avhengig av huskonfigurasjon, alder og andre inntektskilder. Utover dette avhenger en GAI av de formålene den er ment å tjene. For noen er formålet med en GAI å øke insentivet til å jobbe samtidig som kostnadene og kompleksiteten i dagens system reduseres. For andre er målet å etablere en ikke stigmatiserende rett til et tilstrekkelig inntektsnivå, uavhengig av arbeidsprosessen, for alle samfunnsmedlemmer. Som det skal påvises, kan slike forskjellige og motstridende mål ikke oppfylles av samme inntektsgarantiordning. I det føderale diskusjonspapiret, Forbedring av sosial sikkerhet i Canada, ble det gjort at konvertering av Canadas inntektssikkerhetsprogrammer til en enkelt GAI ikke er en praktisk ide. Dette papiret gir en analyse for å forstå vanskelighetene som står overfor implementeringen av en GAI. Moderne forslag til GAI har vanligvis tatt to grunnleggende former som gjenspeiler disse svært forskjellige formål og et uendelig antall variasjoner. Skjemaet favoriseres vanligvis av folk som legger stor vekt på forenkling og arbeidstiltak er negativ inntektsskatt (NIT). Dette er en betaling av regjeringer til personer eller husholdninger under visse inntektsnivå i motsetning til positive inntektsskatter som betales til regjeringer av personer med inntekt over et visst nivå. NIT ble opprinnelig oppfattet av den amerikanske økonomen George Stigler, i 1946 (George Stigler, The Economics of Minimum Wage Legislation, American Economic Review (1946) s. 358-365.), Som en annen måte å nå målene med minimumslønnslovgivning , og raffinert av en annen amerikansk økonom, Milton Friedman, i 1962 (Milton Friedman, Kapitalisme og Frihet (Chicago: University of Chicago Press, 1962).), i et fullskala alternativ til alle sosialhjelps - og inntektsstøtteprogrammer. Den andre formen av GAI er den universelle demogranten (UD). Dette er en betaling til alle personer uansett inntekt. Det er vanligvis begunstiget av de som ser GAI som en rett til statsborgerskap, og som har til hensikt å eliminere fattigdom og føre til mer likeverdig deling av samfunnets økonomiske fordeler. Denne tilnærmingen til en GAI fikk sin klassiske beskrivelse av en annen amerikansk økonom, Robert Theobald, i sin 1965-bok, Free Men and Free Markets. (Robert Theobald, Free Men and Free Markets (New York: Anchor Books, 1965).) Negativ inntektsskatt (NIT) En NIT består av tre elementer: garantien, reduksjonsraten og break even income level. NIT-elementer for en familie med fire reduksjonsfrekvenser: 27 prosent Gjør jevn inntektsnivå: 55 555 Garantien er det høyeste ytelsesnivået for hver familie. Det varierer etter familie størrelse og konfigurasjon. I dette eksemplet er ytelsesnivået for en familie på fire uten inntektskilde annet enn NIT, lik garantien på 15.000. (Dette er kun for illustrasjonsformål. En beskrivelse av begrunnelsen bak parametrene er gitt i avsnitt 2 og 3 der alternativene er utviklet mer fullstendig.) Reduksjonsraten kommer til spill når en familie har andre inntektskilder enn NIT. Reduksjonsraten på 27 prosent betyr at for hver dollar av inntekt annet enn NIT, reduseres NIT-ytelsen med 27 cent. For eksempel, hvis en familie på fire tjener inntekt på 5000, blir ytelsesnivået redusert med 0,27 ganger 5000 eller 1350. Den totale fordelen vil derfor være 13.650 (dvs. 15.000 minus 1.350). Som følge av den ekstra arbeidsinntekten på 5.000 øker familiens totale inntekt med 3 650 (det vil si fra 15 000 til 18 650). 18.650 består av 13.650 NIT og 5000 av inntekter. Pauseinntektsnivået er maksimalt inntektsnivå hvor NIT-fordeler kan mottas. Det varierer også med familie størrelse og konfigurasjon. Med andre ord, for familier med ikke-NIT inntektskilder som er større enn break even income level, er NIT-ytelsen null. I denne illustrasjonen er pauseinntektsnivået 55 555. (I NIT-design der reduksjonen blir brukt på alle inntekter fra andre kilder enn garantien, vil pausejegningen alltid være lik garantien dividert med reduksjonsraten (dvs. 55 555 15 000 divisjoner med 0,27). Dersom et terskelnivå for annen inntekt er unntatt fra reduksjonsraten, gjelder denne formelen ikke.) Under dette systemet er det mulig å identifisere tre grupper: de som mottar full fordel, de som mottar delvise fordeler og de som ikke mottar fordeler. Familier uten inntektskilder, annet enn NIT, får full nytte av 15 000 (det vil si garantien). På den annen side mottar familier med ikke-NIT-inntekt over 55 555 ingen fordel. I mellom disse ytterpunktene mottar familier med ikke-NIT-inntekt mellom 1 og 55554 en ytelse som tilsvarer garantien redusert med 27 cent for hver dollar ikke-NIT-inntekt. (Formelen er: fordelene er lik garanti minus (ikke-NIT-inntekt multiplisert med reduksjonsraten).) Under NIT-systemet er det alltid et incitament for mottakere å tjene mer inntekt eller skaffe det fra andre kilder enn NIT-ytelsen. Men med mindre garantien er satt til fattigdomsgrensen, kan NIT ikke eliminere fattigdom alene. Vanligvis vil NIT-garantien være lavere enn fattigdomsgrensen ved design for å opprettholde et incitament til å oppnå annen inntekt. NIT kan imidlertid redusere fattigdomsgraden og fattigdomsdybden dersom grunngarantien ligger over minimumsnivået for dagens siste utvei sosialhjelpsprogrammer. Avgjørende for NITs strategi for fattigdomsbekjempelse er troen på at forbedrede arbeidsinnsatser vil føre til høyere arbeidsinngang, med forbehold om ledige stillinger, og føre til lavere fattigdom og lavere offentlige utgifter. Et viktig element i strategien er å sikre integrasjon av NIT med personlig inntektsskattesystem. Dette er for å sikre at NIT-støttemottakerne ikke betaler skatt, slik at den kombinerte effekten av reduksjonsraten og inntektsskattesatsen ikke skaper arbeidsavvik. Men dette målet er ekstremt vanskelig å oppnå, siden NIT-ytelsen er basert på familieenheten, og personlig inntektsskatt og lønnsskatt er basert på den enkelte. Likevel, selv om perfekt integrasjon er et unnvikende mål, er det et viktig hensyn for NIT å holde summen av NIT-reduksjonen og personlig marginalrente, dvs. den effektive marginalskattesatsen, så lav som mulig. Den Universelle Demogrant (UD) Under en UD-tilnærming vil alle voksne borgere få en skattefri sjekk fra regjeringen tilstrekkelig for deres behov og deres familie. Inntekter fra alle andre kilder vil bli beskattet (prisene må settes på nivåer som er tilstrekkelig til å betale for UD). Total disponibel inntekt vil være lik UD-pluss etter skatt fra andre kilder. Skatter på andre inntekter kan enten bli oppført til en flat rate eller skalert til å stige som inntektene øker som under Canadas nåværende progressive skattesystem. For eksempel kan en UD gi en ikke skattepliktig nytte på 20.000 til en familie på fire og vil skattes inntekt fra andre kilder til en flat skattesats på 50 prosent. (UD-alternativet i avsnitt 3 har en progressiv skattestruktur med tre priser. Denne enkelsatsstrukturen er valgt her for å forenkle illustrasjonen.) Under et slikt forslag vil en familie med inntjening på 30 000 motta en disponibel inntekt som er lik garantien pluss Halve inntekt fra andre kilder eller 35.000 (dvs. 20.000 pluss 15.000). I motsetning til NIT-tilnærmingen, som bare gir husholdninger netto inntektsnivå, gir UD utbytte til husholdninger hele veien opp i inntektsskalaen. UD har ingen reduksjonsrate eller brutto inntektsnivå. En konsekvens er at UD utgifter er mye høyere enn NIT utgifter. En annen konsekvens er at skattenivået må økes for å betale for det høyere utgiftsnivået. I noen økonomers syn ser en GAI på fattigdomsgrenser, og med en 100 prosent skattesats på annen inntekt opp til disse terskelene, ville være den billigste måten å eliminere fattigdom på. (for eksempel J. E. Meade, strukturen og reformen av direkte beskatning (London: Institute of fiscal studies, George Allen og Urwin, 1978).) Det ville imidlertid fjerne ethvert økonomisk incitament til å ta en jobb som betaler mindre enn fattigdomsgrensen. Dessuten, jo høyere skattesatsen på annen inntekt, jo mindre er det incitamentet til å ta en jobb som betaler over, men nær terskelnivåene. Inntektene etter skatt vil ikke være vesentlig høyere, sammenlignet med garantien, til inntektene var betydelig over terskelnivåene. I sammendrag Det er to store filosofiske orienteringer rundt konseptet av GAI. En orientering fokuserer på GAI som en mekanisme for å legge til rette for tilpasning til økonomiske endringer. Det er opptatt av en forenklet og sammenhengende programstruktur, arbeidsincitamenter og utgiftskontroll. Den andre orienteringen fokuserer på motløshetsmål. Det er hovedsakelig opptatt av omfordeling av inntekt og opprettelse av rettigheter basert på statsborgerskap. Med to slike fundamentalt forskjellige begreper, avviker mange av målene mot hverandre. Ikke desto mindre betyr det ikke at modellene ikke kan kombineres. Faktisk er GAI-forslagene som er gjort i Canada, forskjellige i deres vekt på viktigheten av de ulike målene. Den historiske vurderingen (vedlegg A) illustrerer balansen som rammet over motstridende mål i ulike forslag og avsluttes ved å identifisere det store antallet ofte motstridende mål som er en del av GAI-debatten. Seksjon 2 gir sammenheng for å tenke på en GAI på 1990-tallet og setter scenen for GAI-designene utviklet i avsnitt 3. Disse tilnærmingene er ikke ment å være alternativer i ordets vanlige forstand, men heller generiske illustrasjoner av de to viktigste konsepter av GAI skissert ovenfor. Hensikten er å demonstrere tydelig styrken og svakheten til hver tilnærming. Seksjon 4 avsluttes ved å undersøke hvilken rolle GAI-tilnærminger kan spille i reformen av sosial sikkerhet. 2: Kontekst for en GAI på 1990-tallet En forandringsverden har forskjellige utfordringer I årene siden heyday av omfattende GAI-forslag i begynnelsen av 1970-tallet (se vedlegg A), har miljøet for å vurdere en GAI endret seg betydelig. Mellom 1943 og 1971 spredte regjeringens programmer og tjenester for å gi mye av den infrastrukturen Leonard Marsh projiserte som nødvendig for å oppnå 1943-visjonen om et sosialt minimum. Arbeidsledighet og helseforsikringsprogrammer ble satt på plass. Sosialhjelpsprogrammer ble gjort tilgjengelig for alle personer i nød, og barnets fordeler ble introdusert for å hjelpe foreldrene med kostnadene ved å heve sine barn. En garantert minimumsinntekt for seniorer ble skapt gjennom en kombinasjon av pensjoner (Old Age Security og CanadaQuebec pensjonsplaner) og inntektstestet assistanse (garantert inntektsavgift og fylkeskommunale tillegg til pensjonister). En annen endring har vært den avtagende betydningen av sysselsettingsinntekt som et middel til å støtte paradoksalt, samtidig økte den sysselsatte andelen av befolkningen. Fra 1945 til tidlig på 1970-tallet var arbeidsledigheten generelt lav, og realinntektene økte. De fleste lavinntektsfamilier ledet av personer under 65 år mottok mesteparten av inntekten fra inntekter. Fattigdom var mer utbredt enn i dag, men avhengigheten av overføringsutbetalingene fra staten var også lavere. Siden den tiden har høyere tilgjengelighet av arbeidsledighet, bredere tilgjengeligheten av og avtagende stigma knyttet til mottak, overføringer i staten og veksten av grupper som står overfor store vansker med å tjene tilstrekkelig inntekt fra betalt arbeid, som for eksempel enslige foreldre, endret det bilde. I en slik verden har bekymringer om å gi videre desinfiserende arbeid ved å introdusere en ikke stigmatiserende garantert inntekt, spesielt hvis den gir en mer tilstrekkelig inntekt enn dagens ytelser til sosiale fordeler, blitt stadig mer utbredt. Samtidig har regjeringens finanspolitiske tilstand blitt forverret. Fram til midten av 1970-tallet var det føderale budsjettet vanligvis balansert over konjunktursyklusen, og gjelden til BNP-forholdet ble jevnt fallende fra de meget høye nivåene som ble nådd under andre verdenskrig. Det var mulig, på grunn av høy og kortvarig avbrutt økonomisk vekst, å innføre kostbare nye programmer, balansere budsjettet og tro at ressursene til å introdusere og berike regjeringsprogrammer vil fortsette å øke. Det kan heller ikke lenger antas. Tiltak for tilstrekkelighet Begrepet tilstrekkelighet har også endret seg over tid. Det som anses å være tilstrekkelig i dag må oppfylle en mer sjenerøs standard enn det som tidligere hadde vært brukt. Dette skyldes at over lange perioder er begrepet adekvatitet relativt heller enn absolutt. (For eksempel ser vi tilbake på 1967 som et år med velstand og praktisk talt full sysselsetting (arbeidsledigheten var 3,8 prosent). Men i det året (med bruk av lavinntektsavbruddene i 1978 som et mål for fattigdom) barnets fattigdom rate var over 40 prosent - mer enn doblet i 1992 da arbeidsledigheten var 11,3 prosent og, som tabell 1 indikerer, var standard for tilstrekkelighet noe mer sjenerøs. Se: MC Wolfson og JM Evans, Statistikk Canadas Low Income Cutoffs: Metodologiske bekymringer og muligheter (Ottawa: desember 1989) s. 59.) Denne relativiteten gjenspeiles i Statistikk Canadas lavinntektsavbrudd (LICOs). LICO er ikke offisielle fattigdomslinjer, men brukes ofte som organisasjoner som Nasjonalt velferdsråd. LICO er basert på en periodisk revurdering av den totale andelen av inntekt som tilbys på mat, husly og klær av den gjennomsnittlige familien. Denne andelen har gått ned fra 50 prosent i 1959 til 34,7 prosent i 1992, og resultatet er en fattigdomslinje som har økt med 62 prosent i reelle termer de siste 30 årene. Lavinntektsreduksjonene er indeksert til årlig inflasjon. Tabell 1: Andel av gjennomsnittlig familieinntekter brukt på mat, skjold og klær LICO-nivået er for en familie på fire i 1993 dollar, bysentre på 500 000 pluss 1959 Proportion - 50 prosent LICO-nivå - 19 123 1969 Proportjon - 42 prosent LICO-nivå - 24 870 1978 Andel - 38,5 prosent LICO Nivå - 28 243 1986 Andel - 36,2 prosent LICO Nivå - 30 645 1992 Andel - 34,7 prosent LICO Nivå - 31 007 Kilde: Statistikk Canada, Inntektsfordelinger etter størrelse i Canada, (Cat 13-207 ulike utgaver) Andre tiltak av fattigdom, både relativ og absolutt, er også tilgjengelig for Canada. Noen av disse tiltakene er oppsummert i vedlegg B. Betraktninger for en GAI-design Universitet, målretning og responsivitet En GAI levert som UD ville gi hver enkelt og familie rett til en fordel uavhengig av inntekt. Fordelen kan variere etter alder, familie størrelse, familietype eller andre demografiske kriterier. Det ville være ikke skattepliktig. Nettokostnaden ved å introdusere en GAI (utover motregningen gitt av kostnaden av programmene som den ville erstatte) ville bli gjenvunnet gjennom personlig inntektsskattesystem. (Dette antas for analytisk enkelhet. Kostnadene kan også kompenseres ved å øke andre avgifter eller redusere andre utgifter.) Jo mer progressive systemet, desto mer målrettet nettoresultatet. I virkeligheten gir demogranten fordeler universelt, og forsøker deretter å målrette de trengende ved å tilpasse personlig inntektsskattesats. Fordelene er eliminering av stigma og forenkling av systemet (dersom annen inntektsstøtte og skattekreditter elimineres) når det gjelder administrasjon. Ulempene er imidlertid et mye høyere nivå av regeringsbeskatning, negativ arbeid, besparelser og investeringsstimulerende effekter, og det er uhensiktsmessig å sende ut mange kontroller til mellomstore og øvre inntektsfamilier som da betaler tilbake fordelene gjennom høyere skatt. Siden sosialhjelpssystemet ville bli eliminert eller betydelig redusert både under UD og NIT (videre diskusjon under), er det avgjørende at GAI-designen reagerer på endringer i inntekts - og familiestruktur. Demogranten er unikt plassert for å oppnå dette, siden den maksimale fordelen alltid leveres til hele befolkningen, og utformingen kan gjøres uavhengig av familien type (videre diskusjon nedenfor). Resultatet vil være betydelige administrative besparelser. Fordi en GAI levert gjennom en NIT-mekanisme, gir kun fordeler til de med inntekter under break-even-inntektsnivået, betaler det mindre enn en UD med like generøsitet og gjenoppretter mindre av skatteøkninger eller reduksjoner i utgifter. Dette betyr imidlertid at for å være lydhør overfor svingninger i disponible inntekter i løpet av året, må et negativt inntektsskattesystem kunne holde rede på inntektssvingninger på familiebasis, slik at fordelene leveres når det trengs, og overbetalinger og underbetalinger minimeres. (The Guaranteed Income Supplement til Old Age Pension tar opp problemet med respons ved å tillate personer muligheten til å søke om ytelser på grunnlag av deres forventede inntekt i inneværende år, heller enn deres faktiske inntekt i det foregående år som rapportert om deres inntektsskatt avkastning. Forventet inntekt av eldre er imidlertid generelt langt mer forutsigbar enn forventet inntekt for alderen i arbeidstidsalderen. Risikoen for overbetaling og underbetaling er derfor mye mindre.) Siden en familieinntektstest er brukt, vil den administrative strukturen må være lydhør for endringer i familiestruktur. For å gjøre dette måtte høye administrative kostnader påløpe. Alternativet er å betale ytelsen til en jevn månedlig rente basert på tidligere år netto familieinntekter som rapportert på selvangivelsen, en metode som nå brukes med Child Tax Benefit. Dette systemet er imidlertid kun mulig når høyt reagerte sosialhjelpsbetalinger fortsetter å fungere. Hvis sosialhjelp skal elimineres, må GAI være lydhør. Hvor mye av det nåværende systemet som kan erstattes. Reformert GAI-forslag som avanserte av ulike proponents på forskjellige tidspunkter i Canada, ville erstatte alle eller deler av følgende typer programmer. Sosialhjelpsbetalinger, for eksempel de eksisterende provinsielle territoriale og kommunale sosialhjelpssystemene, er for tiden gitt til personer og familier som er underlagt en behovstest av inntekt og eiendeler. De fleste kanadiske GAI-forslag har foreslått å trekke tilbake føderal finansiering for disse programmene under Canada Assistance Plan. Den 1971-spesielle senatkomiteen for fattigdom foreslo også en tilbakebetaling til provinser og territorier for de fulle kostnadene ved utbetaling av sosialhjelp til de som ikke er omfattet av GAI. (Se Vedlegg A.) Arbeidsledighetsforsikring gir fordeler til berettigede forsikrede. GAI-forslag, som de spesielle senatkomiteen for fattigdom, Macdonald Commission og Wolfson Guaranteed IncomeSimplified Tax, har inkludert endringer i arbeidsledighetsforsikring for å gjøre det mer av et forsikringsprogram ved å øke adgangskravene, redusere ytelsesnivåene og varighetene og fjerne Ikke-forsikringsfunksjoner som regionalt utvidede fordeler. (Se vedlegg A.) Demograntbetalinger gjøres til medlemmer av en befolkningsgruppe som foreldre til barn eller eldre (for eksempel familiegodtgjørelser før 1993 og alderssikkerhet). Negativ inntektsskatt fordeler er gitt til personer og familier som er underlagt en inntektstest som med Child Tax Benefit, The Guaranteed Income Supplement, Ektefeller Tillatelse fordeler og Goods and Services Skattekreditt. Inntektsskatt og fradrag er basert på demografiske egenskaper som personlige og giftede kreditter, tilsvarende gift gift, aldersgodtgjørelse og tidligere barnekreditt. Federal - Provincial Overvejelser Enhver GAI ville kreve grunnleggende endringer i føderale - provinsielle finanspolitiske ordninger. Grunnleggende føderale og provinsielle territoriale roller med hensyn til finansiering og programleveranse må gjennomgås grundig og nye avtaler forhandles. Å oppnå konsensus ville være svært vanskelig. I denne delen utvikles og analyseres to illustrerende GAI-alternativer: - Alternativ 1: En tilstrekkelig universell demogrant (UD) - Alternativ 2: En negativ inntektsskatt (NIT). Begge GAI-alternativene er rettet mot befolkningen i arbeidstidsalderen. De endrer ikke systemet med fordeler rettet mot personer 65 og over, siden dette systemet inngår i en egen politisk gjennomgang av seniorproblemer annonsert i 1994-budsjettet, og siden en GAI for eldre allerede eksisterer. Imidlertid kan refunderbare og ikke-refunderbare kreditter i det føderale personinntektsskattesystemet basert på demografiske egenskaper endres under GAI-tilnærmingene som presenteres her. Pensjonister vil bli påvirket av disse endringene i personskattesystemet. Men for illustrasjonsformål antas eldre å fortsette å være underlagt det eksisterende skattesystemet under begge scenarier, selv om en slik ordning ikke kunne implementeres i praksis. Føderal kostnadsdeling av inntektsstøtte fordeler fra provinsielle territoriale og kommunale sosialhjelpsprogrammer i Canada Assistance Plan vil opphøre under begge GAI design. I UD-alternativet vil GAI også erstatte provinsiell territoriell og kommunal sosialhjelp i de fleste tilfeller (kun kontanthjelp). I NIT-alternativet vil provinsiellterritorisk og kommunal sosialhjelp fortsette å fungere, men et mye mindre program vil være nødvendig. I begge tilfeller vil kostnadsdeling av sosiale tjenester under CAP fortsette. Siden begge alternativene eliminerer noen personlige kreditter, økes de provinsielle skatteinntektene. I UD-alternativet, hvor GAI erstatter sosialhjelp helt, legges de ekstra provinsielle territoriale inntektene til kostnaden for GAI. I NIT-alternativet blir de ekstra provinsielle territoriale inntektene returnert til skattebetalere gjennom lavere personskatt. Begge GAI-designene ville beholde arbeidsløshetsforsikringsprogrammet, men inngangskravene ville stige fra 12-20 uker med sysselsetting i forrige år til 26 uker. Den maksimale varigheten av ytelsene vil også være 26 uker. Benefit rates would decline 15 percentage points to 40 percent of insurable earnings for persons earning more than one half of the maximum insurable earnings or persons without dependents, and decline to 45 percent for persons earning less than half the maximum insurable earnings and with dependents. Special benefits, such as those for sickness, adoption, maternity and parental purposes, would continue under current parameters as would Unemployment Insurance Developmental Uses programs. With respect to fiscal implications, the UD requires higher expenditure levels than provided for in the fiscal parameters laid out in the February 1994 Budget and in Improving Social Security in Canada. Personal income tax rates are increased to pay the additional costs so the result is deficit neutral (i. e. there is no increase to the combined federal and provincialterritorial deficits). This tax increase enables a better illustration of the essential trade offs between cost, adequacy and work incentives under a design based on redistributing income and providing an adequate floor level of income support to all persons, regardless of their work pattern. However, since proposals based on an NIT design traditionally have a greater concern for fiscal implications and work incentives than for adequacy, the second design is constrained to be more consistent with the fiscal parameters established in the February 1994 Budget and in Improving Social Security in Canada. The NIT does not result in a higher deficit level than the framework outlined in those documents and, to the extent possible, respects the expenditure and tax level in that framework. In short, the first design will illustrate the cost of an adequate GAI while the second will illustrate what kind of GAI can be provided within the governments current fiscal framework. Both of the following GAI designs are illustrative and are put forward to provide information on the trade offs and issues involved. They are not intended as specific proposals. Option 1 - An Adequate Universal Demogrant (UD) The UD would provide the following income guarantees: All adults 18 to 64 - 7,000 First dependent child less than 18 in a lone-parent family - 7,000 All other dependent children less than 18 - 3,000 For example, a household consisting of a lone parent and one child under age 18 would receive 14,000, while a married or common-law couple with two children under age 18 would receive 20,000. Benefits would not be taxable. As described previously, the Unemployment Insurance system would be significantly returned, the basic personal credit and married and equivalent to married credits in the personal income tax system would be abolished, as would the refundable Child Tax Benefit and the GST Credit. While falling short of the standard of adequacy represented by the LICOs this design would provide an income for all families with children headed by persons under age 65. It would be above current social assistance levels in all provinces and territories except Ontario and would be over 70 percent of the commonly used measures of adequacy for such families. (It falls short, however, of the adequacy levels provided by social assistance for single disabled persons in all provinces and territories.) Because it falls short of full adequacy, some or all provinces and territories might want to top-up benefits through an income or needs-tested program similar to those now provided to top-up the OASGIS system for seniors. Aside from such small residual programs, provinces and territories would cease to make cash social assistance payments, and the federal government would cease its contributions to such programs under the Canada Assistance Plan. Provincialterritorial social assistance savings are used to pay for the UD. Option 2 - A Negative Income Tax (NIT) The NIT design would provide the following income guarantees: Negative Income Tax All adults 18 to 64 - 4,500 First dependent child less than 18 in a lone-parent family - 4,500 All other dependent children less than 18 - 3,000 For example, a household consisting of a lone parent and one child under age 18 would receive 9,000, while a married or common-law couple with two children under age 18 would receive 15,000. These guarantees represent less than one third of LICOs for a single adult and between 50 and 56 percent of the cut offs for families of two or more persons. They are also below current social assistance incomes in almost every province and territory. (See Appendix C.) Benefits would be reduced at a rate of 15 percent for the first adult in the family, by six percent for the second adult or first dependent child under age 18 in a lone-parent family and by three percent for each of the first two children under age 18 in all other families. These reduction rates would be stacked. That is, a household consisting of a lone parent and one child under age 18 would have its benefits taxed back at a rate of 21 percent on the parents income, (i. e. 15 percent plus 6 percent) while a married or common-law couple with two children under age 18 would have their benefits taxed back at a rate of 27 percent (i. e. 15 plus 6 plus 3 plus 3 equals 27 percent). The reduction rate would not exceed 27 percent, even if there were more than two dependent children in the family. Under this design, the break even levels of income, i. e. the level of other income where no GAI benefit would be received, would be as follows for common household configurations: One adult Benefit Level - 4,500 Reduction Rate - 15 percent Break even Income Levels - 30,000 One adult-one child Benefit Level - 9,000 Reduction Rate - 21 percent Break even Income Levels - 42,857 Two adults Benefit Level - 9,000 Reduction Rate - 21 percent Break even Income Levels - 42,857 Two adult-one child Benefit Level - 12,000 Reduction Rate - 24 percent Break even Income Levels - 50,000 One adult-two children Benefit Level - 12,000 Reduction Rate - 24 percent Break even Income Levels - 50,000 Two adults-two children Benefit Level - 15,000 Reduction Rate - 27 percent Break even Income Levels - 55,555 The benefits would be offset by all the program and tax changes outlined for the UD. The only exception is provincialterritorial social assistance. Since the NIT provides lower guarantee levels than the UD, a second income support tier is needed to enhance the adequacy of the benefits provided. In other words, a significantly reduced social assistance system would continue to exist, wholly framed and delivered by provinces and territories without federal cost-sharing, although the social assistance benefits provided would be much lower than they are currently and the number of people needing the system would be much smaller. This design does not add to the deficit presented in the February 1994 Budget. It focuses on enhancing financial incentives to work, facilitating economic adjustment and simplifying the income security system for those under age 65. Options Results (Source: HRDC analysis using Statistics Canadas Social Policy Simulation Database and Model (SPSDM). These results do not account for behavioural effects (such as changes in work effort) or macroeconomic impacts. The analysis of the impact of both options on the incidence of low income is based on Statistics Canadas after-tax LICOs in order to capture properly the effects of changes to personal income tax. (The abolition of the basic personal credit, the married credit and the equivalent to married credit will increase taxes paid by all taxpayers, while enabling the level of the income guarantees to be higher than they would otherwise have been. Analyzing the effect of these changes on the basis of pre-tax LICOs would significantly overstate the benefits accruing to individuals and families in terms of disposable (i. e. post-income-tax) income.) On this basis, before the implementation of a GAI, 12.8 percent of families and unattached individuals had after-tax incomes below the Statistics Canada after-tax LICOs. After the implementation of the UD, the incidence of low income would decline to 9.7 percent. The implementation of the NIT would reduce the incidence of low income to 11.4 percent. (See Table 2.) TABLE 2: Distributional Impact on Low Income Rate of low income Pre-GAI - 12.8 percent Universal Demogrant - 9.7 percent Negative Income Tax - 11.4 percent Depth of low income Pre-GAI - 6.3 billion Universal Demogrant - 3.5 billion Negative Income Tax - 4.2 billion Source: HRDC Analysis using SPSDM. Because of the large reductions in Unemployment Insurance benefits in both models and because, in some cases, the provided guarantee levels fall short of those benefits now available through refundable income tax credits and provincialterritorial and municipal social assistance programs, both designs result in some households moving into poverty on an after-income-tax basis, and others climbing above the after-tax low income thresholds. In both cases, however, the latter group outnumbers the former, so the incidence of low income is reduced. Some or all of those who fall below the low-income thresholds might be raised back above them by provincialterritorial and municipal income or means-tested top-up programs which would supplement the GAI benefit. (No attempt has been made to estimate the effect of such top-ups on the rate or depth of low income.) The depth of low income measures the difference between the low-income thresholds and the incomes of low-income families and unattached individuals. Before the implementation of the GAI options, the aggregate depth of low income was 6.3 billion. The UD reduces the depth of low income by 45 percent to 3.5 billion. The NIT reduces it by 33 percent to 4.2 billion. (See Table 2.) In this section, winners, losers and neutrals are analyzed according to disposable income, provinceterritory and economic family type for each design. (For the purposes of this paper, families and unattached individuals are designated as winners as a result of the implementation of a GAI design if their annual post-income-tax income increases by 250 or more. They are designated as losers if, as a result of the implementation of a GAI design, their post-income-tax income declines by 250 or more. If, as a result of the implementation of a GAI design, post-income-tax income increases or declines by less than 250, the change is designated as neutral.) Under the NIT, 42 percent of families and unattached individuals are winners, 51 percent are losers and 7 percent are neutral. Under the UD design, 59 percent of families and unattached individuals are winners, 37 percent are losers and four percent are neutral. (See Table 3.) TABLE 3: Distribution of WinnersLosers By Income Category Disposable Family Income of 0 to 20,000 Universal Demogrant Winners - 77 percent Losers - 20 percent Neutral - 3 percent Negative Income Winners - 70 percent Losers - 20 percent Neutral - 10 percent Disposable Family Income of 20,000 - 50,000 Universal Demogrant Winners - 65 percent Losers - 30 percent Neutral - 5 percent Winners - 41 percent Losers - 52 percent Neutral - 7 percent Disposable Family Income of 50,000 and higher Universal Demogrant Winners - 32 percent Losers - 65 percent Neutral - 3 percent Negative Income Winners - 19 percent Losers - 77 percent Neutral - 4 percent Total Disposable Family Income Universal Demogrant Winners - 59 percent Losers - 37 percent Neutral - 4 percent Negative Income Winners - 42 percent Losers - 51 percent Neutral - 7 percent Source: HRDC Analysis using SPSDM. Under the NIT design, winners outnumber losers in the 0 to 20,000 disposable income group. (Disposable income is defined as all sources of income (except the GAI) less the payment of federal and provincialterritorial income taxes and payroll taxes such as Unemployment Insurance premiums and CanadaQuebec Pension Plan contributions.) Losers outnumber winners in the middle and upper income groups. (See Table 3.) Under the UD design, winners outnumber losers for both the low and middle disposable income groups. In either option, there are a significant number of losers with family incomes below 20,000 because, for many, the GAI does not offset UI losses. In the middle income range, i. e. 20,000 to 50,000, there are large numbers of losers because the tax increases (through rate increases or losses of the personal credits) necessary to finance the GAI are larger than any GAI benefits they might receive. Under the NIT, families and unattached individuals who are winners gain an average of 2,500 in additional income. Families and unattached individuals who are losers lose smaller amounts than winners gain. Under the UD design, the biggest winners are in the middle income range with large gains occurring also in the high income range (mostly large families with children who do not currently use UI). Losses for families and unattached individuals depend on income with average losses exceeding 14,000 in the upper category. TABLE 4: Size of Gain and Loss by Income Category Disposable Family Income: Family here refers to economic family which may be either an unattached individual or a unit of two or more related persons. Disposable Family Income of 0 to 20,000 Universal Demogrant Winners - plus 4,490 Losers - minus 3,340 Negative Income Tax Winners - plus 2,680 Losers - minus 2,130 Disposable Family Income of 20,000 to 50,000 Universal Demogrant Winners - plus 5,710 Losers - minus 4,380 Negative Income Tax Winners - plus 2,870 Losers - minus 2,030 Disposable Family Income of 50,000 and higher Universal Demogrant Winners - plus 4,990 Losers - minus 14,050 Negative Income Tax Winners - plus 2,390 Losers - minus 2,640 Source: HRDC Analysis using SPSDM. Under the NIT, winners outnumber losers for all economic family types except unattached individuals and couples with no children under 18. On average, couples with children under 18 have the largest gains followed by lone parents with children under 18. Under the UD design, winners outnumber losers among all economic family types except unattached individuals. In both designs, families with children fare better than families without children under 18. (See Table 5.) TABLE 5: Distribution of WinnersLosers By Family Type Family Type: Family here refers to economic family which may be either an unattached individual or a family of two or more persons. Family Type: Families without children Universal Demogrant Winners - 50 percent Losers - 45 percent Neutral - 5 percent Winners - 37 percent Losers - 55 percent Neutral - 8 percent Family Type: Families with children Universal Demogrant Winners - 73 percent Losers - 25 percent Neutral - 2 percent Negative Income Winners - 50 percent Losers - 45 percent Neutral - 5 percent Source: HRDC Analysis using SPSDM. Work Incentives The effects of either of the two GAI models on the amount of work supplied cannot be predicted with any precision. While experiments have been conducted in the United States and Canada, those participating knew that their benefits were not permanent and, consequently, they were not likely to change their behaviour as much or in the same manner had the GAI been ongoing. As a result, total hours worked fell by about five percent on average. The work reduction was largest for second earners in two-earner households and weakest for the main earner. Further, the negative work effect was higher the more generous the benefit level. The GAIs discussed here are very different from those of the experiments because of the inclusion of a UI reform based on a purer social insurance model. This would improve the overall impact on work incentives (other than for part-year work). Whether this is enough to offset the negative effect of the GAI itself is not known. The main aspect of the NIT and UD design that would help improve work incentives is the removal of high reduction rates for social assistance. Generally effective marginal tax rates for the social assistance population would drop from about 75 to 80 percent to around 50 percent for the NIT and 40 percent for the UD. In the case of the NIT, the lower rates would only occur if the provincialterritorial social assistance program top-up does not add yet another level of reduction rates to the system. (Since there is no family income testing in the UD option, work incentives could be significantly improved for a low income spouse or common-law partner since incomes are not added together for the purposes of calculating the benefit or for taxation.) For the NIT, this improvement to incentives would be offset by three features. One is the higher benefits available to working poor and low income families at their current level of work effort. The second is the higher reduction rate on the NIT than on the Child Tax Benefit and the GST Credit for the middle income group (up to 27 percent compared to about 10 percent), and the third is a lower personal income tax threshold for all levels. For the UD, the improvement of work incentives for social assistance recipients is offset by higher benefit levels at current levels of work effort, a lower personal income tax threshold and the sharp increase in the marginal rates of the personal income tax system (e. g. from 25 percent to 40 percent in the low bracket, 39 percent to 64 percent in the middle bracket and 45 percent to 72 percent in the highest bracket). Horizontal Equity With horizontal equity, the benefits received by families in different circumstances, but at similar levels of income, should reflect those different circumstances. Both proposals have major horizontal impacts. The UD provides more benefits to families with children at every level of income, an effect similar to the Family Allowance program before the clawback, but at a much higher benefit level. The NIT on the other hand, reduces the income level at which families with children can receive benefits by about 10,000 (e. g. for a family with two children, the maximum income level under the Child Tax Benefit is about 65,000 and under the NIT, about 55,000). Generally, except in the case of children, the UD benefits do not vary by family type. Since all adults receive the same benefit level and since children over 18 who are living with their parents receive adult benefits and the personal credits are eliminated, there is no difference in benefit levels for different family configurations. For example, single - and dual-earner families receive the same benefits at the same income level (unlike the current system where single earners claim a personal and a married income tax credit, and dual earners get more by claiming two personal income tax credits). However, since the net impact of the UD depends on the combined effect of the transfer plus the increase in personal income taxes and since personal income taxes are individually based, the net benefits to any family will depend on the distribution of income between spouses. Whether this is desirable or not depends on ones point of view. (For example one consequence of family type neutrality is the equity issue known as The Bankers Wife problem, where a non-working spouse of a high income individual receives a maximum benefit.) With respect to the NIT, there is also more neutrality to family type (for example single - and dual-earner families are treated the same) but, unlike the UD, there is a family-based income test. This means that two people reporting as a couple must add their incomes together to claim their benefits while two people reporting as singles do not, resulting in more favourable treatment. Costs The cost of the UD program is 146 billion. The reallocation of existing expenditures and refundable tax credits (30.2 billion including the provincialterritorial expenditure on social assistance) and the elimination of the personal credits (22.8 billion, including both federal and provincialterritorial effects) fall far short of financing the program. As a result, an additional 93 billion is required in personal income tax revenue through increased rates. (See Table 6.) The cost of the NIT is more modest (i. e. 37.3 billion) and is financed entirely from the reallocation of expenditures and refundable credits (21.1 billion, which does not include provincialterritorial social assistance as does the UD) and the elimination of the basic, married and equivalent to married credits (not including the increases in provincialterritorial tax revenues which are assumed to be returned to taxpayers through lower tax rates). TABLE 6: Fiscal Impact ( Billion) GAI program cost Universal Demogrant - 146.1 billion Negative Income Tax - 37.3 billion UI, CTB, CAP, GST tax credit reallocation Universal Demogrant - 30.2 billion Negative Income Tax - 21.1 billion Elimination of personal credits Universal Demogrant - 22.8 billion Negative Income Tax - 16.2 billion Increased tax rate Universal Demogrant - 93.1 billion Negative Income Tax - 0 billion Source: HRDC Analysis using SPSDM. While the UD design yields favourable results in terms of winners and losers and substantially reduces poverty, it requires enormous increases in federal and provincialterritorial income taxes and in overall expenditure levels. The NIT design produces far more losers than winners, particularly among families without children, and only slightly reduces the incidence of low income. However, it is affordable without additional tax rate increases and significantly reduces the depth of poverty. Both options would probably have net negative effects on labour supply except for current social assistance recipients. The results seem disappointing. The significant disruption associated with implementing any of these designs would make it difficult to advance the GAI as the centrepiece of social security reform. The bottom line is that both these models are too expensive. In the UD approach, the additional cost is clear: 93 billion in additional personal income taxes is required. In the NIT, the expense is less clear because the option was designed to fit existing fiscal parameters. The result was a large number of losing families, many at low income levels. Fixing this problem would require billions of dollars, although not on the scale required for the UD. For example, an increase to the adult benefit of 500 would cost an additional 6 billion under the NIT. Why then are GAIs so expensive A GAI, by its very nature, and in the context of the current Canadian income distribution, provides more benefits to more people than existing systems of social support. To provide a reasonable level of income support, i. e. an adequate guarantee, and a low reduction rate to ensure an incentive to work, most working poor and middle income families become eligible to receive the benefits. The lower the reduction rate on the GAI benefit, the higher up the income scale the benefit goes and the more people are included. At the limit, the reduction rate falls to zero, the entire population benefits and costs soar, which is what happens under the UD model. Moreover, unlike the programs it replaces, a GAI is non-stigmatizing and easier to understand. Families who are eligible for existing benefits but either do not realize it or do not want to apply, are assumed to benefit from the GAI. A final reason is that the GAI provides coverage to groups currently not covered by many social programs such as adult children living with their parents and the self-employed. The question is how to pay for these additional benefits. The NIT tried shuffling income among different parts of the population. The UD resorted to large tax increases. The consequences of both approaches have been documented. The trade-offs are very strict: no surplus funds arise as the result of the consolidation and simplification of programs that could be used to improve the system. What could the sources of this surplus be Any excessively high benefits that some may have in the existing system from dipping into several programs at the same time are eliminated and this does not provide a significant source of new funds. Administrative savings could be possible in the UD design due to the elimination of social assistance but this would be very small compared to the cost of the program. As for the NIT, running a responsive benefit for a much larger population could actually result in increased administrative costs. The main potential source of surplus would be an increase in labour supply, leading to both lower poverty levels and lower benefit payouts. But, as discussed in the previous section, even if labour supply might increase for particular groups, the overall effect on labour supply is more likely to be negative than positive. These results must also be viewed in the context of what a GAI does not do and what it could prevent if it absorbs the financial resources and overextends the capacity of the population to accept major change, i. e. measures to expand economic growth and employment, to increase the employability of persons with inadequate earnings, to provide required supports for persons with disabilities to function in society and in the labour force, to promote a better balance between work and family responsibilities or to fund preventive measures in areas such as child development and school-to-work transitions. However, this does not mean that for more limited purposes, GAI mechanisms may not have value. The final section of the paper examines recent initiatives and proposals that merit further attention. If a GAI, whether based on an anti-poverty or an economic adjustment vision, appears to offer too much disruption and insufficient benefits, is there still a useful role for GAI mechanisms in social security reform Before examining this issue, it is important to remember that some of the ideas underlying a GAI and the mechanisms for implementing it have already had a major impact on Canadian income security programs. As noted earlier, the level of benefits and the taxback structure of the current Ontario social assistance system are remarkably similar to those in the 1971 Special Senate Committee on Poverty proposal. The Child Tax Benefit and the GST Credit are significant negative income tax programs - the first restricted to families with dependent children and the second available to all adult tax filers. And, of course, the combination of the Old Age Pension, the Guaranteed Income Supplement and provincial territorial supplements for seniors provide a GAI for Canadians over age 65. Provincialterritorial and municipal social assistance programs, combined with the GST Credit, the Child Tax Benefit and certain provincialterritorial benefits available to low income persons do provide minimum last resort incomes to persons under age 65. However, benefit levels vary widely, work disincentives remain substantial, a stigma is still attached to the receipt of social assistance, and there is a lack of coherence between social assistance and programs such as Unemployment Insurance. Further, the depth and incidence of poverty in Canada remains too high whatever the definition used. Making Work Pay A central dilemma facing a GAI continues to be the old principle of lesser eligibility. How generous a guaranteed income can the state provide compared to what is available for doing low wage work The stronger the demand for labour at wages adequate for the needs of individuals and families, the less the risk of providing more generous income guarantees. However, even in tight labour markets, as in Ontario in the late 1980s, higher real social assistance benefits helped keep caseload levels from falling as those benefits approached or exceeded entry-level wages available to such groups as lone parents with young children. Lower reduction rates on earned income, often advanced as a way to reduce work disincentives for people on social assistance, can instead lead some people into a situation where they supplement social assistance with part-time or part-year work or vice versa instead of moving off dependence on social assistance into year-round full-time employment and progressing up the job and wage ladder from that position. Further, lower reduction rates can lead to rising caseloads as the program covers a greater proportion of the population. There appears to be a need for some mechanism to encourage people now unemployed andor on social assistance to take entry-level, low-paying jobs. Encouraging this first step on the wage ladder by providing a living standard at least equal to what people would have been receiving on social assistance, is considered a major objective of policy. This has led to the development of strategies to provide support and supplementation to people in low-wage jobs relative to their needs and those of their families, i. e. to make work pay. As with the two visions of a GAI outlined in this paper, fighting poverty while reducing the work disincentives embodied in public programs remain important goals. But to these goals has been added a concern to improve the conditions surrounding low-wage work in order to make working more attractive, i. e. making work pay. Recent strategies to achieve this goal vary widely. Some are not yet off the drawing board, others are in the experimental phase and still others are operating on a provincialterritorial and national scale in Canada and the United States. While those discussed below involve various forms of income support based on NIT-type mechanisms, one important strategy to make work pay is the provision of ample opportunities for learning, education and training. Increasing the human capital of persons stuck in low wage jobs has a double effect. It enables them to compete for more skilled and better-paying jobs and it opens up their former positions to persons who previously were unemployed or working on only a sporadic basis. Replacing Parts of Social Assistance Short of replacing social assistance with a comprehensive GAI, some policy makers have proposed replacing social assistance benefits for specific groups with NIT-type programs which would also be available to low income working persons not receiving social assistance. In 1988, the Ontario Social Assistance Reform Commission (SARC) recommended that national income-tested programs be created for persons with disabilities and parents of dependent children which would replace social assistance benefits for these groups. In 1993, as part of a general reform of Ontario social assistance, that provinces Ministry of Community, Family and Childrens Services proposed to replace the childrens component of social assistance benefits with an income-tested benefit for all low income parents of dependent children, not just those receiving social assistance. (Government of Ontario, Ministry of Community, Family and Childrens Services, Turning Point, 1993, pp. 16-18.) This would enable the province to link adult social assistance benefits to what could be earned at a full-time, year-round minimum wage job, avoiding the current situation where total adult and child social assistance benefits significantly exceed this level of earnings. Because many more families would qualify for benefits under this proposed Ontario Child Income Program (OCIP) and since it was not eligible for federal cost-sharing under current Canada Assistance Plan rules, (it was an income-tested rather than needs-tested benefit) the additional cost of OCIP made it impossible for the Ontario government to implement the proposal. However, it would have had a significant positive impact on making work pay. Earnings would exceed social assistance benefits at much lower wage levels for families with children and, instead of being taxed back at a rate of 75 percent on net earnings, childrens benefits would be reduced at a much lower rate and be received over a broader income range, substantially reducing the financial disincentive to earn. The means of achieving this two-pronged attack would be a provincial income supplement for families with children designed, like the federal Child Tax Benefit, as a form of NIT. The idea of replacing social assistance benefits paid on behalf of children by an integrated federal - provincial child benefit is discussed further in the background paper, Income Security for Children. Earnings Supplementation The Government of Canada, the federal government in the United States and the Quebec government have taken a more direct approach to making work pay by directly supplementing the earnings of the low income working population. In Canada, a Work Income Supplement of up to 500 is added to the Child Tax Benefit for families earning between 3,750 and 25,921 annually. This supplement is designed as a modest step toward making work pay. About 700,000 families qualify for the supplement. In the United States, such supplements are paid through the mechanism of an Earned Income Tax Credit delivered through the personal income tax system. It is the goal of the U. S. government to enrich the credits to the point where, added to year-round full-time work paying the federal minimum wage, they would exceed the official American poverty lines for families of four or fewer persons. The credit is available to single adults and childless couples as well as to parents with dependent children and represents varying percentages of family earned income (up to a maximum) depending on the presence and number of children up to two. It is taxed back based on family income. Quebec has a somewhat different version of earnings supplementation under its Parental Wage Assistance (PWA) program which is available only to low income workers with children. This program not only supplements the earnings of low income parents (once a minimum monthly earnings threshold is exceeded), but also partly reimburses actual child care and provides a special shelter benefit up to levels where earnings, combined with the supplements, provide an income which is at least comparable to social assistance. Moreover, the Quebec personal income tax system has been adjusted so that all households with incomes below what they could receive on social assistance pay no provincial income taxes. Thus, the PWA program is a true NIT - at least so far as Quebec provincial income taxes are concerned. However, in an attempt to make the program responsive to income and earning fluctuations during the year, PWA benefits are not paid automatically and must be applied for directly. Consequently, many parents whose earning levels would qualify them for benefits do not apply and the program reaches only a fraction of the intended target group. Newfoundland ISP Proposal An even more ambitious program, combining NIT features with an earnings supplement, was proposed in 1993 by the Newfoundland Economic Recovery Commission with the support of the Government of Newfoundland and Labrador. The Income Supplementation Program (ISP) is designed to provide a minimum level of income security and improved incentives to earn income. At the same time, the Unemployment Insurance system in Newfoundland and Labrador would be substantially scaled back by increasing the number of weeks of work needed to qualify for benefits and reducing the maximum number of weeks that benefits could be collected. The intent is to change radically the incentive structure of the income security system from one which encourages working just long enough at the highest wages possible to maximize UI benefits, to one which rewards maximizing ones weeks of employment even at low wages. The ISP would provide a base income guarantee, scaled by family size and composition, at levels roughly equal to those of current social assistance benefits. In addition, earnings would be supplemented up to a maximum. For higher family incomes, both the base income guarantee and the supplement would be reduced. As stated earlier, since the scheme is designed to maximize self-sufficiency through earnings, the guarantee level provided falls short of commonly used measures of adequacy. The hope is that by putting a floor under incomes and supplementing earnings in addition to that floor, Newfoundlanders will seek out opportunities to earn while having a non-stigmatizing, secure source of income. Implementing an ISP would be quite a challenge, and many practical aspects would have to be worked out to see if it could be feasible. Because of the high current levels of UI expenditure in Newfoundland and Labrador, the Economic Recovery Commission believes that this modest comprehensive GAI with a second tier of income-tested earnings supplementation can be paid for out of UI savings and by replacing the provincial social assistance system without taxation or deficit increases. It is unlikely that this would be the case elsewhere in Canada as the analysis of the NIT design in this paper indicates. Conclusion All three of these targeted GAI-type programs - an integrated income-tested federal - provincialterritorial child benefit, earnings supplementation and a combination of a base income GAI with earnings supplementation - merit further consideration. Each addresses the largely unmet income security needs of the working poor in a much more direct and targeted way than the current system. Each can be designed to reduce the incidence and depth of poverty among this group in a manner that is more acceptable than comprehensive GAI designs such as those analyzed in the previous section. These approaches are not without flaws. An enriched integrated income-tested child benefit could be costly. Earnings supplementation, unless carefully designed, could lead to an increase in the proportion of jobs paying low wages. The Newfoundland ISP proposal would require major tax increases andor many middle income losers to finance in other provinces and territories. It also faces considerable delivery and administrative challenges. However, while the arithmetic of current Canadian income distribution makes achievement of a comprehensive GAI appear either politically or fiscally out of the question, the problems inherent in these more targeted approaches can seemingly be resolved through practical, acceptable remedies. Moreover, while directly improving the standard of living of their target populations, they would do so while encouraging rather than dampening incentives to become more self-sufficient through earnings. Appendix A - Historical Background The First GAI - Speenhamland A precursor of a guaranteed annual income can actually be traced back to late 18th century England. The first known GAI was the Speenhamland system implemented from 1795 to 1834 in parts of England where wages had fallen below subsistence levels. The Elizabethan Poor Law had provided relief only to those who were unable to work or could not find work. The Speenhamland system provided a subsidy, in addition to wages, that was scaled according to the price of bread and family size. This income floor was provided regardless of work effort. But the subsidy was reduced at a 100 percent rate once earnings exceeded the income floor. Since the system was financed by poor rates levied in the village parishes, it gave manufacturers in nearby towns not subject to those rates, an incentive to hire workers only for periods when they were most needed. At the same time, by meeting the subsistence needs of families, regardless of whether they worked or not, and offering no incentive for able-bodied workers to take work paying wages less than the Speenhamland rates, the system came to be seen as undermining the work-ethic. The Poor Law Commission, which reported in 1832, concluded that the only way to correct these abuses was to ensure that public relief should not pay those able to work benefits that were higher than the worst jobs society had to offer. This became known as the principle of less eligibility. This principle was quickly transferred to Canada and remained the key assumption behind social assistance policy in Canada well into the 20th century. While social assistance rates are now tied to an assessment of basic need rather than to the lowest wage rates in society, the principle of less eligibility is still reflected in the widespread view that people should not be better off on social assistance than they would be working full time at a minimum wage job. The Speenhamland experiment is also a lesson in the unintended effects of government policy. By enabling employers to hold down wages and still retain a supply of reasonably healthy workers, and allowing them to evade the costs of providing for those workers and their families, a humane attempt to help the working poor resulted in drawing an increasing number of workers and their families into that situation. At the same time, by taxing back assistance at a rate of 100 percent on the earnings of workers who became employed, it provided no financial incentive to work at wages less than the subsistence level. The attempt to put a floor under the incomes of the poor did maintain a subsistence standard of living, but increased the numbers of those applying for assistance and living at the subsistence level. The Canadian Context - Social Minimum without a GAI In 1943, Leonard Marsh, a Canadian public servant inspired by the plan for a postwar welfare state advanced by Lord Beveridge in the United Kingdom, introduced the notion of a comprehensive, integrated social security system to protect Canadians against the economic insecurities of work and raising a family. Like the Beveridge Plan, this approach was based on the idea of a social minimum. The income security aspect of this social minimum was to consist of the following three tiers: - social insurance programs for such target groups as the unemployed, the sick, the disabled and those retired from work on scales adequate to meet the minimum needs of a single individual or a married couple - universal family allowances payable to the parents of all children, regardless of parental income, to meet the minimum maintenance costs of a child and - means-tested social assistance for those exceptional cases not covered by social insurance. Marshs concept of a comprehensive social minimum assumed policies to ensure high levels of employment. He emphasized that the first positive measure in providing social security. is a program which will make work available, or in other words, which will offer wages rather than subsistence maintenance to the furthest extent to which it is possible. (Cited in Social Planning Council of Metropolitan Toronto, A Guaranteed Income: A New Look at an Old Idea (Toronto, 1986), p. 17.) Marshs proposed social minimum was never fully realized, but it provided the framework for much of Canadas current social security system. In such a system there was assumed to be no need for a GAI. Income security was to be provided largely through insurance programs. Employment was to be widely available and wages from work, with a floor provided by minimum wage laws in combination with family allowances, would ensure adequacy for working families. While social assistance would provide a minimum income floor, it was to be only for cases of exceptional need, primarily those not expected or able to work because of age, child-rearing responsibilities or severe physical or mental disabilities. The Revival of Guaranteed Income Concepts in the 1960s The ability of a low-unemployment economy, supplemented by social insurance, to eradicate poverty began to be challenged in the early 1960s. This was a time of high economic growth and low unemployment in most western countries. Books, such as Michael Harringtons The Other America in the United States and Richard Titmusss Income Distribution and Social Change in the United Kingdom, (Michael Harrington, The Other America Poverty in the United States (New York: Macmillan, 1962) and Richard M. Titmuss, Income Distribution and Social Change (London: George Allen and Unwin, 1962)), were pointing out that postwar prosperity and existing social insurance and social assistance programs had left large portions of society still in poverty. In part, this reflected inadequate provision for the income needs of groups not able or expected to work such as the elderly and persons with disabilities. However, the population in poverty also included large numbers of households whose head was working for wages at least part-time or for part of the year. Despite low unemployment and high economic growth, social assistance caseloads also began to rise in major cities in the United States at this time. Canada shared in this rediscovery of poverty. In fact, the first attempts to define statistically and measure the incidence and depth of low income in Canada through Statistics Canadas low income cut-offs (LICOs) date from this period. Poverty came to be seen primarily as inadequate income. Anti-poverty strategies began to focus on income maintenance and support programs while the redress of macroeconomic causes of poverty such as inadequate levels of full-time, year-round employment, assumed less importance. With this new perspective, a low debt and rising tax revenues generated by rapid economic growth and rising income levels, a guaranteed income began to seem, to many Canadians, an attractive and simple mechanism to deal with the problem of poverty. The initial response, however, was not an attempt to design a GAI, but efforts to finish the agenda established by Marsh. This led to the introduction of the earnings-related Canada and Quebec pension plans in the mid 1960s, the gradual reduction of the age of eligibility for the Old Age Pension from 70 to 65 in the late 1960s, the creation of the Canada Assistance Plan in 1966 to encourage a rationalization of provincialterritorial social assistance systems and the major expansion of the Unemployment Insurance program in 1971. But it was recognized that enriching social insurance and demogrant programs alone could not provide all Canadians with incomes above low income thresholds. Many people were poor because they did not have sufficient attachment to the labour force to benefit from social insurance, their labour force earnings were insufficient or they had not been able to save enough or establish pension entitlements large enough during their working years to provide for an adequate income in retirement. Many Canadian policy analysts conceived of the GAI as a reform to the third tier of Leonard Marshs integrated approach. Social assistance at the provincialterritorial level by the 1960s had become a maze of categorical programs for lone parents, the blind, the long term unemployed and the disabled that carried considerable stigma. Some were cost-shared by the federal government. Others were not. There was also a growing recognition of the social assistance systems tendency to trap people in dependency due to its asset tests and punitive tax rates on earned income. The way forward seemed to be to maintain the social insurance programs and the universal demogrants for children and seniors while providing a new income-tested income support tier to replace social assistance and provide incentives to work and save for retirement. The negative income tax appeared to be a workable model for putting these ideas into effect. This agenda proceeded for seniors. The Guaranteed Income Supplement was added to the Old Age Pension to create a GAI for seniors. The result, combined with the expansion of eligibility for the Old Age Pension and the creation of the Canada and Quebec pension plans virtually removed seniors from social assistance and led to a marked reduction in poverty among those over age 65. There was little resistance to a GAI for seniors because it was built on top of universal social insurance programs (rather than replacing them) and, for this group, there were few concerns about work-disincentives. In fact, with the baby boom generation just beginning to enter the labour force in large numbers there seemed good reason to encourage people to leave the paid work force at age 65 and open up opportunities for younger workers. Some have proposed that a GAI for persons with disabilities could proceed on the same basis, although there is much concern that such an approach could result in the marginalization of persons with disabilities rather than their inclusion into the social and economic mainstream. The same agenda, however, did not proceed in the same way for the rest of the population. Nonetheless, an important step was taken. The creation of the Canada Assistance Plan in 1966 provided federal cost-sharing to encourage the provinces and territories to establish comprehensive social assistance programs available to all simply on the basis of need that were national in scope since residency tests were prohibited. The federal government reimbursed the provinces and territories for 50 percent of the cost of establishing and maintaining social assistance programs that met these requirements. Wide interprovincial variations remained in the level of income guaranteed under provincialterritorial social assistance programs, and guarantee levels also varied within provinces depending on household type and the presence of physical or mental disabilities. Moreover, as social assistance was still subject to an intrusive means test which included assets as well as income, it continued to carry a stigma not attached to social insurance programs such as Unemployment Insurance or income-tested programs such as the Guaranteed Income Supplement for the elderly. Nevertheless, the Canada Assistance Plan was a watershed in Canadas Unique Social Historyboth in terms of federal - provincial territorial cooperation and the impact it had on building a modem and comprehensive last-resort safety net. By including all Canadians in the safety net, the stage was set for what many hoped would be the next step - a comprehensive GAI. Serious consideration of a GAI quickly followed in the early 1970s. The Early Seventies - Failure to Implement a GAI Not only in Canada, but internationally, the late 1960s and the early 1970s were the glory years for comprehensive guaranteed income proposals, particularly those based on mechanisms inspired by the negative income tax. In the five years following President Nixons 1969 proposal for a guaranteed income for families with children in the United States, the so-called Family Assistance Plan, no fewer than 10 other countries, from Norway to New Zealand, seriously considered comprehensive reform of their income support programs based on guaranteed income principles. Except for highly targeted categories of individuals, none of these schemes were implemented. (See Leslie Lenkowsky, Politics, Economics and Welfare Reform: The Failure of the Negative Income Tax in Britain and the United States (Lanham, Md: University Press of America, 1986) pp. 3-6.) Canada followed this pattern but in three separate initiatives. The Quebec Commission of Inquiry on Health and Social Welfare The first official proposal for a comprehensive GAI in Canada was made in 1971, by a Quebec provincial commission (the Castonguay-Nepveu Commission) which proposed a three-tiered income security program for Quebec. A basic negative income tax would comprise the first tier, social insurance programs the second, with income-tested family allowances providing the third. The negative income tax program, called the General Social Allowances Plan (GSAP), would replace Quebec social assistance with two tiers of benefits: one for persons deemed to be employable and a second for those deemed not to be employable. The benefit levels for the first tier would be set at 60 percent those of the second, under the assumption that these would be supplemented by earnings from employment. This design was intended to provide an incentive to work that was consistent with the principle of less eligibility. A Comprehensive GAI - The Special Senate Committee on Poverty Later in the same year, the Special Senate Committee on Poverty, under the leadership of Senator David Croll, took a different approach, with a proposal for a uniform guaranteed income through a federal negative income tax program to cover most Canadian families living in need. No distinction in benefit or reduction levels was to be made between persons deemed to be employable and those unable or not expected to work. The main elements of the Senate Committees proposal were: - benefit levels would be set at 70 percent of poverty levels defined by the Senate Committee and would be reduced at a rate of 70 percent against other income - non-Canadians and single unattached Canadians under 40 years of age would not initially qualify for GAI benefits because the appropriate solution for this group. lies not in income maintenance but in opportunity programs - education, training, counselling and job placement (Special Senate Committee on Poverty, Poverty iii Canada (Ottawa: Queens Printer, 197 1 ) p. 187.) - family allowances, youth allowances and Old Age Security would be abolished (in effect, these programs would be converted from universal demogrant programs to selective income-tested programs.) - the federal government would assume the full cost of all social assistance payments made under the Canada Assistance Plan by the provinces and territories, to provide for those not covered by the GAI - social insurance programs, such as UI and CPP, would continue but be reconstructed as true insurance schemes and withdrawn from the welfare field entirely ( Ibid. p. 184.) and - the GAI would be integrated with the tax system by a mechanism to offset any income taxes payable by a household with an income below the poverty lines with a tax credit of an equal amount. The personal income tax system would be reformed to place the payment of taxes on an economic family rather than on an individual basis. Every couple with children and every person over 40 years of age would be guaranteed an income level equal to at least 70 percent of the poverty level in the first year of implementation. A social assistance system wholly funded by the federal government would provide for the needs of non-citizens and singles under 40 years of age. The estimated cost for the year 1967 was 645 million or about one percent of GNP more than existing program outlays. The guaranteed income provided was 3,500 for a family of four or the equivalent of 15,200 in 1993, adjusting for inflation. The Senate Committees poverty line, however, was designed to be indexed, not to inflation, but to average living standards. In addition to the large incremental cost, equivalent to over 7 billion in 1993, other objections were raised to this proposal. It did not provide strong incentives to work. For every dollar of earnings by poor families and older individuals, GAI benefits would be reduced at a rate of 70 cents. (In the most generous provinces current reduction rates for social assistance are 75 percent - slightly above the Senate proposal.) The cumulative effect would be that employable recipients could not increase their disposable incomes significantly through work until their earnings were well above the guarantee level. It was no simpler than the system in place. By eliminating two benefit programs for sub-populations and replacing them with a much larger guarantee payment for a broader category of households, a larger number of cheques would have to be delivered than before. Moreover, more people would have to file income tax returns to indicate their entitlement to benefits. The expansion of the Canada Assistance Plan to cover those persons who would be excluded from the GAI would complicate matters even further. While the Croll proposal set a framework for a made-in-Canada GAI and remains the classic expression of a GAI aimed at guaranteeing an adequate income level, the problems associated with it prevented serious consideration by governments at the time. The Social Security Review of the 1970s In 1973, the federal government published its Working Paper on Social Security in Canada (the Orange Paper), which became the basis for the federal - provincial social security review of the 1970s. The review was established in part to develop a social security program to combat poverty by ensuring an acceptable minimum income for all Canadians. After consideration of a number of options by federal - provincial working groups, the federal government proposed, in February 1976, a form of GAI inspired by the two-tiered system of Castonguay-Nepveu. The provinces and territories would administer both an income support program for those without income from employment and an income supplementation program for the working poor. The federal government would pay two thirds of the cost of income supplementation, two thirds of that part of support payments equivalent to the maximum provincialterritorial supplementation benefit eligible for federal cost-sharing and half of the remainder. The levels of the support and supplementation guarantees were to be established by the provinces and territories. However, the maximum level of income supplementation benefits eligible for federal cost-sharing was set at 80 a month or 960 a year for a family of four in 1975 dollars (2,830 in 1993 dollars). Eligibility for income supplementation would be restricted to families with dependent children and to individuals and childless couples aged 55 to 64. Both of these components were designed to motivate persons to work, with a 70 percent benefit reduction rate for income support and a 35 percent reduction rate for income supplementation. The income security system for those over age 65 was to be left unchanged. (National Council of Welfare, Guide to the Guaranteed Income (Ottawa: March 1976) pp. 37-39.) An analysis by the National Council of Welfare estimated that almost 450,000 households containing 1,600,000 people could benefit from income supplementation but stated: There can be no denying that the proposed supplementation program will not lift most of these families out of poverty. The benefit levels are too low to accomplish this. (National Council of Welfare, Support supplementation: who will benefit (Ottawa: November 1976) p. 32.) The February 1976 proposals were not accepted by the provinces because of fears about their short and long-term costs in a context of high inflation, recent sharp increases in the federal deficit and a marked slowdown in the growth rate of real government revenues. While the federal - provincial social security review was considering the design of a GAI in the early 1970s, the province of Manitoba, with financial support from the federal government, chose to go one step further by actually piloting the concept. The Manitoba Basic Annual Income Experiment (Mincome) made payments to over 1,000 Manitoba families over three years, beginning in 1975. The experiment was designed to evaluate work responses of employable recipients under a guaranteed income. Analysis of the work incentive impacts of the program were consistent with the results of similar experiments in the United States, i. e. labour market participation did not increase as might have been hoped. In fact, it declined, but only slightly overall with most of the reduction coming from the lower earner in two-earner couples. Whether this is a success depends on what is expected from a GAI. If the focus is on poverty, this result can be interpreted positively, i. e. benefits can be increased without major changes in work patterns. If the focus is adjustment, the fact that simplification and theoretical reduction of work disincentives did not increase labour supply would seem to be a disappointment. (Derek Hum and Wayne Simpson, Income Maintenance, Work Efforts and the Canadian Mincome Experiment (Ottawa: Supply and Services Canada, 1991)). Finally, it is noteworthy that the level of income guarantees provided by Mincome, in 1993 dollars, are below current social assistance levels in that province. Therefore, the Mincome study tells us little about the potential work disincentive effects of a more adequate GAI. Late Seventies and Early Eighties - The Shift to Incrementalism Following the collapse of the Orange Paper process in 1976, reform to income security programs in Canada shifted its focus from comprehensive to incremental change. New programs based on the GAI idea, such as the refundable Child Tax Credit and the refundable Sales Tax Credit at the federal level and various supplements at the provincial level, aimed to improve, modestly, the situation of low-income households, particularly families with dependent children. However, these programs were additions to the current system and did not consolidate existing income support programs. Moreover, they made no pretence that the income guarantees they provided were in any sense adequate. The result was to multiply significantly the number of programs available and to create considerable overlap between federal and provincialterritorial programs in the area of income maintenance and among income maintenance programs within levels of government. Unlike the de facto GAI for seniors, these programs usually did not provide high enough benefits to remove families from social assistance. (The APPORT program in Quebec, which supplements the earnings of the working poor is an exception to this generalization since it is designed to complement the social assistance system.) On the other hand, the introduction of refundable credits provided much legitimacy to the negative income tax mechanism for delivering benefits to poor Canadians. Many considered these credits as a step toward a GAI. The Mid-Eighties to the Present - The GAI Revived A new generation of GAI proposals emerged in the mid 1980s. The most prominent of these was the Universal Income Security Plan (UISP) in the 1985 report of the Royal Commission on the Economic Union and Development Prospects for Canada. Also, in the late 1980s Quebec and Ontario made major, but very different reforms to their income security systems which addressed the issues of adequacy, supplementation of the incomes of working poor families and work incentives raised by earlier GAI proposals. Quebec White Paper on the Personal Tax and Transfer System (1984) The reforms in Quebec were inspired both by the Castonguay-Nepveu Commission of the early 1970s and by a white paper on the provincial personal income tax and income support system published in 1984 which laid great emphasis on the very high marginal tax rates faced by the poor as they attempted to make the transition from social assistance to work. (Quebec, Department of Finance, White Paper on the Personal Tax and Transfer Systems (Quebec: 1984).) It also stressed the need to harmonize the income tax and income transfer systems so households with incomes below social assistance rates would not have to pay income tax. To do this, it proposed using common definitions of the family unit and of income in both systems and indexing each to inflation in the same way. The Universal Income Security Plan (UISP) (1985) The proposal of the UISP by the Royal Commission on the Economic Union and Development Prospects for Canada (the Macdonald Commission) marked a number of departures in thinking about a GAI and its relationship to social insurance programs such as Unemployment Insurance. While past GAI proposals had attempted to improve the standard of living of the poor while seeking to minimize work disincentives, the UISP was consciously designed to provide an income floor which would make it politically and socially acceptable to embark on what would otherwise be controversial economic adjustment policies, including a significant scaling back of the Unemployment Insurance system, an expansion of adjustment programs, such as job training and mobility assistance, and the signing of a free trade agreement with the United States. This was an attempt to convert what had been a passive policy tool into a foundation for active measures designed to improve economic competitiveness. Previous GAI proposals (with the partial exception of the 1971 report of the Special Senate Committee on Poverty) had assumed that Unemployment Insurance would remain in place. However, anticipating the conclusions of the Newfoundland and federal royal commissions on Unemployment Insurance which would report a year later, the Macdonald Commission saw many aspects of the Unemployment Insurance system, particularly regionally extended benefits, as crossing the boundary between social insurance and income supplementation. (Newfoundland, Building on our Strengths: Report of the Royal Commission on Employment and Unemployment (the House Report) (St. Johns: 1986) and Canada, Commission of Inquiry on Unemployment Insurance (the Forget Report) (Ottawa: 1986).) To restore the UI program to its social insurance roots, the Commission recommended stripping UI of its income support elements and replacing them with an explicit, income-tested supplementation program with benefits related to family size. Concerned as it was with promoting economic adjustment, the Macdonald Commission deliberately made its UISP inadequate both in terms of commonly used measures of low income and existing social assistance levels in many provinces. Moreover, to avoid work disincentives it proposed to tax back benefits at a low rate of 20 percent. The UISP also attempted to disentangle the roles of the federal and provincialterritorial governments in the income security system. In contrast to the proposal emerging from the social security review of the 1970s, the federal government would be 100 percent responsible for the administration and financing of income supplementation for those with earnings as well as for providing an income base for the non-earning poor. This would leave the provinces 100 percent responsible for the financing and administration of a support tier which would top up the UISP to ensure that persons on social assistance would be no worse off than under the current system. The UISP was designed to replace: - the three existing child benefits - the spousal and equivalent to married exemptions in the income tax system - the Guaranteed Income Supplement and Spouses Allowance for the elderly - federal contributions to provincialterritorial social assistance programs and - federal housing programs. The UISP would provide full benefits to all families and to unattached individuals over age 35. The annual benefit level for a couple with two children would be about 10,000 in 1993 dollars, and would be indexed to growth in the Consumer Price Index. The Macdonald proposal had many attractive features which improved on previous GAI scenarios. It provided for a streamlining of federal programs through eliminations and tax simplifications - one program would now stand where several had previously been. It also provided a more rational system of income supplementation to the working poor than Unemployment Insurance and recognized an obligation by government to assist those families whose earnings did not provide them with an adequate income. The program was also intended to be fiscally neutral. Dollars saved from programs eliminated would be redeployed into the UISP. However, one independent estimate put the incremental cost of the program, as designed, at an additional 3 billion to 5 billion in 1985. (See Michael Wolfson, A Guaranteed Income, Policy Options (January, 1986) p. 37. Wolfson estimated the proposal could be made fiscally neutral by raising the reduction rate to 25 percent.) However, the UISP disappointed many advocates of the GAI concept because it did not promise to reduce substantially either the incidence or the depth of poverty. Combining GAI and Tax Reform The program design of UISP also failed to recognize that because the reduction rate of the benefit program was added to the existing income tax system, the cumulative marginal tax rates and work disincentive effects would be far more severe than intended. With a basic benefit for a family of four of approximately 10,000 in 1993 dollars and a reduction rate of 20 percent, the UISP would provide net benefits to families with income from other sources up to 50,000. (Not all these families would be better off than under the current system because they would lose their Child Tax Benefit and might have to pay higher taxes because of the elimination of the married exemption.) However, adding that 20 percent reduction rate on top of current federal and provincialterritorial marginal income tax rates would mean a 45 percent effective marginal tax rate for those earning up to 30,000 a year and a 59 percent effective marginal tax rate for those earning between this level and the 50,000 threshold. In 1986, to avoid this problem and to attempt to provide income guarantees which were more adequate, Michael Wolfson, an economist at Statistics Canada, proposed a version of the GAI which, while retaining the disentanglement of federal - provincialterritorial roles in income security proposed in the UISP, involved a profound reform of the personal income tax system to complement the base federal income guarantee. The most radical version of this Guaranteed IncomeSimplified Tax (GIST) model would have abolished all federal child benefits, the Guaranteed Income Supplement for seniors, federal cost-sharing of provincialterritorial social assistance spending under the Canada Assistance Plan and the refundable GST Credit, reduced spending on Unemployment Insurance by 30 percent and made the basic Old Age Pension non-taxable. Within the tax system, it would have abolished the basic personal credit, the spousal and equivalent to married credit, the age and pension income credits and Unemployment Insurance premiums. All these would be replaced by a federal basic income guarantee of 7,200 for a family of four headed by a person under age 65 and guarantees of 4,220 for seniors living alone and 7,000 for senior couples. (The guarantee levels for seniors were designed to mimic the existing GIS benefit structure for this age group.) The guarantees would not be taxed back so, in this respect, the design resembles the universal demogrant approach described in the introduction. This means that, unlike the negative income tax design of the Croll Committee under which families with children at income levels above the point where no benefit is paid would have the same disposable income as families without children and the same pretax income, the GIST design provided for horizontal equity between families with and without children at all income levels. (Families with children and high incomes would probably pay more in additional taxes than the benefits they would receive on behalf of their children under GIST but their net additional tax burden would be lower than for families without dependent children possessing the same pretax income. Added to this would be a flat-tax personal income tax system which would tax all personal net income at a basic rate of 29.5 percent with a surtax of 16.5 percent on total income in excess of 40,000. (Net income is total personal income from sources other than the guarantee after subtracting income spent on the remaining deductions in the tax system such as for charitable donations, pension contributions and child care expenses.) Men and women would be treated as individuals within married couples in the tax system. With a constraint of fiscal neutrality, Wolfson argued that provinces and territories could afford to top up the federal guarantees for persons not earning income because of disability, lone parenthood or high local unemployment rates. This income support tier which would be wholly financed by the provinces and territories would be set at 3,000 a year for each adult aged 18 to 64 and at 1,500 for each child under age 18. This benefit would be taxed back at a rate of 40 percent. This support tier would replace existing social assistance benefits. Families of four qualifying for maximum support and supplementation benefits would have a combined guaranteed income of 16,200 in 1986 dollars or just over 21,500 in 1993 dollars. This would still be over 5,000 below the weighted average Statistics Canada low income cut-off for a family of four in 1993 (And below the income available to a family of four on social assistance in Ontario in 1993. See National Council of Welfare, Welfare Incomes 1993 (Ottawa: Summer 1994) p. 30.) and would be available only to families with no other income. The basic federal income floor for families of four would equal about 9,500 in 1993 dollars. The GIST proposal is the most comprehensive Canadian version of the universal demogrant type of GAI, although unlike the classic universal demogrant, it has separate supplementation and support tiers, with the support tier being a form of negative income tax. Social Assistance Reform While the federal government chose not to pursue either the UISP or the GIST proposals, Canadas two most populous provinces - Ontario and Quebec - moved in the late 1980s to reform their social assistance systems in ways resembling much earlier GAI proposals. In Ontario, reforms moved in a direction similar to that proposed by the Croll report, i. e. higher benefit guarantees and reduced tax rates on earned income. Between 1986 and 1993, real social assistance benefits in the province increased by approximately 25 percent. By 1993 the income available to families with children on social assistance stood at between 72 percent and 82 percent of Statistics Canadas low income cut-offs (these are the 1992 base low income cut-offs. The National Council of Welfare used the 1986 base cut-offs.) in urban areas of Ontario with populations of 500,000 or more, and between 82 percent and 95 percent of the cut-offs for families with children living in less densely populated areas of the province. ( Ibid p. 27. The lower figure in the range is for a married couple with two children. The upper figure is for a lone parent with one child.) The adequacy of benefits for single persons with disabilities was increased to similar percentages of the low income cut-offs. During the same period the taxback rate on non-social assistance net income was lowered to 75 percent. (Net income is income after deducting income and payroll taxes and child care and work-related expenses up to a fixed limit. Persons receiving social assistance in Ontario and other provinces are also permitted to earn small amounts of income a month before the 75 percent taxback rate is applied.) Previously, much higher rates had been levied on non-social assistance gross income. These guarantee and taxback levels are very similar to those proposed by the Croll Committee in 1971 (70 percent of the poverty line with a 70 percent taxback rate.) In Quebec, equally significant changes were made to the income security system in the late 1980s, but were less focused on benefit adequacy and more on harmonization between taxes and transfer payments and improved work and employability incentives. Quebec did not significantly increase its real social assistance rates for families with children. Instead, it roughly indexed them to inflation at levels between 50 percent and 60 percent of the low income cut-offs. However, the provincial income tax system was changed so households with incomes lower than what they would receive on social assistance were not subject to provincial income tax. Payments to parents of newborn children were introduced, and the universal provincial family allowance for families with children was enriched. Social assistance benefits, among those deemed able and expected to work, were set at higher levels for those willing to participate in active programs to improve their employability (and for those actually doing so) than for those unwilling to participate in such programs. And a new income-tested earnings supplementation program, APPORT, was introduced to supplement the earnings and reimburse the child care expenses of working poor parents. Policy makers have been motivated by many different and sometimes incompatible objectives in considering a GAI. The main objectives have been to: - provide more money for the poor to contribute to eliminating poverty in society - provide more choice and less stigma. Basic needs would be met without the stigma of needs-tested social welfare or, potentially, the classification of the population into employable and unemployable groups - simplify the current system of programs and services. (Many of these programs and services would be integrated and harmonized into a single benefit that would require a smaller infrastructure to administer and would make it easier for the client to receive government benefits.) - cost less than current programs and services - provide better incentives to work than the current system of taxes and transfers which imposes conditions and limitations on the receipt of benefits and the level of earnings and - allow for a faster and more efficient adjustment process to structural economic change. If all Canadians could be assured of a base income that doesnt penalize work effort, then the willingness and ability to adjust to changing economic circumstances would improve. The historical review of the GAI proposals indicates that although any one of these objectives may be feasible, combining several objectives into the same program requires trading off one objective against the other. Appendix B: Measures of Adequacy (This Appendix deals with selected measures only. For a fuller discussion, including an evaluation of the strengths and weaknesses of the various measures, see Wolfson and Evans, op. cit. ) Relative Measures of Adequacy Low Income Measure In addition to the low-income cut-offs (LICOs) Statistics Canada also publishes the low income measure (LIMs). These represent 50 percent of adjusted median family income where the adjustment reflects a judgment on how much income needs increase with family size and configuration. In calculating the LIMs, it is assumed that each additional adult after the first increases the familys needs by 40 percent while each dependent childs needs are assumed to be 30 percent of those of the first adult. The exception is in the case of a lone parent family where it is assumed the first dependent child adds 40 percent rather than 30 percent to the familys needs. Adjusted family size is then determined by counting the first adult as 1, the second adult or the first child in a lone parent family as 0.4 and all other dependent children as 0.3. Thus, a married couple with two dependent children would have an adjusted family size of 1 plus 0.4 plus 0.3 plus 0.3 equals 2. Adjusted family income is then determined by dividing family income by adjusted family size. The median adjusted family income is the adjusted family income where 50 percent of families have a smaller adjusted family income and 50 percent have a larger one. The LIM for a single person living alone is 50 percent of the median adjusted family income and the LIMs for all other family configurations are equal to this value multiplied by adjusted family size. The LIMs are automatically adjusted each year to reflect changes in median adjusted family income.(Unlike the low income cut-offs the LIMs are not adjusted to take the size of the community in which the family resides into account.) CCSD Poverty Thresholds Another commonly used relative measure of adequacy is the income threshold calculated by the Canadian Council for Social Development (CCSD). It represents 50 percent of average adjusted family income. The CCSD assumes that the first additional person in the household increases the familys needs by two fifths, and each subsequent person adds an additional one third. Since the average size of a census family in Canada is just over three persons, the CCSD sets the poverty threshold for a family of three at 50 percent of average pretax family income. Adjustments are then made for different-sized families on the basis of family income units which are scaled as follows: a family of one equals three income units, a family of two equals five income units, a family of three equals six income units, a family of four seven units and so on. Thus, for example, the poverty threshold for a family of one is three sixths of that for a family of three. The CCSD thresholds are automatically updated each year according to changes in average family incomes, but are not adjusted for the size of the community in which the family resides. Absolute Measures of Adequacy Other analysts have attempted to construct absolute measures of adequacy based on the cost of essential food, clothing, shelter and other needs for varying family sizes and configurations. Two well known examples are those used by the federal government in the United States and those recently calculated for Canadian cities and provinces by economist Christopher Sarlo. USA Poverty Lines Unlike Canada and most other developed countries, the United States has an official set of poverty lines which are used to determine eligibility for a number of government programs. These lines were based on the cost of a basic nutritious food budget for households of varying sizes in 1961. These amounts were then multiplied by three which was the average ratio of family food expenditures to post-tax family income in the United States at the time. These amounts have since been updated annually to match changes in the American Consumer Price Index. The Sarlo Poverty Lines These lines were initially calculated by Christopher Sarlo in 1988 for major Canadian cities and for each of the provinces. They reflect the actual cost of a basic nutritious food diet, basic shelter and clothing and the cost of a range of other goods and services deemed to be essential for a basic standard of living by Sarlo. Comparing Measures of Adequacy As the attached table indicates, the range of adequacy for common household types under these relative and absolute measures of low income in a given year varies widely. 1992 Thresholds of Pre-Tax Adequacy - in Canadian dollars Sarlos amounts are 1988 estimates for the City of Toronto in 1992 dollars. U. S.A. amounts are adjusted for 1992 purchasing parities (U. S. 1 dollar equals Canadian 1.24) LICO amounts are the weighted average of the population by community size One adult Sarlo - 7,983 U. S.A. - 8,857 LIMs - 12,148 LICOs - 14,615 CCSD - 13,419 One adult-one child or two adults Sarlo - 10,903 U. S.A. - 11,330 LIMs - 17,007 LICOs - 17,830 CCSD - 22,365 Two adults-one child or One adult-two children Sarlo - 14,126 U. S.A. - 13,871 LIMs - 20,652 LICOs - 22,213 CCSD - 26,838 Two adults-two children or One adult-three children Sarlo - 17,936 U. S.A. - 17,775 LIMs - 24,296 LICOs - 26,843 CCSD - 31,311 Appendix C: 1993 Social Assistance Incomes (Social assistance income refers to provincial or territorial and municipal cash social assistance benefits plus other cash benefits available to persons receiving social assistance such as the refundable Child Tax Benefit and GST Credit. Newfoundland Employable Adult - 4,522 Disabled Adult - 8,541 Lone Parent One Child - 12,986 Couple Two Children - 14,825 Prince Edward Island Employable Adult - 8,180 Disabled Adult - 9,294 Lone Parent One Child - 12,773 Couple Two Children - 19,110 Nova Scotia Employable Adult - 6,100 Disabled Adult - 8,637 Lone Parent One Child - 12,080 Couple Two Children - 15,111 New Brunswick Employable Adult - 3,256 Disabled Adult - 8,238 Lone Parent One Child - 10,150 Couple Two Children - 12,151 Quebec Employable Adult - 6,316 Disabled Adult - 8,164 Lone Parent One Child - 12,607 Couple Two Children - 16,251 Ontario Employable Adult - 8,527 Disabled Adult - 11,725 Lone Parent One Child - 16,790 Couple Two Children - 22,334 Manitoba Employable Adult - 7,236 Disabled Adult - 8,257 Lone Parent One Child - 11,386 Couple Two Children - 19,410 Saskatchewan Employable Adult - 5,965 Disabled Adult - 8,512 Lone Parent One Child - 12,093 Couple Two Children - 17,382 Alberta Employable Adult - 5,608 Disabled Adult - 9,753 (Assumes recipient qualified for Assured Income for the Severely Handicapped (AISH) benefits Lo ne Parent One Child - 11,281 Couple Two Children - 18,122 British Columbia Employable Adult - 6,639 Disabled Adult - 9,318 Lone Parent One Child - 13,345 Couple Two Children - 17,374 Yukon Employable Adult - 8,121 Disabled Adult - 8,977 Lone Parent One Child - 14,841 Couple Two Children - 22,404 Northwest Territories Employable Adult - 11,599 Disabled Adult - 13,104 Lone Parent One Child - 20,893 Couple Two Children - 25,307 Source: National Council of Welfare, Welfare Incomes 1993 (Ottawa: Summer 1994) pages 16 to 23.4.3.4 Bias where is the standard deviation std ( X ) being estimated. We dont know the standard deviation of X . but we can approximate the standard error based upon some estimated value s for . Irrespective of the value of , the standard error decreases with the square root of the sample size m . Quadrupling the sample size halves the standard error. 4.3.6 Mean Squared Error We seek estimators that are unbiased and have minimal standard error. Sometimes these goals are incompatible. Consider Exhibit 4.2, which indicates PDFs for two estimators of a parameter . One is unbiased. The other is biased but has a lower standard error. Which estimator should we use Exhibit 4.2: PDFs are indicated for two estimators of a parameter . One is unbiased. The other is biased but has lower standard error. Mean squared error (MSE) combines the notions of bias and standard error. It is defined as Since we have already determined the bias and standard error of estimator 4.4 , calculating its mean squared error is easy: Faced with alternative estimators for a given parameter, it is generally reasonable to use the one with the smallest MSE.
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