Mincome

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Glen Hodgson, iPolitics:

Nice idea in theory, but would it work in practice? As evidence, a social experiment called “MINCOME” was conducted by the Government of Manitoba in the 1970s, testing the impact of a GAI on the population of Dauphin, Manitoba. All Dauphin families were guaranteed an income of 60 per cent of the low-income cut-off (or LICO), as set by Statistics Canada, a level of income comparable to that under existing welfare schemes. Each dollar of income from other sources was taxed at a relatively high marginal rate of 50 per cent.

An excellent recent paper by Evelyn Forget provides analysis of the health and social impacts of the MINCOME experiment. Using data sources that (remarkably) had never before been assembled, Ms Forget demonstrates that hospitalization rates of MINCOME recipients fell by 8.5 per cent relative to similar non-recipients. Visits to doctors declined, especially for mental health concerns—meaning that the GAI appears to have produced a significant reduction in provincial health spending on the target population. More adolescents stayed in school to grade 12. Marital stability was maintained, and there was no evidence that fertility rates increased, or that birth outcomes changed. In short, the MINCOME experiment appears to have had some important success in terms of improving population health and reducing health costs, with few negative social costs.

If the MINCOME results could be reproduced and generalized across Canadian society, a GAI might produce sizable net fiscal savings, especially for provinces. A GAI that delivered income support through the tax system would allow the existing provincial welfare bureaucracy to be sharply reduced. Improved population health for lower-income persons could create savings on health care, through reduced hospitalization and fewer visits to doctors. And if the GAI system were properly calibrated to lower the welfare wall, greater labour force attachment and higher net income tax revenues could be achieved. Some important obstacles would have to be addressed. An exceptional degree of federal-provincial cooperation would be required on fiscal arrangements if a guaranteed annual income were to become a reality. The costs and benefits of a GAI system would have to be assessed carefully, with detailed research and economic modelling of key elements like the level of income support and the marginal tax rate for earned income.

We expect that economic factors—like continued fiscal deficits, ever-rising provincial health care costs and tightening labour markets—would be the political drivers for GAI reform, more than social concerns. But there are solid economic, fiscal and social reasons to give a GAI serious consideration. If properly designed and implemented, the introduction of a GAI could be one of those rare moments in public policy when a win-win-win outcome is achieved, for society and for the individuals and families affected." (http://www.other-news.info/2017/01/three-stories-on-universal-basic-income/)