Guaranteed minimum income

A guaranteed minimum income is a proposed system of income redistribution that would give each citizen a certain sum of money independent of whether they work or not. It is sometimes known as a "Basic income Guarantee (BIG)", "universal basic income", "citizen's income scheme", or just a basic income (the term "guaranteed annual income" is often used in the United States), but these systems also often include a method of paying for the income as well.

Related Topics:
Income redistribution - United States

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The system would be a government administered one that would allot every citizen a sum of money large enough to live on. A common amount proposed is 20% of per capita GDP. The wealthiest as well as the poorest citizens would receive this. Salaries from employment would be a supplement to this government income. A common way of paying for this system is through a negative income tax where a government flat tax would be charged to all citizens. The current model of progressive income taxes used throughout the western world could be eliminated, but the system would still be progressive, since those at the lower end of the wage scale would pay less in taxes than they would receive in guaranteed income. For the most wealthy members of society the few thousand dollars of the guaranteed income would only make a small dent in the taxes they have to pay.

Related Topics:
GDP - Negative income tax - Flat tax - Progressive income tax

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Proponents of a guaranteed minimum income argue that the system has a number of advantages:

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• It would simplify the welfare state. The introduction of a guaranteed minimum income could also see the elimination of traditional welfare, the minimum wage, much of unemployment insurance, government pensions, and benefits for the disabled and ill. This would eliminate large amounts of government bureaucracy. It could also see the elimination of the progressive income tax with no adverse effects on the poor, as explained above.
• It would prevent any citizen from falling into abject poverty. With a guaranteed minimum income, starvation and homelessness would be all but eliminated.
• It would cure some of the major problems of the modern welfare state such as the welfare trap, that is assumed to discourage people from working.
• It would give enough money for every citizen to be able to receive a good education and proper healthcare.
• It would give each citizen the freedom to select jobs that are more pleasant (assuming they are available), thus potentially eliminating unpleasant tasks that the economy would thus be forced to automate.
• It would allow citizens to do work that is productive but cannot provide income, such as caring for children or the elderly within one's own family, or providing public goods.
• It would place no ceiling on income (thus preserving incentive) but would create a solid income floor below which no one could fall.

The system has many opponents as well, however. They raise a number of objections:

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• The most common of these objections is the so called Malibu surfer problem, where a certain unambitious section of the population would presumably elect not to work at all.
• It involves a transfer of resources from the rich to the poor, which critics find objectionable as a matter of principle.
• It would increase wages dramatically for the very large category of workers who are doing unpleasant, menial but essential jobs, thus potentially damaging the economy.
• It would cost a large amount of money, which would necessitate raising taxes.

No country in the world has ever implemented a full guaranteed minimum income system. Portugal is by far the closest, with a guaranteed minimum income a legally enshrined right for the entire population since 1997. However, the amount guaranteed is well below the poverty line and other programs such as the minimum wage are thus still in place. The system also forces participants to attend social integration sessions.

Related Topics:
Portugal - 1997

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Brazil has also just recently announced a limited system that will apply to the poorest members of society. Some European countries have reoriented their taxation systems to more closely reflect a guaranteed minimum income system, including Belgium, the Netherlands and the United Kingdom.

Related Topics:
Brazil - Belgium - Netherlands - United Kingdom

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The U.S. State of Alaska has a system which guarantees each citizen a share of the state's oil revenues.

Related Topics:
U.S. - Alaska

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Many other countries have political parties that advocate such a system, such as the Canadian Action Party, the Danish Minority Party, both the Scottish Green Party and recently the left-of centre Scottish National Party, and the New Zealand Democratic Party. In 1972, members of the American Democratic Party wrote a proposal for a GMI into their official platform. However, that particular plank, along with numerous others, was removed following the landslide defeat of Senator George McGovern, the party's candidate in that year's presidential election.

Related Topics:
Canadian Action Party - Danish - Minority Party - Scottish Green Party - Scottish National Party - New Zealand Democratic Party - 1972 - American - Democratic Party - George McGovern - Presidential

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The world's most noted advocate of the guaranteed minimum income system is the Belgian economist Philippe van Parijs. Other advocates include Keith Rankin (New Zealand), Herwig Büchele (Innsbruck) and Hans A. Pestalozzi. The system is supported by both left wing and right wing thinkers, but it is more popular among leftists and socialists. Right-wing advocates generally prefer the negative income tax model.

Related Topics:
Philippe van Parijs - Keith Rankin - Herwig Büchele - Innsbruck - Hans A. Pestalozzi - Socialist

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A negative income tax, proposed by Milton Friedman, came close to implementation in the United States under Richard Nixon. Also, the U.S. does have the GMI-inspired Earned income tax credit. The citizen's dividend is a similar concept, but the payment made to individuals is based upon the revenues that the government can collect from leasing and selling natural resources (such a dividend in fact exists in the state of Alaska).

Related Topics:
Negative income tax - Milton Friedman - United States - Richard Nixon - Earned income tax credit - Citizen's dividend - Alaska

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Many different sources of funding have been suggested for a guaranteed minimum income:

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• Income taxes
• Sales taxes
• Capital gains taxes
• Inheritance taxes
• Wealth taxes
• Luxury taxes
• Elimination of current income support programs and tax deductions
• Repayment of the grant at death or retirement
• Land and natural resource taxes
• Pollution Taxes
• Fees from government created monopolies (such as the broadcast spectrum and utilities)
• Collective resource ownership
• Universal stock ownership
• A National Mutual Fund
• Money creation
• Tariffs, the lottery, or sin taxes
 
Guaranteed minimum income: See Also ►