Mostly, yes. (And I completely agree that we will still need social support programs if there is a GAI - programs that build effective 'social capital' may be more useful than any re-shaping of income support systems.)
Stapleton argues that an income support program should look exactly like that:
1. a universal payment;
2. a top-up for low-income people;
3. registered, tax-saving instruments; and
4. matching or separate contributions to reward individual savings.
Mostly, I agree. The one point where it doesn't succeed as a copy and paste format is in METRs - Marginal Effective Tax Rates. Many current welfare recipients would like to work, but a structure that penalizes them heavily for earning is a major deterrent. With seniors, it's basically not an issue. If it was a single program, it still wouldn't be that bad, but with the 'stacking' of multiple support programs that each remove a chunk, METRs can approach or exceed 100% - you can actually be worse off with a job or a raise, in some cases. And while the Working Income Tax Benefit is a good idea, a tax credit a year later isn't going to substantially affect the decision of someone who's losing their support systems immediately. The two biggest reasons I like a GAI are that it cuts the stigma of welfare and does away with the clawback of benefits. Any means-tested program must, by definition, increase METRs for low- or no-income earners, even if placed on top of a universal benefit.
Does that mean there are no ways to make a means-tested program work? No. Pat Capponi and others have called for a 6-month grace period on earnings that would allow people to get their feet on the ground before facing a clawback. We need some good behavioural economics studies of what works and what doesn't. Hmm, I think I just found a research topic.
Thanks for your all of your insights and for continuing to hold this issue up.
Mostly, yes. (And I completely agree that we will still need social support programs if there is a GAI - programs that build effective 'social capital' may be more useful than any re-shaping of income support systems.)
Stapleton argues that an income support program should look exactly like that:
1. a universal payment;
2. a top-up for low-income people;
3. registered, tax-saving instruments; and
4. matching or separate contributions to reward individual savings.
Mostly, I agree. The one point where it doesn't succeed as a copy and paste format is in METRs - Marginal Effective Tax Rates. Many current welfare recipients would like to work, but a structure that penalizes them heavily for earning is a major deterrent. With seniors, it's basically not an issue. If it was a single program, it still wouldn't be that bad, but with the 'stacking' of multiple support programs that each remove a chunk, METRs can approach or exceed 100% - you can actually be worse off with a job or a raise, in some cases. And while the Working Income Tax Benefit is a good idea, a tax credit a year later isn't going to substantially affect the decision of someone who's losing their support systems immediately. The two biggest reasons I like a GAI are that it cuts the stigma of welfare and does away with the clawback of benefits. Any means-tested program must, by definition, increase METRs for low- or no-income earners, even if placed on top of a universal benefit.
Does that mean there are no ways to make a means-tested program work? No. Pat Capponi and others have called for a 6-month grace period on earnings that would allow people to get their feet on the ground before facing a clawback. We need some good behavioural economics studies of what works and what doesn't. Hmm, I think I just found a research topic.
Thanks for your all of your insights and for continuing to hold this issue up.