Despreocupado despreocupado - sem interesse ou cuidado ou sentindo o americano médio. É despreocupado que sua situação é o resultado de um complexo de ações pessoais e econômicas e governamentais. Além da compreensão e controle dos cidadãos normais alegremente despreocupado com seus amigos dificuldade despreocupada - marcada pela falta de atenção ou consideração ou premeditação ou minuciosidade não cuidado descuidado sobre suas roupas esquecido por alguma pessoa descuidada uma governanta descuidada repreensões descuidadas foi um erro descuidado ferido por um Observação descuidada não perturbada - não acometida por problemas ou distúrbios ou angústia parecia despreocupado por dúvidas de qualquer tipo de sono não perturbado uma espécie de rosto não perturbado preocupado - sentindo ou mostrando preocupação ou solicitude preocupado com pais de jovens infratores estava preocupado com o futuro nos sentimos preocupados com a realização da tarefa Na mão muito preocupado em não decepcionar uma criança pequena despreocupado - fácil em mente não preocupado o prisioneiro parece totalmente despreocupado quanto ao resultado do exame untroubled - não assediado por problemas ou perturbação ou angústia parecia untroubled por dúvidas de qualquer tipo de sono untroubled um tipo Rosto desinteressado, despreocupado - não Ocupado ou envolvido com os leitores despreocupados com o estilo uninvolved - não envolveu sendo uninvolved ele permaneceu objetivo unconcerned (unworried) x2192 unbekmmert (indiferente) x2192 gleichgltig ser despreocupado sobre algo x2192 sich nicht um etw kmmern como ele poderia ser tão despreocupado sobre o seu problema safetythe x2192 Wie konnte ihm ihre Sicherheit das Problema tão egal ou gleichgltig sein Eu não estava despreocupado com a sua segurança x2192 ich habe mir Sorgen um deine Sicherheit gemacht para ser despreocupado por algo, para ser despreocupado em algo x2192 von etw unberhrt sein despreocupado x2ccx28cnkx259nx2c8sx25cx2d0nd adj (unworried) X2192 tranquilloa para ser despreocupado sobre x2192 não darsi pensiero di, não preoccuparsi di ou por falta de interesse ou ansiedade. Ele recebeu a notícia de seu fracasso com aparente despreocupação. 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 indiferente abejingas vienaldzgs terabai onbezorgd uengasjert. ubekymret beztroski desinteressado indiferent ahostajn brezbrien ravnoduan likgiltig, ointresserad, ilgisiz obekymrad, kaytsz v TNH indiferentemente (-nid-) advérbio onverskillig, kalm indiferentemente lhostejn gleichgltig ligeglad con indiferencia kskikselt vlinpitmttmsti dun ar indiffrent bezbrino kzmbsen secara tidak Peduli af hugaleysi con indifferenza abejingai vienaldzgi terabai Onbezorgd gostou. Ubekymret beztrosko desinteressadamente (cu un aer) indiferent ahostajne brezbrino ravnoduno likgiltigt, ointresserat, obekymrat ilgisizce, kaytszca v tnh Ligação a esta página: Sentou-se na parte de trás de um vagão expresso e eles estavam no assento como despreocupado como qualquer coisa. Durante todos esses movimentos, e em meio à agitação geral, Magua não só manteve seu lugar, mas a própria atitude que ele tomara originalmente, contra o lado da hospedaria, onde continuou imóvel e, aparentemente, como indiferente . Como se não tivesse interesse no resultado. A cada instante, quando o homem falava, movia-se ou sorria, começava a fixar os olhos nele e, de repente, os retirava, quando os olhos brilhantes e escuros se encontravam com os seus com tão despreocupada frieza. Emma não respondeu, e tentou parecer alegremente despreocupada. Mas estava realmente se sentindo desconfortável e querendo que ele fosse muito embora. Ele, seu pai, um homem bem-intencionado, mas não um homem de visão rápida, poderia realmente, eu acredito, não dar nenhuma informação para ele tinha sido geralmente confinados à casa, enquanto as meninas estavam varrendo a cidade e fazendo o que eles conheciam Escolheu e tentou convencer-me, tão completamente como ele se convenceu, de que suas filhas estavam inteiramente despreocupadas no negócio. Disse a matrona, guardando seu livro com a resignação despreocupada de uma pessoa experiente que prevê uma tempestade em uma xícara de chá. Quando eu tentava pegar qualquer um desses pássaros, eles corajosamente se voltassem contra mim, tentando picar meus dedos, que eu não ousaria arriscar a seu alcance e então eles iriam saltar de volta despreocupados. Para caçar vermes ou caramujos, como faziam antes. Eu assumi as atitudes mais despreocupadas e esperei com impaciência que falassem primeiro. As exclamações, os insultos dirigidos a Benedetto, que permaneceram perfeitamente despreocupados. Os gestos energéticos, o movimento dos gendarmes, os escarnecedores da escumalha da multidão sempre a ponto de subir à superfície em caso de qualquer perturbação - tudo isso durou cinco minutos, antes que os porteiros e os magistrados conseguissem restabelecer o silêncio . Bennet, parecendo tão despreocupado quanto possível, e não nos importando mais do que se estivéssemos em York, desde que ela pudesse ter seu próprio caminho. Receio agora, mãe, você está pensando em Betts Shoreham, disse Julia, corando, embora lutasse poderosamente para parecer despreocupada. É uma visão comovente isso, de tantos homens da terra, terrena, que nunca se importou com nada para um navio, pisando despreocupado. Brutal e hob-nailed em cima de seu corpo impotente. Melhorando a segurança social no Canadá Garantia renda anual: Um papel suplementar Government of Canada 1994 NOTA: Este documento foi recuperado do desenvolvimento de recursos humanos Canadá REPRODUÇÃO DE SEGURANÇA SOCIAL website e copiado aqui para a informação Finalidades. O site SSR não está mais ativo. Na cidade de Quebec, em 18 de setembro de 1994, o primeiro-ministro delineou quatro componentes-chave da agenda de empregos e crescimento do governo: - reforma da segurança social - garantia de um clima fiscal saudável - revisão dos programas e prioridades do governo e - fortalecimento do desempenho Da economia canadense em investimentos, inovação e comércio. O Documento de Discussão, Melhorar a Segurança Social no Canadá. Divulgado ao público em 5 de outubro de 1994, fornece aos canadenses um quadro para participar da reforma do nosso sistema de segurança social. O documento analisa de perto o porquê de o sistema de segurança social não estar funcionando para muitos canadenses e para o país como um todo. Ele define uma direção para a mudança e oferece uma gama de opções para redesenhar programas federais nas áreas de trabalho, aprendizagem e segurança. Esses programas incluem Seguro de Desemprego, serviços de desenvolvimento de emprego, assistência à infância e apoio federal para educação pós-secundária e assistência social. Os Documentos Complementares fornecem detalhes analíticos Este documento faz parte de uma série de documentos complementares que estão sendo divulgados para fornecer aos canadenses informações mais detalhadas sobre o sistema atual e as opções descritas no Documento de Discussão. Este material destina-se a proporcionar uma compreensão mais profunda das questões e a incentivar uma participação mais informada no debate. Todas as contribuições para a discussão são bem-vindas e encorajadas. É somente com a participação de todos os canadenses que podemos projetar um sistema eficaz, justo, flexível e acessível, que responda às necessidades dos canadenses hoje e no futuro. O começo dos anos 70 - o fracasso para implementar um GAI Finais dos anos setenta e início dos anos oitenta - a mudança para o incrementalismo Os meados dos anos oitenta para O Atual - A GAI Revived Conclusão Medidas Relativas de Adequação Medida de Baixa Renda CCSD Limiares de Pobreza Medidas Absolutas de Adequade EUA Linha de Pobreza As Linhas de Pobreza Sarlo Comparando Medidas de Adequação 1: O que é um Rendimento Anual Garantido (GAI) É uma peça central perene em qualquer discussão da reforma da segurança social. As versões modernas da idéia originaram aproximadamente 30 anos há e ainda comandam muito interesse e atenção hoje. Tem sido um tema dominante nos debates sobre política social no Canadá desde então. Pessoas diferentes significam coisas diferentes quando falam de um GAI. Comum a todos os conceitos é um rendimento de chão fornecido numa base contínua, que pode variar dependendo da configuração de casa, idade e outras fontes de renda. Além disso, no entanto, um GAI depende dos fins que se destina a servir. Para alguns, o objetivo de um GAI é aumentar o incentivo para trabalhar, reduzindo ao mesmo tempo o custo ea complexidade do sistema atual. Para outros, o objetivo é estabelecer um direito não estigmatizante a um nível adequado de renda, independentemente do esforço de trabalho, para todos os membros da sociedade. Como será demonstrado, esses objectivos diferentes e contraditórios não podem ser satisfeitos pelo mesmo sistema de garantia de rendimentos. No documento de discussão federal, Melhorando a Segurança Social no Canadá, o ponto foi dito que a conversão dos programas de segurança de renda do Canadá em um único GAI não é uma idéia prática. Este artigo fornece uma análise para compreender as dificuldades que enfrentam a implementação de um GAI. As propostas modernas para um GAI tomaram geralmente duas formas básicas que refletem estes propósitos muito diferentes e um número infinito das variações. O formulário geralmente favorecido por pessoas que colocam um alto valor na simplificação e incentivos de trabalho é o imposto de renda negativo (NIT). Trata-se de um pagamento por parte dos governos a pessoas ou famílias abaixo de determinado nível de renda, em oposição a impostos de renda positivos que são pagos aos governos por pessoas com renda acima de um certo nível. O NIT foi inicialmente concebido pelo economista americano George Stigler, em 1946 (George Stigler, Economia da Legislação do Salário Mínimo, American Economic Review (1946) pp. 358-365), como outra forma de atingir os objetivos da legislação sobre salário mínimo , E refinado por outro economista americano, Milton Friedman, em 1962 (Milton Friedman, Capitalismo e Liberdade (Chicago: University of Chicago Press, 1962)), numa alternativa em grande escala a todos os programas de assistência social e de apoio à renda. A segunda forma de GAI é o demogrant universal (UD). Este é um pagamento para todas as pessoas, independentemente da renda. Geralmente é favorecido por aqueles que vêem o GAI como um direito de cidadania e cujo propósito é eliminar a pobreza e levar a uma partilha mais igualitária dos benefícios económicos da sociedade. Esta aproximação a um GAI recebeu sua descrição clássica por outro economista americano, Robert Theobald, em seu livro 1965, homens livres e mercados livres. O imposto de renda negativo (NIT) Um NIT consiste em três elementos: a garantia, a taxa de redução eo nível de renda break even. NIT Elementos para uma Família de Quatro Taxa de Redução: 27 por cento Ruptura de renda: 55.555 A garantia é o nível máximo de benefício para cada família. Ele varia de acordo com o tamanho da família e configuração. Neste exemplo, o nível de benefício para uma família de quatro sem fonte de renda diferente da NIT, é igual à garantia de 15.000. Uma descrição do raciocínio por trás dos parâmetros é fornecida nas seções 2 e 3, onde as opções são desenvolvidas mais completamente.) A taxa de redução entra em jogo quando uma família tem fontes de renda diferentes do NIT. A taxa de redução de 27 por cento significa que para cada dólar de renda diferente do NIT, o benefício NIT é reduzido em 27 centavos. Por exemplo, se uma família de quatro ganha renda de 5.000, seu nível de benefício é reduzido em 0.27 vezes 5.000 ou 1.350. O seu benefício total seria, portanto, de 13.650 (ou seja, 15.000 menos 1.350). Como resultado da renda de trabalho adicional de 5.000, o rendimento total da família aumenta em 3.650 (ou seja, de 15.000 para 18.650). O 18.650 é composto de 13.650 de NIT e 5.000 de ganhos. O nível de renda break even é o nível máximo de renda no qual os benefícios NIT podem ser recebidos. Também varia de acordo com o tamanho ea configuração da família. Em outras palavras, para as famílias com fontes de renda não-NIT maiores do que o nível de renda break even, o benefício NIT é zero. Nesta ilustração, o nível de renda até mesmo de repouso é 55.555. (Nos projectos NIT em que a redução é aplicada a todos os rendimentos provenientes de fontes diferentes da garantia, o ponto de equilíbrio será sempre igual à garantia dividido pela taxa de redução (ou seja, 55 555 15 000 dividido por 0,27) Se um limiar de outros rendimentos for isento A partir da taxa de redução, esta fórmula não se aplicará). Neste sistema, é possível identificar três grupos: os que recebem os benefícios completos, os que recebem benefícios parciais e os que não recebem benefícios. Famílias sem fontes de renda diferentes do NIT recebem o benefício completo de 15.000 (ou seja, a garantia). No outro extremo, as famílias com renda não-NIT acima de 55.555 não recebem nenhum benefício. Entre esses extremos, famílias com renda não-NIT entre 1 e 55.554 recebem um benefício igual à garantia reduzido em 27 centavos por cada dólar de renda não-NIT. (A fórmula é: benefício igual a garantia menos (renda não-NIT multiplicada por taxa de redução).) No sistema NIT, há sempre um incentivo para os beneficiários ganhar mais renda ou adquiri-lo de outras fontes que não o benefício NIT. No entanto, a não ser que a garantia seja fixada no limiar de pobreza, a NIT não pode eliminar a pobreza por conta própria. Normalmente, a garantia do NIT será inferior ao limiar de pobreza por design, a fim de manter um incentivo para obter outros rendimentos. A NIT pode, no entanto, reduzir a taxa de pobreza e a profundidade da pobreza se a garantia básica estiver acima do nível mínimo dos actuais programas de assistência social de último recurso. Crucial para a estratégia NIT anti-pobreza é a crença de que a melhoria dos incentivos ao trabalho conduzirá a uma maior oferta de mão-de-obra, sujeita à disponibilidade de empregos e resultará em níveis mais baixos de pobreza e menores níveis de despesa pública. Um elemento importante da estratégia é assegurar a integração da NIT com o sistema de imposto sobre o rendimento das pessoas singulares. Trata-se de garantir que os beneficiários do NIT não pagam impostos, pelo que o efeito combinado da taxa de redução e da taxa de imposto sobre o rendimento não cria um desincentivo no trabalho. No entanto, este objectivo é extremamente difícil de alcançar uma vez que o benefício NIT é baseado na unidade familiar, e os impostos sobre o rendimento das pessoas singulares e os impostos sobre os salários são baseados no indivíduo. No entanto, mesmo se a integração perfeita for um objetivo indescritível, manter a soma da taxa de redução do NIT ea taxa marginal do imposto de renda pessoal, ou seja, a taxa de imposto marginal efetiva, tão baixa quanto possível é uma consideração importante para o NIT. O Demogrant universal (UD) Sob uma aproximação UD, todos os cidadãos adultos receberiam um cheque isento de impostos do governo adequado para suas necessidades e os de sua família. Os rendimentos de todas as outras fontes seriam tributados (as taxas deveriam ser fixadas em níveis suficientes para pagar a UD). O rendimento disponível total seria igual à UD mais o rendimento após impostos de outras fontes. Impostos sobre outros rendimentos podem ser cobrados a uma taxa fixa ou escalado para subir à medida que os rendimentos aumentam como sob o sistema fiscal progressivo atual Canadas. Por exemplo, uma UD poderia fornecer um benefício não-tributável de 20.000 a uma família de quatro e iria tributar os rendimentos de outras fontes a uma alíquota de imposto fixo de 50 por cento. (A opção UD na Seção 3 tem uma estrutura fiscal progressiva com três taxas, que é escolhida aqui para simplificar a ilustração). Sob tal proposta, uma família com rendimentos de 30.000 receberia um rendimento disponível igual à garantia plus Metade das suas receitas de outras fontes ou 35.000 (ou seja, 20.000 mais 15.000). Em contraste com a abordagem NIT, que proporcionaria benefícios líquidos apenas para as famílias até o nível de renda break even, a UD fornece benefícios para as famílias todo o caminho até a escala de renda. A UD não tem taxa de redução nem mesmo nível de renda. Uma conseqüência é que os gastos com UDs são muito mais altos do que os gastos com NIT. Outra consequência é que o nível de tributação deve ser aumentado para pagar o nível mais elevado das despesas. Na opinião de alguns economistas, um GAI fixado em limiares de pobreza e com uma taxa de imposto de 100 por cento sobre outros rendimentos até esses limiares seria a forma mais barata de eliminar a pobreza. (Por exemplo, J. E. Meade, The Structure and Reform of Direct Taxation (Londres: Instituto de Estudos Fiscais, George Allen e Urwin, 1978)). No entanto, eliminaria qualquer incentivo financeiro para aceitar um emprego pagando menos do que os limiares de pobreza. Além disso, quanto maior a taxa de imposto sobre outros rendimentos, menor o incentivo para assumir um emprego pagando acima, mas perto dos níveis de limiar. Os rendimentos após impostos não seriam significativamente mais elevados, em comparação com a garantia, até que os resultados fossem consideravelmente acima dos níveis de limiar. Em resumo Existem duas grandes orientações filosóficas em torno do conceito de GAI. Uma orientação focaliza o GAI como um mecanismo para facilitar o ajuste à mudança econômica. Trata-se de uma estrutura de programas simplificada e coerente, incentivos ao trabalho e controlo das despesas. A segunda orientação centra-se nos objectivos anti-pobreza. Trata-se principalmente da redistribuição do rendimento e da criação de direitos baseados na cidadania. Com dois desses conceitos fundamentalmente diferentes, muitos dos objetivos trade off uns contra os outros. No entanto, isso não significa que os modelos não podem ser combinados. Na verdade, as propostas GAI que foram feitas no Canadá diferem em sua ênfase na importância dos diferentes objetivos. A revisão histórica (Apêndice A) ilustra o equilíbrio alcançado em relação aos objetivos conflitantes em diferentes propostas e conclui identificando o grande número de objetivos muitas vezes conflitantes que fazem parte do debate do GAI. A Seção 2 fornece o contexto para pensar sobre um GAI na década de 1990 e prepara o cenário para os designs de GAI desenvolvidos na Seção 3. Essas abordagens não devem ser opções no sentido usual da palavra, mas sim ilustrações genéricas dos dois principais Conceitos do GAI descritos acima. O objetivo é demonstrar claramente os pontos fortes e fracos de cada abordagem. A seção 4 conclui o artigo examinando o papel que as abordagens da GAI podem desempenhar na reforma da previdência social. 2: Contexto para um GAI nos anos 90 Um mundo em mudança significa diferentes desafios Nos anos que se seguiram ao apogeu das propostas abrangentes do GAI no início dos anos 70 (ver Apêndice A), o ambiente para considerar um GAI mudou consideravelmente. Entre 1943 e 1971, os programas e serviços governamentais proliferaram para fornecer grande parte da infra-estrutura que Leonard Marsh projetou como necessária para alcançar sua visão de 1943 de um mínimo social. Foram criados programas de seguro de desemprego e saúde. Os programas de assistência social foram disponibilizados a todas as pessoas necessitadas e os benefícios das crianças foram introduzidos para ajudar os pais com os custos de criar seus filhos. Uma renda mínima garantida para os idosos foi criada através de uma combinação de pensões (Previdência da Velhice e planos de pensão do CanadáQuebec) e assistência com renda comprovada (o Suplemento de Renda Garantida e suplementos provinciais para idosos). Outra mudança tem sido a diminuição da importância do rendimento do trabalho como um meio de apoio paradoxalmente, ao mesmo tempo em que a proporção ocupada da população estava aumentando. De 1945 ao início dos anos 70, as taxas de desemprego eram geralmente baixas, e os rendimentos reais estavam subindo. A maioria das famílias de baixa renda chefiada por pessoas com menos de 65 anos recebeu a maior parte de sua renda com rendimentos. A pobreza foi mais difundida do que hoje, mas a dependência dos pagamentos de transferência do governo também foi menor. Desde então, taxas mais elevadas de desemprego, maior disponibilidade e diminuição do estigma associado à recepção, transferências governamentais eo crescimento de grupos que enfrentam dificuldades consideráveis para obter rendimentos adequados de trabalho remunerado, como famílias monoparentais, mudaram isso cenário. Em um mundo como esse, as preocupações sobre a possibilidade de desincentivar o trabalho através da introdução de uma renda garantida não estigmatizante, especialmente se proporcionam renda mais adequada do que os benefícios da assistência social atual, têm se tornado cada vez mais difundidas. Ao mesmo tempo, a situação fiscal dos governos piorou. Até meados da década de 1970, o orçamento federal era normalmente equilibrado ao longo do ciclo econômico ea relação dívida / PIB estava caindo constantemente dos níveis muito altos alcançados durante a Segunda Guerra Mundial. Foi possível, por causa do crescimento econômico alto, e apenas brevemente interrompido, introduzir novos programas caros, equilibrar o orçamento e acreditar que os recursos para introduzir e enriquecer os programas governamentais continuariam a aumentar. Isso também não pode mais ser assumido. Medidas de Adequação O conceito de adequação também mudou ao longo do tempo. O que é considerado adequado hoje deve atender a um padrão mais generoso do que teria sido aplicado no passado. Isso ocorre porque, ao longo de longos períodos de tempo, o conceito de adequação é relativo em vez de absoluto. (Por exemplo, olhamos para 1967 como um ano de prosperidade e praticamente pleno emprego (a taxa de desemprego foi de 3,8 por cento). No entanto, nesse ano (usando os limiares de baixa renda de 1978 como medida de pobreza) A taxa foi mais de 40 por cento - mais do dobro da taxa em 1992, quando a taxa de desemprego foi de 11,3 por cento e, como indica a Tabela 1, o padrão de adequação foi um pouco mais generoso Ver: MC Wolfson e JM Evans, Preocupações e Possibilidades Metodológicas (Ottawa, dezembro de 1989) p. 59.) Esta relatividade reflete-se em Estatísticas Canadas de baixos rendimentos (SFRs). Os SFT não são linhas oficiais de pobreza, mas são freqüentemente usados como tais por organizações como o Conselho Nacional de Bem-Estar. Os SFR baseiam-se numa reavaliação periódica da proporção global da renda gasta em alimentos, abrigo e vestuário pela família média. Esta proporção diminuiu ao longo do tempo de 50 por cento em 1959 para 34,7 por cento em 1992, eo resultado é uma linha de pobreza que aumentou 62 por cento em termos reais nos últimos 30 anos. Os cortes de baixos rendimentos são indexados à inflação anual. TABELA 1: Proporção da renda familiar média gasta em alimentos, abrigo e vestuário Nível LICO é para uma família de quatro em 1993 dólares, centros urbanos de 500.000 mais 1959 Proporção - 50 por cento Nível LICO - 19.123 Proporção 1969 - 42 por cento Nível LICO - 24.870 Proporção de 1978 - 38,5 por cento Nível LICO - 28,243 1986 Proporção - 36,2 por cento Nível LICO - 30,645 1992 Proporção - 34,7 por cento Nível LICO - 31,007 Outras distribuições de renda por tamanho no Canadá Da pobreza, tanto relativa como absoluta, também estão disponíveis para o Canadá. Algumas dessas medidas estão resumidas no Apêndice B. Considerações para uma Universalidade, Alvo e Capacidade de Atendimento do GAI Um GAI emitido como UD daria direito a cada indivíduo e família a um benefício, independentemente do rendimento. O benefício pode variar de acordo com a idade, o tamanho da família, o tipo de família ou outros critérios demográficos. Não seria tributável. O custo adicional líquido da introdução de um GAI (para além da compensação proporcionada pelo custo dos programas que iria substituir) seria recuperado através do sistema de imposto sobre o rendimento das pessoas singulares. (Isto é assumido para a simplicidade analítica. Os custos também podem ser compensados aumentando outros impostos ou reduzindo outras despesas.) Quanto mais progressivo esse sistema, mais direcionado ao resultado líquido. Com efeito, o demogrant oferece benefícios universalmente e, em seguida, tenta alvejar os necessitados, ajustando as taxas de imposto de renda pessoal. As vantagens são a eliminação do estigma ea simplificação do sistema (se outros apoios ao rendimento e créditos fiscais são eliminados) em termos de administração. No entanto, as desvantagens são um nível muito mais elevado de tributação do governo, trabalho negativo, poupança e efeitos de incentivo ao investimento e a inadequação de enviar um grande número de cheques para famílias de renda média e alta, que então pagam os benefícios através de impostos mais altos. Uma vez que o sistema de assistência social seria eliminado ou significativamente reduzido sob a UD ea NIT (discussão mais adiante), é fundamental que o GAI design ser responsivo a mudanças na renda e estrutura familiar. O demogrant é colocado unicamente para conseguir este desde que o benefício máximo é entregado sempre à população inteira, eo projeto pode ser feito invariant ao tipo da família (uma discussão mais adiante). O resultado seria uma poupança administrativa significativa. Porque um GAI entregado através de um mecanismo NIT fornece benefícios apenas para aqueles com rendimentos abaixo do nível de renda break even, ele paga menos de UD de generosidade igual e recupera menos por aumentos de impostos ou reduções de gastos. No entanto, isso significa que, para responder às flutuações nos rendimentos disponíveis durante o ano, um sistema de imposto de renda negativo deve ser capaz de acompanhar as flutuações de renda em uma família para que os benefícios sejam entregues quando necessário, e os pagamentos em excesso e minimizados. (O Suplemento de Renda Garantida para a Pensão de Velhice aborda o problema da capacidade de resposta, permitindo que as pessoas a opção de solicitar benefícios com base na sua renda antecipada no ano em curso, em vez de sua renda real no ano anterior, conforme relatado em seu imposto de renda No entanto, o rendimento antecipado dos idosos é geralmente muito mais previsível do que o rendimento esperado da população em idade activa. Consequentemente, o risco de pagamentos em excesso e pagamentos insuficientes é muito menor). Estrutura deve ser sensível às mudanças na estrutura familiar. Para fazer isso, custos administrativos elevados teriam de ser incorridos. A alternativa é pagar o benefício com uma taxa mensal uniforme com base na renda familiar líquida dos anos anteriores conforme relatado na declaração de imposto, um método agora usado com o Benefício Fiscal de Criança. Este sistema, entretanto, só é possível quando os pagamentos de assistência social altamente responsivos continuam a operar. Se a assistência social deve ser eliminada, o GAI deve ser responsivo. Quanto do sistema atual poderia ser substituídoReformed As propostas do GAI avançadas por vários proponentes em várias ocasiões no Canadá substituiriam todos ou parte dos seguintes tipos de programas. As prestações de assistência social, como os actuais sistemas provinciais territoriais e municipais de assistência social, são actualmente prestadas a pessoas e famílias sujeitas a um teste de necessidades dos seus rendimentos e activos. A maioria das propostas de GAI canadenses sugeriu a retirada de financiamento federal para esses programas sob o Canadá Assistência Plano. O Comitê Especial do Senado de 1971 sobre a Pobreza também propôs um reembolso às províncias e territórios para os custos totais dos pagamentos de assistência social para aqueles não cobertos pelo seu GAI. (Ver Apêndice A.) O Seguro de Desemprego oferece benefícios a segurados elegíveis. As propostas do GAI, como as do Comitê Especial do Senado sobre a Pobreza, a Comissão Macdonald e o Imposto Garantido do Imposto Garantido de Wolfson, incluíram mudanças no Seguro de Desemprego para torná-lo mais um programa de seguro aumentando os requisitos de entrada, reduzindo os níveis e / Não seguros, tais como benefícios estendidos regionalmente. (Ver Apêndice A.) Os pagamentos demogrant são feitos aos membros de um grupo da população tal como pais das crianças ou dos idosos (tais como concessões de família antes de 1993 e segurança da idade avançada). Benefícios negativos de imposto de renda são fornecidos a pessoas e famílias sujeitas a um teste de renda, como com o Benefício Fiscal de Criança, o Suplemento de Renda Garantida, benefícios de Subsídio de Cônjuge eo Crédito de Imposto de Bens e Serviços. Os créditos e deduções de imposto de renda baseiam-se em características demográficas, como os créditos pessoais e casados, o equivalente ao crédito casado, o crédito por idade e o crédito à criança anterior. Considerações Federais - Provinciais Qualquer GAI exigiria mudanças fundamentais nos acordos fiscais federais e provinciais. As funções básicas federais e provinciais-territoriais no que diz respeito ao financiamento e à execução do programa teriam de ser cuidadosamente reexaminadas e negociadas novas disposições. Alcançar um consenso seria muito difícil. Nesta seção, duas opções ilustrativas de GAI são desenvolvidas e analisadas: - Opção 1: Demogrant universal adequado (UD) - Opção 2: Um imposto de renda negativo (NIT). Ambas as opções GAI são direcionados para a população em idade de trabalhar. Eles não mudam o sistema de benefícios direcionados a pessoas com mais de 65 anos, uma vez que esse sistema faz parte de uma análise separada da política de idosos anunciada no Orçamento de 1994 e desde que um GAI para idosos já existe. No entanto, créditos reembolsáveis e não-reembolsáveis no sistema de imposto de renda pessoal federal baseado em características demográficas mudariam sob as abordagens GAI apresentadas aqui. Os idosos seriam afetados por essas mudanças no sistema de imposto de renda pessoal. Porém, para fins ilustrativos, presume-se que os idosos continuem sujeitos ao regime fiscal existente em ambos os cenários, mesmo que tal esquema não possa ser implementado na prática. A partilha federal de custos dos benefícios de apoio ao rendimento fornecidos pelos programas de assistência social provinciais e municipais ao abrigo do Plano de Assistência do Canadá cessaria de acordo com os dois desenhos do GAI. Na opção UD, o GAI também substituiria a assistência social territorial e municipal na maioria dos casos (apenas assistência em dinheiro). Na opção de NIT, a assistência social provincial territorial e municipal continuaria a operar, mas um programa muito menor seria necessário. Em ambos os casos, a partilha dos custos dos serviços sociais no âmbito da PAC continuaria. Como ambas as opções eliminam alguns créditos pessoais, as receitas fiscais provinciais são aumentadas. Na opção UD, onde o GAI substitui inteiramente a assistência social, as receitas provinciais adicionais são colocadas para o custo do GAI. Na opção NIT, as receitas adicionais provinciais territoriais são devolvidos aos contribuintes através de taxas de imposto de renda pessoal mais baixas. Ambos os projetos GAI iria manter o programa de seguro de desemprego, mas os requisitos de entrada aumentaria de 12-20 semanas de emprego no ano anterior para 26 semanas. A duração máxima dos benefícios também seria de 26 semanas. 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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