A basic income of $22,000 a year to all adult Canadians is financially doable, and would nearly eliminate poverty in the country, a new economic analysis argues ― but not without tax hikes for higher earners and a higher corporate tax rate.
The analysis from the Basic Income Canada Network (BICN) used a simulation database and model from Statistics Canada to predict how three different basic income programs would work. It picked $22,000 as the level because it’s an approximation of the cut-off point for a number of measures of poverty.
It found all three options would virtually eliminate poverty in Canada, with the share of people living below the low income cut-off dropping by as much as 95 per cent, depending on the program type. Families in the bottom 10 per cent of earners would see their disposable incomes jump by 3.5 to 4.5 times current levels. The country would also see an immediate and significant shrinking of the income gap.
The BICN report was released on Thursday.
Part of the point of the analysis was to address concerns ― even within the basic income movement ― that a workable basic income could be designed, said Sheila Regehr, chair of BICN.
The analysis showed that “there are ways of doing this (that) meet our objectives of reducing poverty, inequality and insecurity,” Regehr said in an interview with HuffPost Canada.
The analysis found a large part of the cost can be covered by shuffling around money from existing federal and provincial programs that would be made redundant by a basic income, such as the Working Income Tax Benefit and the GST/HST credit.
But it would still require additional revenue to keep it from driving up deficits.