Guaranteed minimum income (GMI), also called minimum income (or mincome for short), is a social-welfare system that guarantees all citizens or families an income sufficient to live on, provided that certain eligibility conditions are met, typically: citizenship and that the person in question does not already receive a minimum level of income to live on.
The primary goal of a guaranteed minimum income is reduction of poverty. Under more unconditional requirements, when citizenship is the sole qualification, the program becomes a universal basic income (UBI) system. Unlike a guaranteed minimum income, UBI does not typically take into account what a recipient already earns before receiving a UBI.
A system of guaranteed minimum income can consist of several elements, most notably:
Persian monarch Cyrus the Great (c. 590 to c. 529 B.C.), whose government used a regulated minimum wage, also provided special rations to families when a child was born. [1]
Cash assistance GMI was first documented by the third century BCE Greek philosopher, Aristotle, in his review of the Athenian Constitution. [2] The modern equivalent would be a safety net program for people with less than $1,000 USD in savings to receive $20 USD per day.
The Roman Republic and Empire offered the Cura Annonae, a regular distribution of free or subsidized grain or bread to poorer residents. The grain subsidy was first introduced by Gaius Gracchus in 123 B.C., then further institutionalized by Julius Caesar and Augustus Caesar. [3] [4]
The first Sunni Muslim Caliph Abu Bakr, who came to power in 632 C.E., introduced a guaranteed minimum standard of income, granting each man, woman and child ten dirhams annually. This was later increased to twenty dirhams. [5] [ better source needed ]
In 1795, American revolutionary Thomas Paine advocated a citizen's dividend to all United States citizens as compensation for "loss of his or her natural inheritance, by the introduction of the system of landed property" ( Agrarian Justice , 1795).
French Emperor Napoleon Bonaparte echoed Paine's sentiments and commented that 'man is entitled by birthright to a share of the Earth's produce sufficient to fill the needs of his existence' (Herold, 1955).
The American economist Henry George advocated for a dividend paid to all citizens from the revenue generated by a land value tax. [6]
American economist Milton Friedman began advocating a basic income in the form of a negative income tax in the early 1940s. He discusses the proposal his 1962 book Capitalism and Freedom and his 1980 book Free to Choose . [7] [8]
In 1963, Robert Theobald published the book Free Men and Free Markets, in which he advocated a guaranteed minimum income (the origin of the modern version of the phrase).
In 1966, the Cloward–Piven strategy advocated "overloading" the US welfare system to force its collapse in the hopes that it would be replaced by "a guaranteed annual income and thus an end to poverty".
In his final book Where Do We Go from Here: Chaos or Community? (1967), Martin Luther King Jr. wrote [9]
I am now convinced that the simplest approach will prove to be the most effective—the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.
— from the chapter titled "Where We Are Going"
In 1968, James Tobin, Paul Samuelson, John Kenneth Galbraith and another 1,200 economists signed a document calling for the US Congress to introduce in that year a system of income guarantees and supplements. [10]
In 1969, President Richard Nixon's Family Assistance Plan would have paid a minimum income to poor families. The proposal by Nixon passed in the House but never made it out of committee in the Senate.[ citation needed ]
In 1973, Daniel Patrick Moynihan wrote The Politics of a Guaranteed Income, in which he advocated the guaranteed minimum income and discussed Richard Nixon's Guaranteed Annual Income (GAI) proposal. [11]
In 1987, New Zealand's Labour Finance Minister Roger Douglas announced a Guaranteed Minimum Family Income Scheme to accompany a new flat tax. Both were quashed by then Prime Minister David Lange, who sacked Douglas. [12]
In his 1994 "autobiographical dialog", classical liberal Friedrich Hayek stated: "I have always said that I am in favor of a minimum income for every person in the country". [13]
In 2013, the Equal Life Foundation published the Living Income Guaranteed Proposal, [14] illustrating a practical way to implement and fund a minimum guaranteed income. [15]
In 2017, Harry A. Shamir (US) published the book Consumerism, or Capitalism Without Crises, in which the concept was promoted by another label, as a way to enable our civilization to survive in an era of automation and computerization and large scale unemployment. The book also innovates a method to fund the process, tapping into the underground economy and volunteerism.
Other modern advocates include Ayşe Buğra (Turkey), The Green Economics Institute (GEI), [16] and Andrew Coyne (Canada). [17]
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Tax revenues would fund the majority of GMI proposals. As most GMI proposals seek to create an earnings floor close to or above poverty lines amongst all citizens, the fiscal burden would require equally broad tax sources, such as income taxes or VATs. To varying degrees, a GMI might be funded through the reduction or elimination of other social security programs, such as unemployment insurance.
Another approach for funding is to acknowledge that all modern economies use fiat money and thus taxation is not necessary for funding. However, the fact that there are no financial constraints does not mean other constraints, such as on real resources, do not exist. A likely outcome based on the economic theory known as Modern Monetary Theory would be a moderate increase in taxation to ensure the extra income would not cause demand-pull inflation. This hypothetical Chartalist approach can be seen in the implementation of quantitative easing programs where, in the United States, over three trillion dollars [18] [19] were created without requiring taxes.
Social assistance is the last social safety net provided by the state (principle of subsidiarity). Social assistance is only granted if people cannot secure their livelihood either through their own efforts or through family assistance (maintenance obligation) or on the basis of a social insurance or other benefit entitlement. Due to other existing benefits in Austria, many people are not dependent on social assistance.
Minimum income has been increasingly accepted by the Brazilian government. In 2004, President Lula da Silva signed into law a bill to establish a universal basic income. [20] This law is primarily implemented through the Bolsa Família program. Under this program, poorer families receive a direct cash payment via a government issued debit card. Bolsa Família is a conditional cash transfer program, meaning that beneficiaries receive their aid if they accomplish certain actions. Families who receive the aid must put their children in school and participate in vaccination programs. If they do not meet these requirements, they are cut off from aid. [21] The program has been criticised as vote-buying, trading productive individuals' earning for the votes of welfare recipients [22] As of 2011, approximately 50 million people, or a quarter of Brazil's population, were participating in Bolsa Família. [23]
Canada has experimented with minimum income trials. During the Mincome experiment in Manitoba in the 1970s, Mincome provided lower-income families with cash transfers to keep them out of poverty. [24] The trial was eventually ended but this was due to budget shortfalls and a change in government.
The province of Ontario began a minimum income experiment in 2017. Approximately 4000 citizens began to receive a stipend based on their family situation and income. [25] Recipients of this program could receive upwards of $10,000 per year. Government researchers used this pilot as a way of testing to see if a minimum income can help people meet their basic needs. [26] On 31 August 2018, following a change in government, incoming Premier Doug Ford announced that the pilot would be cancelled at the end of the current fiscal year.
China's Minimum Livelihood Guarantee also called dibao, is a means-tested social assistance scheme introduced in 1993 and expanded to all Chinese cities in 1999. [27] [28] [29]
In July 2013, the Cypriot government unveiled a plan to reform the welfare system in Cyprus and create a 'Guaranteed Minimum Income' for all citizens. [30]
Kontanthjælp (formerly known as bistandshjælp) is a public benefit in Denmark granted to citizens who would otherwise not be able to support themselves or their families. In principle, cash benefits are a universal right for all citizens who meet certain statutory criteria.
A subsistence allowance is financial help for a person or family in need, which provides minimal resources for everyday life (food, medicine, housing costs, etc.).
Basic subsistence allowance paid by Kela may be granted to a person or family whose income and assets are insufficient to cover the necessary daily expenses.
In 1988, France was one of the first countries to implement a minimum income, called the Revenu minimum d'insertion. In 2009, it was turned into Revenu de solidarité active (RSA), a new system that aimed to solve the poverty trap by providing low-wage workers a complementary income to encourage activity.
The minimum guaranteed income is a selective financial benefit to ensure that all citizens enjoy a minimum standard of living and cover their basic needs. It has been tested and implemented in European Union countries and others. In 2019 it was incorporated as a requirement in the Greek Constitution.
Modern independent India developed many means and livelihood tested cash transfer programs through Direct Benefit Transfer at both the federal and the state level. At the federal level, these include minimum income social pension programs such as National Social Assistance Scheme, guaranteed employment program like National Rural Employment Guarantee Act, 2005 or a disability aid like Deendayal Disabled Rehabilitation Scheme. At the state level, there can be additional minimum income programs, one such being "Laksmir Bhandar" run by the state of West Bengal that transfers a minimum aid to families without work in the state. [31]
In Ireland, €20 of earnings per day of permitted work (beneficiaries are allowed up to three days per week) is disregarded from employment income when calculating Jobseekers’ Allowance entitlement and deductions are calculated as 60 percent of earnings less this income disregard. In addition, the Part-time Job Incentive Scheme and Back to Work Family Dividend are fixed-duration payments offered to the long-term unemployed incentive moving into work. In return for relinquishing claims to primary assistance benefits, both schemes provide benefits for a fixed duration that are slightly lower than household GMI entitlements, but which are not tapered with employment income, subject to certain eligibility requirements. Ireland's relatively generous tapering system serves to smooth disincentives to increase income and work and contributes to their lower measured participation tax rates (PTRs) and marginal effective tax rates (METRs). [32]
The citizens' income was a social welfare system created in Italy in January 2019. [33] [34] Although its name recalls one of a universal basic income, this provision was actually a form of conditional and non-individual guaranteed minimum income. [35] [36]
Income support can be granted if the applicant has insufficient income and resources to live on and is not entitled to other social security benefits. Income support is paid by the Norwegian Labour and Welfare Administration.
The Social Insertion Income is a benefit for combating poverty, enabling individuals and their families to obtain support adapted to their situation, facilitating the satisfaction of their basic needs and aiming to integrate them into work, society and the community.
Saudi Arabia has a Citizen's Account Program which provides a basic income to registered citizens. In December 2017, immediately before the program began, more than 3.7 million households had registered, representing 13 million people, or more than half the population. [37] As of 2013 [update] , between one fifth and one third of Saudi residents are estimated to be non-citizens. [38] [39] [40] [ needs update ]
Material need assistance (pomoc v hmotnej núdzi) includes one hot meal a day, essential clothing and shelter. [41]
The Social Relief of Distress grant (SRD) in South Africa is given to those whose monthly income falls short of the individual food poverty line, which is the minimal amount required to buy food that provides adequate calories for survival. [42]
In Spain, the ingreso mínimo vital is an economic benefit guaranteed as part of the Social security in Spain. The IMV is defined as a "subjective right" and is intended to prevent poverty and social exclusion of people who live alone or integrated into a coexistence unit when they are in a situation of vulnerability due to lack of sufficient financial resources to cover their basic needs. [43] The benefit, which is not fixed and varies depending on various factors, ranges between 462 and 1015 euros per month, is expected to cover 850,000 households (approximately 2.5 million people) and will cost the government 3 billion euros per year. [43] [44]
Social assistance consists partly of a "national standard" (riksnorm) and partly of "reasonable costs outside the national standard". The national standard includes costs such as food, clothing and footwear. Reasonable non-standard costs include rent and household electricity.
Universal Credit is a social welfare program in the United Kingdom that consolidates several means-tested benefits into a single payment, aiming to simplify the welfare system and incentivize work.
The United States has multiple social programs that provide guaranteed minimum incomes for individuals meeting certain criteria such as assets or disability. For instance, Supplemental Security Income (SSI) is a United States government program that provides stipends to low-income people who are either aged (65 or older), blind, or disabled. SSI was created in 1974 to replace federal-state adult assistance programs that served the same purpose. Today the program provides benefits to approximately eight million Americans. Another such program is Social Security Disability Insurance (SSD or SSDI), a payroll tax-funded, federal insurance program. It is managed by the Social Security Administration and is designed to provide income supplements to people who are restricted in their ability to work because of a disability, usually a physical disability. SSD can be supplied on either a temporary or permanent basis, usually directly correlated to whether the person's disability is temporary or permanent.
An early guaranteed minimum income program in the U.S. was the Aid to Families with Dependent Children (AFDC), established by the Social Security Act. Where previously the responsibility to assist needy children lay in the hands of the states, AFDC transferred that authority to the federal government. [45] Over time, the AFDC was often criticized for creating disincentives to work, leading to many arguing for its replacement. In the 1970s, President Richard M. Nixon proposed the Family Assistance Program (FAP), which would replace the AFDC. FAP was intended to fix many of the problems of the AFDC, particularly the anti-work structure. Presidential nominee George McGovern also proposed a minimum income—in the form of a Universal Tax Credit. Ultimately, neither of these programs was implemented. Throughout the decade, many other experimental minimum income programs were carried out in cities throughout the country, such as the Seattle-Denver Income Maintenance Experiments. [46] In 1996, under President Bill Clinton, the AFDC was replaced with the Temporary Assistance for Needy Families program. This would block grant funds to the states to allow them to decide how aid would be distributed. [45]
Another guaranteed minimum income program in the U.S. is the Earned Income Tax Credit. This is a refundable tax credit that gives poorer families cash assistance every year. The EITC avoids the welfare trap by subsidizing income, rather than replacing it. [47]
Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifically to social insurance programs which provide support only to those who have previously contributed, as opposed to social assistance programs which provide support on the basis of need alone. The International Labour Organization defines social security as covering support for those in old age, support for the maintenance of children, medical treatment, parental and sick leave, unemployment and disability benefits, and support for sufferers of occupational injury.
Welfare reform is the process of proposing and adopting changes to a welfare system in order to improve the efficiency and administration of government assistance programs with the goal of enhancing equity and fairness for both welfare recipients and taxpayers. Reform programs have various aims: empowering individuals to help them become self-sufficient, ensuring the sustainability and solvency of various welfare programs, and/or promoting equitable distribution of resources. Welfare reform is constantly debated because of the varying opinions on a government's need to balance the imperatives of guaranteeing welfare benefits and promoting self-sufficiency.
Social welfare has long been an important part of New Zealand society and a significant political issue. It is concerned with the provision by the state of benefits and services. Together with fiscal welfare and occupational welfare, it makes up the social policy of New Zealand. Social welfare is mostly funded through general taxation. Since the 1980s welfare has been provided on the basis of need; the exception is universal superannuation.
In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level; in other words, earners above that level pay money to the state while earners below it receive money, as shown by the blue arrows in the diagram. NIT was proposed by Juliet Rhys-Williams while working on the Beveridge Report in the early 1940s and popularized by Milton Friedman in the 1960s as a system in which the state makes payments to the poor when their income falls below a threshold, while taxing them on income above that threshold. Together with Friedman, supporters of NIT also included James Tobin, Joseph A. Pechman, and Peter M. Mieszkowski, Jim Gray and even then-President Richard Nixon, who suggested implementation of modified NIT in his Family Assistance Plan. After the increase in popularity of NIT, an experiment sponsored by the US government was conducted between 1968 and 1982 on effects of NIT on labour supply, income, and substitution effects.
Welfare in France includes all systems whose purpose is to protect people against the financial consequences of social risks.
The United States spends approximately $2.3 trillion on federal and state social programs including cash assistance, health insurance, food assistance, housing subsidies, energy and utilities subsidies, and education and childcare assistance. Similar benefits are sometimes provided by the private sector either through policy mandates or on a voluntary basis. Employer-sponsored health insurance is an example of this.
Social protection, as defined by the United Nations Research Institute for Social Development, is concerned with preventing, managing, and overcoming situations that adversely affect people's well-being. Social protection consists of policies and programs designed to reduce poverty and vulnerability by promoting efficient labour markets, diminishing people's exposure to risks, and enhancing their capacity to manage economic and social risks, such as unemployment, exclusion, sickness, disability, and old age. It is one of the targets of the United Nations Sustainable Development Goal 10 aimed at promoting greater equality.
Universal basic income (UBI) is a social welfare proposal in which all citizens of a given population regularly receive a minimum income in the form of an unconditional transfer payment, i.e., without a means test or need to work. In contrast a guaranteed minimum income is paid only to those who do not already receive an income that is enough to live on. A UBI would be received independently of any other income. If the level is sufficient to meet a person's basic needs, it is sometimes called a full basic income; if it is less than that amount, it may be called a partial basic income. As of 2024, no country has implemented a full UBI system, but two countries—Mongolia and Iran—have had a partial UBI in the past. There have been numerous pilot projects, and the idea is discussed in many countries. Some have labelled UBI as utopian due to its historical origin.
According to the International Labour Organization, social security is a human right that aims at reducing and preventing poverty and vulnerability throughout the life cycle of individuals. Social security includes different kinds of benefits A social pension is a stream of payments from the state to an individual that starts when someone retires and continues to be paid until death. This type of pension represents the non-contributory part of the pension system, the other being the contributory pension, as per the most common form of composition of these systems in most developed countries.
The National Social Assistance Programme (NSAP) is a Centrally Sponsored Scheme of the Government of India that provides financial assistance to the elderly, widows and persons with disabilities in the form of social pensions. The NSAP scheme only includes Below Poverty Line individuals as beneficiaries.
Universal basic income in India refers to the debate and practical experiments with universal basic income (UBI) in India. The greatest impetus has come from the 40-page chapter on UBI that the Economic Survey of India published in January 2017. It outlined the three themes of a proposed UBI programme:
Universal basic income in Canada refers to the debate and trials with basic income, negative income tax and related welfare systems in Canada. The debate goes back to the 1930s when the social credit movement had ideas around those lines. Two major basic income experiments have been conducted in Canada. Firstly the Mincome experiment in Manitoba 1974–1979, and secondly the Ontario Basic Income Pilot Project in 2017. The latter was intended to last for three years but only lasted a few months due to its subsequent cancellation by the then newly-elected Conservative government.
Universal basic income is a subject of much interest in the United Kingdom. There is a long history of discussion yet it has not been implemented to date. Interest in and support for universal basic income has increased substantially amongst the public and politicians in recent years.
Universal basic income (UBI) is discussed in many countries. This article summarizes the national and regional debates, where it takes place, and is a complement to the main article on the subject: universal basic income.
Universal basic income pilots are smaller-scale preliminary experiments which are carried out on selected members of the relevant population to assess the feasibility, costs and effects of the full-scale implementation of universal basic income, or the related concept of negative income tax (NIT), including partial universal basic income and similar programs. The following list provides an overview of the most famous universal basic income pilots, including projects which have not been launched yet but have been already approved by the respective political bodies or for the negotiations are in process.
South Korea's pension scheme was introduced relatively recently, compared to other democratic nations. Half of the country's population aged 65 and over lives in relative poverty, or nearly four times the 13% average for member countries of the Organisation for Economic Co-operation and Development (OECD). This makes old age poverty an urgent social problem. Public social spending by general government is half the OECD average, and is the lowest as a percentage of GDP among OECD member countries.
Cyprus is a high income country with a well established and extensive welfare system. The Social Insurance Scheme ensures access to healthcare, income support, and pensions, with mandatory contributions for all employees and employers. Income support is means tested on the basis of total family income and assets, which often places the burden of care on the family unit before the state provides assistance. There is also an obligation to seek work. The pension system is fairly comprehensive, yet may still leave some in the private sector unsupported.
Universal basic income and negative income tax, which is a related system, has been debated in the United States since the 1960s, and to a smaller extent also before that. During the 1960s and 1970s a number of experiments with negative income tax were conducted in United States and Canada. In the 1970s another and somewhat related welfare system was introduced instead, the Earned Income Tax Credit. The next big development in the history of basic income in the United States came in 1982, when the Alaska Permanent Fund was established. It has delivered some kind of basic income, financed from the state's oil and gas revenues, ever since.
The Nyuntam Aay Yojana was a proposed social welfare programme by the Indian National Congress in its 2019 general election manifesto. It promised that the party, if voted to power in the 2019 Indian general election, would enact a law under which it would distribute cash to the bottom 20 per cent of India's families in terms of wealth, as a minimum guarantee programme. These households would each receive up to ₹72,000 (US$860) a year, a program the Congress claimed would benefit 250 million people in India.
The Family Assistance Plan (FAP) was a welfare program introduced by President Richard Nixon in August 1969, which aimed to implement a negative income tax for households with working parents. The FAP was influenced by President Lyndon B. Johnson's War on Poverty program that aimed to expand welfare across all American citizens, especially for working-class Americans. Nixon intended for the FAP to replace existing welfare programs such as the Aid to Assist Families with Dependent Children (AFDC) program as a way to attract conservative voters that were beginning to become wary of welfare while maintaining middle-class constituencies. The FAP specifically provided aid assistance to working-class Americans, dividing benefits based on age, the number of children, family income, and eligibility. Initially, the Nixon administration thought the FAP legislation would easily pass through the House of Representatives and the more liberal Senate, as both chambers were controlled by the Democratic Party. In June 1971, the FAP under the bill H.R. 1 during the 92nd Congress, passed in the House of Representatives. However, from December 1971 to June 1972 H.R.1 bill that included the FAP underwent scrutiny in the Senate chamber, particularly by the Senate Finance Committee controlled by the conservative Democrats, while the Republicans were also reluctant on passing the program. Eventually, on October 5 of 1972, a revised version of H.R.1 passed the Senate with a vote of 68-5 that only authorized funding for FAP testing before its implementation. During House-Senate reconciliation, before Nixon signed the bill on October 15, 1972, the entire provision on FAP was dropped. The FAP enjoyed broad support from Americans across different regions. Reception towards the program varied across racial, regional, income, and gender differences. The FAP is best remembered for beginning the rhetoric against the expansion of welfare that was popular during the New Deal. It initiated the support for anti-welfare conservative movements that became mainstream in American political discourse during the Reagan era.
Deputy Prime Minister Pablo Iglesias told a news conference on Friday the creation of a minimum income worth €462 (£416.92) a month will target some 850,000 households or 2.5 million people. The government would pay the monthly stipend and top up existing revenue for people earning less so that they receive at least that minimum amount every month, he said. The minimum income would increase with the number of family members, up to a maximum of €1,015 (£916.30) each month. The programme would cost the government about €3 billion a year.