Ontario looking at basic income guarantee

[eyeball]

What's the math on taxing those 160 families? At what tax rate and how much new revenue does it bring in?

The highest rate in the world?

Which will still be poised between too much and never enough.

[TimG]

What many calculations of the "cost" of GAI omit are the savings on no need for different programs:

I did the math. Those programs cost maybe 100 billion today including administration (and most of that cost is OAS/GIS). The potential savings to not add up to enough. It is clear to me after looking at the numbers that a GAI is a very inefficient way to deliver social services when you look at dollars spent. Edited March 26, 2016 by TimG

[Martin Chriton]

The highest rate in the world?

Which will still be poised between too much and never enough.

I'm skeptical it's going to raise the amount of money some folks think it will raise. I expect most of the wealth of those 160 is already earned so taxing yearly income another 5-15% won't be all that impressive for gov revenue.

Any math/numbers to demonstrate otherwise?

Edited March 28, 2016 by Martin Chriton

[eyeball]

I'm pretty skeptical that taxing money will make much difference either. Redistributing power is what we really need to be doing. I'd start by outlawing in-camera lobbying.

Widespread public demand for that would probably get the lolly flowing down to the bottom even faster. It's power the putrescently rich fear losing most of all.

[jacee]

I did the math. Those programs cost maybe 100 billion today including administration (and most of that cost is OAS/GIS). The potential savings to not add up to enough. It is clear to me after looking at the numbers that a GAI is a very inefficient way to deliver social services when you look at dollars spent.

You haven't done all the math yet.

It appears to me that you've included only 'federal transfers to persons', about $100b, that includes senior OAS/GIS, EI, and child tax credits.

That doesn't include welfare, disability, social housing, veterans, and other benefits, some of it federal funds included in the 'social transfer' to provinces, and some funded by provinces and municipalities.

You haven't included savings in administrative costs.

And you haven't considered revenues from offshore tax evasion, to be 'repatriated'.

GAI must be at least equal to the highest current benefit rate.

With the savings and revenues noted, I suspect that it wouldn't require increased taxes at all.

.

[TimG]

It appears to me that you've included only 'federal transfers to persons', about $100b, that includes senior OAS/GIS, EI, and child tax credits.

That doesn't include welfare, disability, social housing, veterans, and other benefits, some of it federal funds included in the 'social transfer' to provinces, and some funded by provinces and municipalities.

Total tax revenue by all levels of government $350 billion. Of that about 12-15% is spent on government operations which includes everything from police to tax auditors. More importantly, mass layoffs of government workers is not going to happen because of the unions so one must assume that the cost of running government will NOT go down and will continue to cost $50 billion per year. In addition governments spend about $150 billion for healthcare and $60 billion on interest on debt. Theat leaves a mere $90 billion left over to fund the GAI AND all government programs which are not connected to the GAI.

If you assume this GAI is distributed among the 13 million tax payers with less than 30K/year income you get a GAI of about $7000/year and that assumes that OAS/GIS recipients would be happy with a benefit cut.

As for you magical pot of gold from tax evasion: nothing stops the government form collecting this money today. Once they start to collect it I can redo the numbers but until that happens such speculations are irrelevant to the determination of whether the GAI makes economic sense.

Given the tax revenues that actually exist today it is clear that a GAI is a complete non-starter.

Edited April 4, 2016 by TimG

[jacee]

Total tax revenue by all levels of government $350 billion.

? All tax revenue? What are you including here?

All federal income and corporate taxes?

All provincial income taxes?

All sales taxes?

All municipal property taxes?

Of that about 12-15% is spent on government operations which includes everything from police to tax auditors.

Again, are you including operations of all provincial and municipal governments as well?

EG, welfare administration costs are municipal

More importantly, mass layoffs of government workers is not going to happen because of the unions so one must assume that the cost of running government will NOT go down and will continue to cost $50 billion per year.

Agreed mass layoffs won't happen, but program administration for existing means testing for benefits will wind down via attrition and transfer to the GAI program, and there will be savings of course.

In addition governments spend about $150 billion for healthcare and $60 billion on interest on debt. Theat leaves a mere $90 billion left over to fund the GAI AND all government programs which are not connected to the GAI.

If you assume this GAI is distributed among the 13 million tax payers with less than 30K/year income you get a GAI of about $7000/year and that assumes that OAS/GIS recipients would be happy with a benefit cut.

As for you magical pot of gold from tax evasion: nothing stops the government form collecting this money today. Once they start to collect it I can redo the numbers but until that happens such speculations are irrelevant to the determination of whether the GAI makes economic sense.

Well the Panama Papers just made collection of outstanding taxes from offshore tax evasion a step closer to reality. ?

Given the tax revenues that actually exist today it is clear that a GAI is a complete non-starter.

That isn't clear to me yet.

.

Edited April 5, 2016 by jacee

[TimG]

Again, are you including operations of all provincial and municipal governments as well?

My number did not include municipal taxes (most of which are spent on fire and police). The total tax bill is $585.8 billion.

means testing for benefits will wind down via attrition and transfer to the GAI program, and there will be savings of course.

Not that much. $50 billion is the total bill. That is a hard upper limit on the potential savings.

Well the Panama Papers just made collection of outstanding taxes from offshore tax evasion a step closer to reality.

Still hypothetical and irrelevant to the discussion.

So back to calculating potential savings from budget.

Here is Ontario's budget:

http://www.fin.gov.on.ca/en/budget/ontariobudgets/2016/ch3b.html#t3-23

From that I only see 10-20 billion that can be reallocated for a GAI.

Include all provinces and you get ~45 billion.

The federal spending that can be reallocated to GAI: 76 billion.

http://www.budget.gc.ca/2016/docs/plan/budget2016-en.pdf

City spending on social services is about $8 billion.

https://www.fcm.ca/Documents/reports/The_State_of_Canadas_Cities_and_Communities_2012_EN.pdf

So total is $129 + plus hypothetical savings from fewer government worker (no likely to be more than 10 billion).

The net result is a GAI of about ~10K for all 13 million filers with income <30K.

This is still a benefit cut for current OAS and GIS recipients.

And that is also an over estimate because some services such as special services for disabled will have to be funded over and above GAI and that reduces the potential savings.

Edited April 5, 2016 by TimG

[jacee]

Keep working at it ... you'll get to a livable amount soon. ?

[TimG]

Keep working at it ... you'll get to a livable amount soon.

The numbers don't work no matter how much you may wish it to be so.

I double checked my numbers and linked to sources so there are no more omissions to find.

Edited April 11, 2016 by TimG

[jacee]

The numbers don't work no matter how much you may wish it to be so.

I double checked my numbers and linked to sources so there are no more omissions to find.

You've already doubled it!

You can find more!

$1b/year in corporate subsidies.

Revenues from legalized Marijuana.

Revenues from offshore tax evaders.

.

[TimG]

You've already doubled it!

It went up by 30% because I omitted one level of government tax revenue. I corrected my numbers. This is not a process that can be repeated. The numbers now are firm. Feel free to check them yourself. And the numbers say a GAI is not viable at current taxation levels.

$1b/year in corporate subsidies.

Revenues from legalized Marijuana.

Revenues from offshore tax evaders.

Hypothetical peanuts that don't change the numbers. Edited April 11, 2016 by TimG

[eyeball]

The numbers don't work no matter how much you may wish it to be so.

I double checked my numbers and linked to sources so there are no more omissions to find.

Good to know. Obviously we'll just have to print more money.

Problem solved.

[TimG]

Good to know. Obviously we'll just have to print more money.

If printing money solved government money problems then no government would ever run deficits. Unfortunately we are living in the real world where every action has consequences and the consequences of printing money to fund government spending wishlists were quite severe in every country that tried. Edited April 11, 2016 by TimG

[eyeball]

Fine. I'm all for living in the real world. We need to nationalize our environment and stop the no-cost accounting approach we take towards it.

[overthere]

Speaking of numbers, Rachel Notley is presenting her first full budget today.

I wonder if she will have a big fat new line item "Couple Billion for Quebec Basic Income Guarantee"?

[cybercoma]

Speaking of numbers, Rachel Notley is presenting her first full budget today.

I wonder if she will have a big fat new line item "Couple Billion for Quebec Basic Income Guarantee"?

You still have absolutely no idea how federal revenues work. This post is hilariously ignorant.

[Smallc]

http://www.cbc.ca/news/canada/toronto/moodys-ontario-credit-rating-stable-1.3554371

Ontario is a basket case though, remember.

[cannuck]

My politics are generally somewhere right of Genghis Khan, but I believe that GAI is a worthwhile thing to consider.

One would have to do so federally, and eliminate almost all of the current federal, provincial and municipal agencies that grow fat, dumb and happy in the process of administering to the gateway to social assistance. Just cut a cheque to everyone with a SIN who has reached elegibility age (18?)

I would like to see something around $1,200 a month flat rate for everyone, with EVERY penny earned being taxed at a flat rate adjusted annually to balance the budget. No more welfare, no more unemployment enjoyment, no more worker's comp, no more pensions, no more student funding issues (loans for more expensive courses, of course), NO MORE TREATIES, etc. You can't afford to live in the big city on GAI? Move to small town.

Yeah, flat tax on everything except speculative gains (DRILL that HARD).

The mere fact we are importing workers from half way around the world to do hospitality and food service jobs tells you our current way of doing things is totally screwed up.

[Big Guy]

My politics are generally somewhere right of Genghis Khan, but I believe that GAI is a worthwhile thing to consider.

...

I am not somewhat right of Genghis Khan but I agree with you. There are a growing number of economists and a variety of people from all political positions who are now taking the concept seriously. I believe it would have to be applied on a federal level - but how then do you establish a yearly figure which represents the cost of living in Bucktuck PEI and Vancouver or Toronto?

There are very many positive aspects to the concept but we always hit a wall with transition from now till then. I am glad to see that there are others who do not reject something different just because it is different or that it appears to favor some political party.

Personally I think it would be the best thing that could happen to those stuck on welfare with all kinds of social programs and conditions keeping them from getting a job and getting off welfare.

[TimG]

I would like to see something around $1,200 a month flat rate for everyone.

You would need about $200 billion/year to fund a GAI at that level and that is barely adequate but it at least matches the current OAS+GIS benefits. Current taxes collected by all levels of government is about $600 billion which has to be used to pay for a number of services which cannot be cut because of a GAI including: healthcare, education, interest on debt, police, military. customs and border control et. al. My guess-timate is there only about $130 billion available for reallocation which means the total tax haul by governments would have to go up to fund your plan.

On top of that you want a flat tax which has the effect of increasing the taxes taken from the middle while decreasing the taxes taken from rich and you want to do this while increasing the total taxes taken. My guess we would be looking at a flat tax in the 40%-50% range which would likely leave the vast majority of people who work for living much worse off.

GAI is one of those concepts that sounds wonderful in theory but can never work in practice.

Edited May 4, 2016 by TimG

[Bonam]

GAI is one of those concepts that sounds wonderful in theory but can never work in practice.

Not necessarily. Canada just isn't rich enough and the cost of living is too high. If you run the same numbers for the US (I did this in some thread a while back), you can see that there it would not be completely unreasonable to implement, as GDP/capita is higher while the cost of living / poverty level is lower.

[TimG]

Not necessarily. Canada just isn't rich enough and the cost of living is too high. If you run the same numbers for the US (I did this in some thread a while back), you can see that there it would not be completely unreasonable to implement, as GDP/capita is higher while the cost of living / poverty level is lower.

Your calculations were not in this thread but if I remember correctly we did the math differently. In your case you calculated the tax brackets necessary to fund a given GAI level. I look at current government spending and estimate how much of it could be re-allocated to pay for a GAI and estimate the maximum GAI based on that. The different approaches could give different results because your approach presumes that people would be OK with some increase in taxes but I assume that there is little interest in increasing taxes to fund a GAI. Edited May 4, 2016 by TimG

[Bonam]

Your calculations were not in this thread but if I remember correctly we did the math differently. In your case you calculated the tax brackets necessary to fund a given GAI level. I look at current government spending and estimate how much of it could be re-allocated to pay for a GAI and estimate the maximum GAI based on that. The different approaches could give different results because your approach presumes that people would be OK with some increase in taxes but I assume that there is little interest in increasing taxes to fund a GAI.

What I calculated was what % of total GDP goes to taxes (for all levels of government: federal + provincial/state + muni) right now, and what % would need to go to taxes if one ran a GAI program where everyone got funding equal to the poverty line, taking into account redirecting funds from other social programs that would no longer be needed. In Canada, it was something like going from ~42% now to ~57% with GAI, while in the US it was something like going from 38% to 45%.

In both cases, taxes go up significantly, but the difference is 57% is just too much while 45% is possible, so the US could afford such a program if it really wanted it while Canada could not.

http://www.mapleleafweb.com/forums/topic/25436-what-policies-should-the-conservatives-party-start-putting-forward/?p=1134911

The overall point here being that as GDP/capita goes up relative to the poverty line, a GAI program becomes increasingly more affordable. So while it is not viable in Canada now it may become viable after another decade or two assuming a reasonable rate of economic growth.

Edited May 5, 2016 by Bonam

[TimG]

In Canada, it was something like going from ~42% now to ~57% with GAI, while in the US it was something like going from 38% to 45%.

Taxes collected by Canadian governments are about 600 billion. The GDP is 1.8 trillion so as a percentage of GDP taxes are about 33%. I don't know where you got the 42% number from. More importantly, you are assuming that the public would support a significant increase in taxation levels for an income redistribution scheme. I believe this is a wrong assumption in the US and in Canada no matter what the differences in taxation levels. In the US it is more complicated because there are large differences in incomes and cost of living across different states and a national GAI would spark massive opposition from states that end up as losers under scheme.

The only way a GAI could be sold as a policy is if it is set at a level that keeps taxes the same or lowers them. And given that constraint the numbers do not work in the US or Canada.