To be poor in our society is to suffer some of the most outrageous indignities to the spirit that can be perpetrated. One of the primary purposes of government, the purposes of the policies of any progressive administration, is to assure that Canadians do not have to depend on some exceptional stroke of good fortune to receive the opportunity of access into the world of affluence. The foundation of generations of policies aimed at income redistribution and fiscal fairness, is not just to insure the capitalist system against revolution by giving out the minimum meager amounts people need to exist, but to show that we are a culture of compassion and we want to give all our citizens the equality of opportunity to thrive. We are a people who give a damn.
At the dawn of the industrial revolution, philosophers and kings and industrial potentates all realized that we entered a new age of inter-dependence. No one could make it alone no matter how much money or majesty they had. Liberalism arose out of this cauldron of change representing a new class with a visceral sympathy for the huge labour masses now lodged in factories and sweatshops rather than agrarian fields. Revolutionary change was pushed through because all understood the historic thrust of the uncontestable inevitability of the need for a society of equity as well as equality. It is incumbent upon each generation of political leadership to continue to build on this progress so that we may, one day, cease to be faced with the tragedy of unfulfilled promise.
Any society that claims to respect the principle of equality must afford its citizens a level-playing field of opportunities and in addition, must insure its citizens against absolute financial catastrophe caused by loss of income or illness. A society that provides these elements will become more egalitarian. Economic inequality produces political inequality and the stability of a democracy demands at least some basic guarantee of rough equality to each citizen. Nobody should be left out of the of the system of economic protection, and nobody should be allowed to escape paying their fair share of the costs of that protection. These ends are the reasons for the policies of economic redistribution that have been place for the past seventy years.
What Canada needs is an income-support program that guarantees everyone a certain minimum decent standard of living. A social insurance program that protects people against sharp drops in income; and a tax system to pay for the first two by drawing money from the affluent and so evening out economic inequalities from the other end of the scale. Almost all experts agree that a modified tax structure raising more revenues from the corporate sector, while not increasing, and indeed perhaps lessening, the tax burden on working people and small business who now produce 80% of our total tax revenues, will give us sufficient means to put such a program into effect.
This would be a program of social insurance not income support. We do not want to suggest that the government simply open a new money machine. Nor do we want to leave the citizen responsibility free. The programs will have supervision combined with flexibility. Its controllers will be trained to respond to unique circumstances without being allowed to degrade the person in need. But this will be combined with clear rules that the individual has a responsibility to continue trying to look after themselves through job retraining and other programs if they can. In addition, couples in cyclical or generational welfare positions will be given support, but tied to family planning programs as well.
Social insurance must always avoid two pitfalls. First, it should not penalize people so that they have no reason to work; and second, it should not cost so much to run that it cuts down on the work and savings incentives of the affluent. To ensure the latter, government may have to re-evaluate the budgets of departments and agencies that deal with what could be called “discretionary” spending and allocate more for a certain time on essential core programs affecting social security and Medicare.
The case for a guaranteed annual income is unassailable. Many people will always be unable to survive on the terms of the labour market and these people too have a right to dignity and decency. But to be useful, the program must have as its basis the concept of poverty as relative to affluence. The income level must be set at or above the relative line, and it must rise as that line rises, in relation to the overall well being of the country.
These, and other issues, will have to be examined in the following manner:
1. A Commission will have to be established to advise on how to implement such an income security program and will have to examine one specific problem area, among others. How to modify the tax structure of Canada to allow for such a guaranteed income. What will have to be specifically addressed is the determination of break-even points, for if people are taxed below that point the government will in effect be taxing their incomes twice. The Commission will have to examine the issue of raising tax exemptions to the break-even point, that is, not to charge anybody any money for taxes until they are beyond the point of needing any subsidy from the government.
2. Aside from tax questions, sociological issues will have to be examined. For example, living in a household is considerably cheaper than living on your own, and there is no reason to pay a separate guaranteed income to a mother living in the house of her rich son. Furthermore, some work will have to be done on the taxation of gifts between members of family units, so that the son of rich parents does not receive support from his father and a guaranteed income while he tools around college in a sports car. Such cases might destroy the credibility of the whole scheme in the general public’s view.
3. The Commission will also have to recommend co-ordination with existing programs. Ideally, the Guaranteed Annual Income will act as the bottom level of a series of social security programs—programs that include the Canada Pension Plan and Unemployment Insurance. Only when those programs prove inadequate will the guaranteed annual income come into use.
The Guaranteed Annual Income would draw a line below which nobody will be allowed to fall. We in Canada have generally kept the tax system and the social security system have apart. In terms of taxation we define affluence as the ability to pay a certain amount of tax. In terms of income maintenance there has always been a consideration of both the applicant’s need for help, and anything he has that would allow him to get along without that help. In other words, assets are calculated for the determination of welfare but not considered as a contributing factor in the ability to pay taxes. One kind of bookkeeping for affluence, and another for poverty.
But wealth and poverty are closely related. Poverty is the lack of affluence; affluence, freedom from poverty. The worker who finds himself poor at the age of retirement after working decades in a factory helped bring considerable wealth to the owner of that factory. The tax system and the income maintenance system should be seen as a package. The one an extension of the other. What R.H.Tawney wrote decades ago was never more true than today:
“As the number of those who take the decisions upon which the conduct of economic affairs, and, therefore, the lives of their fellowmen, depends is diminished, the number of those affected by each decision is increased. J.P.Morgan frowns and the population of two continents is plunged into doom. Lord Metchett smiles, and there is sunshine in ten thousands homes.”
When he wrote those lines, 20% of our population controlled 80% of national assets. Today, that same 80% is controlled by just 4% of our people. The enactment of a Guaranteed Annual Income by a progressive administration would bring sunshine to millions of our fellow citizens. It is time to right the balance. It is long overdue. It is the decent thing to do.
Beryl P. Wajsmann
Institute for Public Affairs of Montreal