Briefing on Basic Income 2002

BRIEFING ON BASIC INCOME

Prepared by CORI Justice Commission, October 4, 2002

The CORI Justice Commission has argued, for a long time, that the present tax and social welfare systems should be integrated and reformed to make them more appropriate for the changing world of the 21st century. To this end the Justice Commission has argued for the introduction of a basic income system.

A basic income is an income that is unconditionally granted to every person on an individual basis. It is a form of minimum income guarantee that avoids many of the negative side effects inherent in social welfare payments. A basic income differs from other forms of income support in that:

• it is paid to individuals rather than households
• it is paid irrespective of any income from other sources
• it is paid without conditions. It does not require the performance of any work or the willingness to accept a job if offered one
• it is always tax-free.

As CORI Justice Commission has designed it a Basic Income system would replace social welfare. It would guarantee an income above the poverty line for everyone. It would not be means tested. There would be no 'signing on' and no restrictions or conditions. In practice a basic income recognises the right of every person to a share of the resources of society.

There is real danger that the plight of large numbers of people excluded from the benefits of the modern economy will be ignored. Images of rising tides lifting all boats are often offered as Governments, policy makers and commentators assure society that prosperity for all is just around the corner. Likewise, the claim is often made that a job is the best poverty fighter and consequently all priority must be given to getting everyone a paid job. These images and claims are no substitute for concrete policies to ensure all are included. Twenty first century society needs a radical approach to ensure the inclusion of all people in the benefits of present economic growth and development. Basic income is such an approach.

The Basic Income system aims to guarantee an income above the poverty line for everyone. Just as important, it ensures that looking for a paid job and earning an income, or increasing one's income while in employment, is always worth pursuing, because for every pound earned the person will retain a large part. It thus removes the many poverty traps and unemployment traps that may be in the present system.

Women and men get equal payments in a basic income system. Consequently, the Basic Income system promotes gender equality since it treats every person equally.

Ten reasons to introduce basic income

• It is work and employment friendly
• It eliminates poverty traps and unemployment traps
• It promotes equity and ensures that everyone receives at least the poverty level of income
• It spreads the burden of taxation more equitably
• It treats men and women equally
• It is simple and transparent
• It is efficient in labour-market terms
• It rewards types of work in the social economy that the market economy often ignores, e.g. household work, child-rearing, etc
• It facilitates further education and training in the labour force
• It faces up to the changes in the global economy

It is a system that is altogether more guaranteed, rewarding, simple and transparent than the present tax and welfare systems. It is far more employment friendly than the present system. It also respects other forms of work besides paid employment. This is crucial in a world where other forms of work need to be recognised and respected. It is also very important in a world where paid employment cannot be permanently guaranteed for everyone seeking it.

Basic Income also lifts people out of poverty and the dreadful dependency mode of survival. In doing this it also restores their self-esteem and broadens their horizons. Poor people, however, are not the only ones who should welcome a Basic Income system. Employers, for example, should welcome it because its introduction would mean they would not be in competition with the social welfare system. Since employees would not lose their Basic Income when taking a job, there would always be an incentive to take up employment.

It should also be pointed out, finally, that a Basic Income system is achievable. Studies done for a range of countries in Europe and beyond have identified how such a system could be put in place and how it could be financed. A series of studies undertaken as part of the Partnership 2000 national agreement, and funded by the Irish Government, have produced interesting results. These studies have shown that a Basic Income system would improve the incomes of 70% of households in the bottom four deciles (i.e. the four tenths of the population with lowest incomes). They have also shown that a Basic Income system would raise half of the individuals that would be below the 40% poverty line under 'conventional' options above this poverty line. This is a highly desirable outcome of income distribution policy.

Basic Income system would create a platform for good work. It would benefit both paid employment as well as other forms of meaningful work. It would also have a substantial impact on reducing income poverty. The present tax and welfare systems were designed for a different era. They have done very well in addressing major problems of the second half of the twentieth century. The world, however, is changing radically. A new system is required for the twenty first century. Basic Income is such a system.