Lets talk about Mincome

While I was going through our new policy points of the Pirate Party of Canada one by one. One policy in particular caught my eye and intrigued me. This was a policy that made so much sense that the only thing that does not make sense is why the government isnt already doing it! That policy that caught my eye was Mincome (a portmanteau of Minimum Income). Of course it goes by many other names Guarnteed Annual Income, Negative Income Tax, Basic Income, Basic Income Guarentee, but no matter what name it goes by the premise is simple. People are entitled, yes I used the word entitled, to a reasonable standard of living and in order to achieve a reasonable standard of living one needs to earn a certain minimum income.

The name Mincome comes from the social experiment done in rural Manitoba in the 1970′s. What they did was set about ensuring that everyone in two towns that this was tested in were given money up to a minimum amount if they did not make enough money to surpass that point for that month. Now people who are right-wing in their political affiliation may start going on about it being a commie ideology, how people will sit around and blow all their money on booze and smokes, etc… But the experiment showed that for the most part people continued to work hard and those who did drop out of the work force were usually mothers with young children and teenagers who continued their educational pursuits through highschool. Keeping in mind that in the 1970′s getting a high school diploma was a pretty big deal. Likewise, hard working farmers did not have to agonize over failed crops knowing there was a support structure in place that ensured that they would not lose the farm because of one bad seasons. There is one Conservative Senator Hugh Segal who actually advocates for the very same thing that we as a party hope to push forward and while his own reasonings may differ slightly from our own they all still make sense. There is a very good youtube video ( http://youtu.be/tI-LDQCmW5E )

Now you might think that poor people are the only ones who benefit from Mincome. You would be wrong. Criminal activity as a whole went down under Mincome in these places. When people dont have to lie, cheat and steal to make ends meet criminal activity becomes less lucrative. As well during the study hospital visits were down 8-9% and hospitalizations for work accidents were also down. Just imagine how much money we as a community would save if we suddenly had like 10% less people going to hospital. The hospitalizations reduction was theorized to be a benefit from the reduced stress of having to worry about things.

Mincome is such a simple and elegant solution. Keeping in mind that I did my math that Mincome should be equal to full time minimum wage job and used the highest minimum wage value in the country (Ontario) for my calculations ($10.25 * 40 Hours * 52 Weeks = $21,320/yr or $1,752/mo or $410/wk)

Under a federal Mincome system you would not need to deal with provincial welfare systems. In ontario alone there are nearly 300,000-400,000 people on social assistance and Ontario spends $1.9 Billion a year (2012) on Ontario Works and eliminating the bureaucracy to dispense Ontario Works alone would free up enough money to pay 89,118 under Mincome. Health Care costs across the country were $192 Billion dollars in 2010. Now lets assume we would have a cost of 10% less under mincome (since hospital stays are more expensive than just visiting a doctor by quite a bit, this is an over simplification) that is $19 billion dollars saved right there. The savings there would account for enough to pay 890,000 people Mincome.

Also lets not forget the number of people who would open up businesses. Given a safety net the number of people who would engage in the creation of businesses and entrepeneurship would increase because the risk associated with it is diminished while rewards remain there for the taking.

In short the number of programs a Mincome system makes obsolete is amazing. We would not need Welfare and the bureaucracy associated with it with a national Mincome system. Likewise we may no longer need Employment Insurance (EI) because if you lose your job you would get the equivalent income to a minimum wage job automatically. You would not need a Canada Pension Plan (CPP) or Old Age Security (OAS) either because those are basically programs which combined implment a lesser form of Mincome.

Now you ask how would you handle this so that there is no huge sprawling bureaucracy with thousands of rules involved to decide who gets Mincome and who doesnt? The answer is simple. Everyone who files a tax return gets a mincome cheque whether they need it or not so the person who makes nothing and the person who makes millions a year both receive a mincome cheque. Money received from Mincome would be treated as untaxable income or alternatively it would be treated as taxable income with a tax rate of 0% up to the Mincome level. Either way when people acquire jobs there would not be any real clawbacks on mincome, which will improve their position and may make coping mechanisms like GST/HST Rebate Cheques obsolete as well leading to even more savings.

We can solve poverty. All it takes is treating people are human beings and not just numbers on a spreadsheet.

This post was written by
Patrick Fitzgerald (aka. Concerned Citizen) has been a member of the Pirate Party of Canada since Summer of 2009. He currently is the head of the Project Development Committee and works with both IT and the Political Council. As of August 2013, I am no longer on the Political Council and have formally resigned.

14 Comments on "Lets talk about Mincome"

  • mrG says

    we need not call this minimum-income, as that may raise the ire of the right-wingers. Let’s call it “national dividends” which just so happens to equal a pension sufficient for living. this is more like the alberta oil-profits-slash-environment-rape-hush-money given to every citizen as their rightful entitlement on the basis of being a citizen and therefore a ‘shareholder’ in the corporation of the government. No one could complain about paying dividends to shareholders, could they>

  • A Name says

    Thanks Patrick, I hadn’t seen this explained before.

    Paying multimillionaires $21,320/yr seems unnecessary. A simple minimum income cutoff would make sense. 34M people x $21k = $714B

    It’s obvious that early investment has benefits beyond later payments (a gram of prevention is worth a kilo of cure). Also, a portion returns as property, sales, and excise tax. Over time, several efficiencies show up, but negatives also (longer lifespan = higher health costs).

    I’ve always believed that prosperity should be used whenever possible to guarantee citizens the minimum requirements of life (ie. water, food, shelter). Extending that idea to life protection brings health care, national defence, fire suppression, and crime deterrence services. Government objectives beyond those purposes work toward optimizing progress (eg. regulation, infrastructure) and maintaining goods (eg. parks); from there, the bureaucracy sprawls, with government agency department names of >5 words.

    I’m not sure if even a guaranteed minimum income is possible now. More fast math, 3.5M impoverished Canadians x $21,230 = $74.62B per year, or roughly 28% of 2013 Federal revenue. I’ve probably misunderstood, but it doesn’t seem feasible yet. It is a fraction of revenue, but much is needed to maintain the mechanism that created it. Anti-poverty programs like EI are bureaucratic, but they attempt to get similar effects using less, increasing efficiency. They also continue to provide service long after a $21k cheque is spent.

    Unfortunately, the best weapons against poverty we have are still industry, technology, and education.

    • Numbers says

      It’s hard to get accurate numbers but it’s estimated that the cost of poverty is around 72 to 86 billion. This includes increased crime, courts, police, prisons, health care, mental health and countless other factors.

      Then there’s EI which costs 1.8 billion in administer and pays out around 16 billion annually. CPP costs around 2 billion annually to administer costs and pays out around 62 billion a year. Our disability program costs around 16 billion a year and our welfare program costs around 7 billion. Heck even the child care benefit costs around 2.5 billion a year.

      When you tally up all theses programs the figures approach 200 billion.

      There is a lot of redundancy, inefficiencies and complexity in our current system. It’s possible that mincome makes more financial sense.

    • Concerned Citizen says

      I figured I had to explain it. Also the video link contained within helped me understand it even more. After watching that video by a senator who self-identifies as a Conservative no less, I’ve come to the conclusion that we as a country can not afford to not at least try this. After all to paraphrase what he said, all the people on social assistance are there for one reason and one reason only, because they dont have enough income to survive and under our current system even what social assistance provides is insufficient to truly help. Our social assistance safety net is actually designed to entangle but never catch someone from a fall.

      Guarenteed Minimum Income IS possible now. Putting in a minimum income cutoff would probably exclude the top 10% (like people who make over $100,000+ just an example but the real number could be higher or lower intended to mark certain jobs as sufficient to support oneself on). The only thing that is lacking is the will to implement it. Even if it cost $75B a year, you have to realize that some of those costs are offset by eliminating all the provincial welfare systems because noone would qualify for them under Mincome.

      As Numbers mentions below, all the savings you get from mincome tally up to over $200B. With savings like that, I’m willing to take the bet that it’s worth it.

  • Sasha says

    This is slightly getting off topic, however if there is going to be changes made to the system I feel we must dig deeper than Mincome. I think it is a good idea, but if we do not see beneath the surface of why we need Mincome, eventually I fear it will become as unproductive as welfare.
    1st off, we have the prices of rent and food multiplying continuously. Welfare isn’t enough to pay for a bachelor apartment anymore not including having to feed yourself too.
    2nd off, people are losing more and more faith in the educational system because it demands far too much without good reason. It needs to be restructured to suit the needs of the individuals it intends to educate as well as the employers who intend to employ them in the future. They already know everyone is different yet the system insists on treating every student the same and expecting the same from each of them. Maybe someone isn’t very good with numbers but could write the most touching story you every read. Or maybe someone understands the pattern of numbers but doesn’t have the best persuasive writing skills. Why should people be held back from doing what they do best because they aren’t good at everything else too? Better apprenticeship programs need to be formed for those who are talented at something in particular.
    3rd off a lot of really simple jobs like flipping burgers demand of you to have a grade twelve. That is very disheartening to people. Why spend years of our life getting a grade twelve that will only allow you to flip burgers? There needs to be some adjustments made to what kind of level of education certain places are allowed to demand. There is no incentive there to encourage people to educate themselves.
    I am sure there are many more problems under the surface of which I am not yet aware. But until these current issues are taken seriously there will continue to be a lot of crime and a lot of lies and cheating. There will continue to be more and more highschool dropouts turning to selling drugs to survive.

    • Concerned Citizen says

      Thank you for your comment.

      As for your first concern. I would say that Mincome should be pegged to inflation and increase as inflation increases.

      For your second concern there was a good idea by a member who posted on their own personal blog ( http://shawngray.ca/?p=1804 ) with the idea that ‘unemployable’ majors like English Literature, Philosphy and the like only be offered as minors and those instututes of higher learning should focus on employable majors. This way people dont graduate with thousands of dollars of debt and a useless piece of paper.

      I also think that the ‘deflation’ of education has contributed to the fact that it now takes a highschool diploma to flip burgers. It seems rather rediculous a job that teenagers typically do would require a highschool diploma.

  • Jarrod says

    Mincome is a great plan and to help subsidize it the country could nationalize all natural resources and use the money that goes to individuals now to be spread throughout the whole.

  • Patrick says

    People are entitled, yes I used the word entitled, to a reasonable standard of living and in order to achieve a reasonable standard of living one needs to earn a certain minimum income.
    Question on this. What’s the specific philosophical chain of logic to arrive at this conclusion?

  • Anthony says

    Of course, this money needs to come from *somewhere*, so it means that it will come from taxes. After a certain point, the money you are paying in taxes will exceed the money you are getting back as mincome. The people over this treshold will be the ones subsidizing life for the rest of folks. If you could find ways to reduce other government spending because of savings from the program — decreased expenses in administration, health care spending, crime, etc. then perhaps it could work out. Also might be useful to simplify taxes in general with a flat tax or other standard % of income and eliminate brackets. Everyone gets the $30k / year “tax free”, and then pays 20% of everything earned over that. Of course, I wonder if prices would inflate as a result of the increased income in the short term. If my tenants are all making an extra $30k / year, it seems easy enough for me to raise my rents to absorb most of that or other basic expenses. So, this might have the effect of pushing up the cost of living over time.

    • Concerned Citizen says

      Well with all the recent scams in the economic sector, I too question the source of money in the first place. With financial trickery like the subprime mortgage crisis which caused a huge bubble and basically caused a recession and depression in the economy. Then you get things like the carbon tax credit scam where some train car just kept getting shipped back and forth across the border without being unloaded because they said something was being used to offset carbon emissions. The most recent one is that bank or whatever that was just moving metals around a warehouse and creating money out of thin air.

      Money should only enter the system when something of VALUE enters the system. The problem with our system is that money enters the system at the top. When it does this the rich spend their money and ‘new’ money does not see the flaw of inflation until it is first spent. Once it is spent the new money in the system makes everyone’s money worth less.

      I feel you did not read through the entire post because it goes on to talk about how reducing costs of administration of social assistance ($1.9B alone in Ontario) as well that the study where it occured saw a 10% drop in health care costs. I dont know if there was any link to crime in such a small study but I would be willing to bet that having enough money to live in a half-decent place and have enough to put food on the table greatly reduce the chance of someone going out to try and mug someone to achieve that same goal because desperate people resort to desperate actions.

      If one were to introduce a Mincome type setup, then as I said the amount granted each year would have to be pegged to the inflation rate. This is the flaw that we have in Minimum Wage. When it first came out Minimum Wage was set at a level that people could actually live off of. However, Minimum Wage was not pegged to inflation. Therefore, every year that Minimum Wage was not increased or increased at a rate smaller than inflation resulted in an effective pay cut to all employees working at the minimum wage level.

      Also if you are talking about tenants, remember with an extra $30k/year they might not need to rent from you anymore. Options are opened up for people to purchase and/or move to different locales where a landlord may not be prone to raising rents to bleed their tenants dry.

  • Andres says

    Anthony, when you say “The people over this treshold will be the ones subsidizing life for the rest of folks.”, you’re making it sound worse than it is.

    First, I think the majority of the money needed to fund mincome could possibly be collected just through taxes over companies. The rest would be funded by workers, but it could be a very progressive taxation, that is, a person who earns 300 times more than the average worker, would need to pay more. Or do you think a person can be 300 times more productive than other person? All those salary differences are not normally because of productivity differences, but because of capitalism-derived circumstances (such as: fortunes inheritances, having high-class and important friendships, etc.). In short, the “passive incomes” that today plague the planet which fund the most important and profitable businesses, would be the first ones to pay what is the minimum for the lowest class: money to not die of hunger or lack of medical treatments.

  • Hello from America! While there is no chance in hell such a thing would pass in my country, having a working example from our neighbors up north would be invaluable to us.

    I very much agree with the comments about branding, as mincome does imply entitlements which Conservatives around the world are opposed to. The challenge in my mind is to recognize the value of the “platform” which enables businesses to thrive. We have come to terms with this in regards to roads and bridges, but we’ve lost sight on the human values of education and healthcare.

    Best of luck!

  • Did you heard of this ’70s decade experience in Canada precisely http://www.dominionpaper.ca/articles/4100

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