The basic income guarantee is currently one of the hottest topics in the financial and political realms. While the concept has been around for several hundred years, it has recently exploded in popularity due to rising inequality, globalization, financial bail-outs, labour displacement from technological changes, and more.
So what is the basic income guarantee, and how does it work? Also, what makes the idea so controversial? These are some of the questions that we’ll be answering over this three-part series on the basic income guarantee. Next week we’ll be looking at the main arguments for and against this policy.
Thanks again for reading, and you can find more about the Friendly Financial Coach, Toronto’s original Financial Literacy Coach here.
What is the Basic Income Guarantee?
The basic income guarantee (BIG) is a government policy that pays a non-conditional income to all citizens of a region. That means that the poor, rich and everyone in between receive a payment. This received amount is still taxable, so after-tax amount will differ.
The amount of income paid would be vary wildly, making this a very controversial aspects of the policy. The amount would be predetermined by a governmental body, and would vary by region, policy goals, and fiscal limitations.
BIG would also replace existing social security expenses, such as child benefits, select pensions, disability payments, and other benefits. Ideally, the replacement income would be comparable to existing social security programs. Replacing these benefits would partially pay for the BIG program.
In practise, this policy has been implemented in pilot projects around the world, but never widely rolled out. During the mid-1970’s it was implemented in Winnipeg, Manitoba and in surrounding rural areas. Recently, a pilot project was passed in Finland. Similar proposals are being developed in the Netherlands and Oakland, California.
Also, a nationwide vote in Switzerland on June 5th, 2016 rejected a national-wide BIG proposal.
We’ll look further into how these pilot projects have performed in the third part of this article special of basic income guarantees.
Thanks again for stopping by, please consider sharing this article if you found it informative or enjoyable. Please sign-up to our newsletter to get other similar articles.