Guaranteed minimum income
Encyclopedia
Guaranteed minimum income (GMI) is a system of social welfare provision that guarantees that all citizens or families
have an income sufficient to live on, provided they meet certain conditions. Eligibility is typically determined by citizenship
, a means test
and either availability for the labour market or a willingness to perform community service
s. The primary goal of a guaranteed minimum income is to combat poverty
. If citizenship is the only requirement, the system turns into a basic income
guarantee.
) and wealth
, with no other requirement than citizenship
. This is a special case of GMI, based on additional ideologies
and/or goals. While most modern countries have some form of guaranteed minimum income, a basic income is rare.
A basic income is a proposed system of social security
, that periodically provides each citizen with a sum of money that is sufficient to live on. Except for citizenship, a basic income is entirely unconditional. There is no means test; the richest as well as the poorest citizens would receive it.
A basic income is often proposed in the form of a citizen's dividend
(a transfer) or a negative income tax
(a guarantee). A basic income less than the social minimum is referred to as a partial basic income. A worldwide basic income, typically including income redistribution
between nations, is known as a global basic income.
advocated a basic income guarantee to all US 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).
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 his final book Where Do We Go from Here: Chaos or Community?
(1967) Martin Luther King Jr. wrote
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.
In 1973, Daniel Patrick Moynihan
wrote The Politics of a Guaranteed Income in which he advocated for the Guaranteed Minimum Income and discussed Richard Nixon
's GAI proposal.
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.
Modern advocates include Hans-Werner Sinn
(Germany) and Ayşe Buğra
(Turkey).
Family
In human context, a family is a group of people affiliated by consanguinity, affinity, or co-residence. In most societies it is the principal institution for the socialization of children...
have an income sufficient to live on, provided they meet certain conditions. Eligibility is typically determined by citizenship
Citizenship
Citizenship is the state of being a citizen of a particular social, political, national, or human resource community. Citizenship status, under social contract theory, carries with it both rights and responsibilities...
, a means test
Means test
A means test is a determination of whether an individual or family is eligible for help from the government.- Canada :In Canada means tests are used for student finance , and "welfare" . They are not generally used for primary education and secondary education which are tax-funded...
and either availability for the labour market or a willingness to perform community service
Community service
Community service is donated service or activity that is performed by someone or a group of people for the benefit of the public or its institutions....
s. The primary goal of a guaranteed minimum income is to combat poverty
Poverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
. If citizenship is the only requirement, the system turns into a basic income
Basic income
A basic income guarantee is a proposed system of social security, that regularly provides each citizen with a sum of money. In contrast to income redistribution between nations themselves, the phrase basic income defines payments to individuals rather than households, groups, or nations, in order...
guarantee.
Elements
A system of guaranteed minimum income can consist of several elements, most notably:- a minimum wageMinimum wageA minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
, either set by the government or resulting from negotiations of employers or their organizations with trade unionTrade unionA trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
s; - a calculation of the social minimum, usually below the minimum wage;
- a safety netSafety netA safety net is in most cases a net to protect people from injury after falling by limiting the distance they fall. It may also be a device to arrest falling or flying objects for the safety of people beyond the net....
, to help citizens or families without sufficient financial means survive at the social minimum. This may be a transfer or, in some cases, a loan, and is generally conditional to availability for work, performance of community services, some kind of social contractSocial contractThe social contract is an intellectual device intended to explain the appropriate relationship between individuals and their governments. Social contract arguments assert that individuals unite into political societies by a process of mutual consent, agreeing to abide by common rules and accept...
, or commitment to a reintegration trajectory; - child supportChild supportIn family law and public policy, child support is an ongoing, periodic payment made by a parent for the financial benefit of a child following the end of a marriage or other relationship...
by the government; - student grantStudent loanA student loan is designed to help students pay for university tuition, books, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in education...
s and student loanStudent loanA student loan is designed to help students pay for university tuition, books, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in education...
s; - state pension for the elderly.
Basic income
A basic income is granted independent of other income (including salariesSalary
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis....
) and wealth
Wealth
Wealth is the abundance of valuable resources or material possessions. The word wealth is derived from the old English wela, which is from an Indo-European word stem...
, with no other requirement than citizenship
Citizenship
Citizenship is the state of being a citizen of a particular social, political, national, or human resource community. Citizenship status, under social contract theory, carries with it both rights and responsibilities...
. This is a special case of GMI, based on additional ideologies
Ideology
An ideology is a set of ideas that constitutes one's goals, expectations, and actions. An ideology can be thought of as a comprehensive vision, as a way of looking at things , as in common sense and several philosophical tendencies , or a set of ideas proposed by the dominant class of a society to...
and/or goals. While most modern countries have some form of guaranteed minimum income, a basic income is rare.
A basic income is a proposed system of social security
Social security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...
, that periodically provides each citizen with a sum of money that is sufficient to live on. Except for citizenship, a basic income is entirely unconditional. There is no means test; the richest as well as the poorest citizens would receive it.
A basic income is often proposed in the form of a citizen's dividend
Citizen's dividend
Citizen's dividend or citizen's income is a proposed state policy based upon the principle that the natural world is the common property of all persons . It is proposed that all citizens receive regular payments from revenue raised by the state through leasing or selling natural resources for...
(a transfer) or a negative income tax
Negative income tax
In economics, a negative income tax is a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government. Such a system has been discussed by economists but never fully implemented...
(a guarantee). A basic income less than the social minimum is referred to as a partial basic income. A worldwide basic income, typically including income redistribution
Redistribution (economics)
Redistribution of wealth is the transfer of income, wealth or property from some individuals to others caused by a social mechanism such as taxation, monetary policies, welfare, nationalization, charity, divorce or tort law. Most often it refers to progressive redistribution, from the rich to the...
between nations, is known as a global basic income.
Advocates
American revolutionary Thomas PaineThomas Paine
Thomas "Tom" Paine was an English author, pamphleteer, radical, inventor, intellectual, revolutionary, and one of the Founding Fathers of the United States...
advocated a basic income guarantee to all US 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
Emperor
An emperor is a monarch, usually the sovereign ruler of an empire or another type of imperial realm. Empress, the female equivalent, may indicate an emperor's wife or a woman who rules in her own right...
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).
In 1963, Robert Theobald
Robert Theobald
Robert Theobald was a private consulting economist and futurist author. In economics, he was best known for his writings on the economics of abundance and his advocacy of a Basic Income Guarantee...
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 his final book Where Do We Go from Here: Chaos or Community?
Where Do We Go from Here: Chaos or Community?
Where Do We Go from Here: Chaos or Community? is a 1967 book by African-American minister, Nobel Peace Prize laureate, and social justice campaigner Martin Luther King, Jr. It was King's fourth and last book before his assassination. He spent a long period in isolation, living in a rented residence...
(1967) Martin Luther King Jr. wrote
In 1968, James Tobin
James Tobin
James Tobin was an American economist who, in his lifetime, served on the Council of Economic Advisors and the Board of Governors of the Federal Reserve System, and taught at Harvard and Yale Universities. He developed the ideas of Keynesian economics, and advocated government intervention to...
, Paul Samuelson
Paul Samuelson
Paul Anthony Samuelson was an American economist, and the first American to win the Nobel Memorial Prize in Economic Sciences. The Swedish Royal Academies stated, when awarding the prize, that he "has done more than any other contemporary economist to raise the level of scientific analysis in...
, John Kenneth Galbraith
John Kenneth Galbraith
John Kenneth "Ken" Galbraith , OC was a Canadian-American economist. He was a Keynesian and an institutionalist, a leading proponent of 20th-century American liberalism...
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.
In 1973, Daniel Patrick Moynihan
Daniel Patrick Moynihan
Daniel Patrick "Pat" Moynihan was an American politician and sociologist. A member of the Democratic Party, he was first elected to the United States Senate for New York in 1976, and was re-elected three times . He declined to run for re-election in 2000...
wrote The Politics of a Guaranteed Income in which he advocated for the Guaranteed Minimum Income and discussed Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...
's GAI proposal.
In 1987, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
's Labour
New Zealand Labour Party
The New Zealand Labour Party is a New Zealand political party. It describes itself as centre-left and socially progressive and has been one of the two primary parties of New Zealand politics since 1935....
Finance Minister Roger Douglas
Roger Douglas
Sir Roger Owen Douglas , is a New Zealand politician who formerly served as a senior New Zealand Labour Party Cabinet minister. He became arguably best-known for his prominent role in the radical economic restructuring undertaken by the Fourth Labour Government during the 1980s...
announced a Guaranteed Minimum Family Income Scheme to accompany a new flat tax. Both were quashed by then Prime Minister David Lange
David Lange
David Russell Lange, ONZ, CH , served as the 32nd Prime Minister of New Zealand from 1984 to 1989. He headed New Zealand's fourth Labour Government, one of the most reforming administrations in his country's history, but one which did not always conform to traditional expectations of a...
, who sacked Douglas.
Modern advocates include Hans-Werner Sinn
Hans-Werner Sinn
Hans-Werner Sinn is a German economist and President of the Ifo Institute for Economic Research.- Education and career :...
(Germany) and Ayşe Buğra
Ayse Bugra
Ayşe Buğra is a Turkish social scientist, currently Professor of Political Economy at and the co-founder of of Boğaziçi University in İstanbul.After graduating from Robert College of Istanbul, she continued her education at Bogazici University...
(Turkey).
Funding
Many different sources of funding have been suggested for a guaranteed minimum income:- Income taxIncome taxAn income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
es - Sales taxSales taxA sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....
es - Capital gains taxCapital gains taxA capital gains tax is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property...
es - Inheritance taxInheritance taxAn inheritance tax or estate tax is a levy paid by a person who inherits money or property or a tax on the estate of a person who has died...
es - Wealth taxWealth taxA wealth tax is generally conceived of as a levy based on the aggregate value of all household holdings actually accumulated as purchasing power stock , including owner-occupied housing; cash, bank deposits, money funds, and savings in insurance and pension plans; investment in real estate and...
es, e.g. property taxProperty taxA property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality... - Luxury taxLuxury taxA luxury tax is a tax on luxury goods: products not considered essential. A luxury tax may be modeled after a sales tax or VAT, charged as a percentage on all items of particular classes, except that it mainly affects the wealthy because the wealthy are the most likely to buy luxuries such as...
es - Elimination of current income supportIncome SupportIncome support is an income-related means-tested benefit in the United Kingdom for people who are on a low income. Claimants of Income Support may be entitled to certain other benefits, for example, Housing Benefit, Council Tax Benefit and help with health costs...
programs and tax deductionTax deductionIncome tax systems generally allow a tax deduction, i.e., a reduction of the income subject to tax, for various items, especially expenses incurred to produce income. Often these deductions are subject to limitations or conditions...
s - Repayment of the grant at death or retirement
- LandLand value taxA land value tax is a levy on the unimproved value of land. It is an ad valorem tax on land that disregards the value of buildings, personal property and other improvements...
and natural resource taxEcotaxEcotax refers to taxes intended to promote ecologically sustainable activities via economic incentives. Such a policy can complement or avert the need for regulatory approaches. Often, an ecotax policy proposal may attempt to maintain overall tax revenue by proportionately reducing other taxes...
es - Pollution taxes
- Fees from government created monopolies (such as the broadcast spectrum and utilities)
- Collective ownership
- Universal stockStockThe capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
ownership - A National Mutual Fund
- Money creation or seignorage
- Tariffs, the lottery, or sin taxes
- Technology Taxes
- Tobin TaxTobin taxA Tobin tax, suggested by Nobel Laureate economist James Tobin, was originally defined as a tax on all spot conversions of one currency into another...
See also
- Basic IncomeBasic incomeA basic income guarantee is a proposed system of social security, that regularly provides each citizen with a sum of money. In contrast to income redistribution between nations themselves, the phrase basic income defines payments to individuals rather than households, groups, or nations, in order...
- Basic Income Earth NetworkBasic Income Earth NetworkThe Basic Income Earth Network is a network of academics and activists interested in the idea of a universal basic income, i.e. a guaranteed minimum income based solely on citizenship and not on work requirement or charity...
- Citizen's dividendCitizen's dividendCitizen's dividend or citizen's income is a proposed state policy based upon the principle that the natural world is the common property of all persons . It is proposed that all citizens receive regular payments from revenue raised by the state through leasing or selling natural resources for...
- Constitutional economicsConstitutional economicsConstitutional economics is a research program in economics and constitutionalism that has been described as extending beyond the definition of 'the economic analysis of constitutional law' in explaining the choice "of alternative sets of legal-institutional-constitutional rules that constrain the...
- Guaranteed Income Supplement
- Guaranteed Minimum PensionGuaranteed Minimum PensionThe Guaranteed Minimum Pension is the minimum pension which a United Kingdom occupational pension scheme has to provide for those employees who were contracted out of the State Earnings-Related Pension Scheme between 6 April 1978 and 5 April 1997...
- Homelessness in the United StatesHomelessness in the United StatesHomelessness in the United States has continued to remain a focus area of concern of social service providers, government officials, and policy professionals since its resurgence among many types of individuals and families. The number of homeless people further grew in the 1980s, as housing and...
- Minimum wageMinimum wageA minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
- Revenu minimum d'insertionRevenu minimum d'insertionThe Revenu minimum d'insertion is a French form of social welfare. It is aimed at people without any income who are of working age but do not have any other rights to unemployment benefits...
- Social CreditSocial CreditSocial Credit is an economic philosophy developed by C. H. Douglas , a British engineer, who wrote a book by that name in 1924. Social Credit is described by Douglas as "the policy of a philosophy"; he called his philosophy "practical Christianity"...
- Social welfare provision
- Wage slaveryWage slaveryWage slavery refers to a situation where a person's livelihood depends on wages, especially when the dependence is total and immediate. It is a negatively connoted term used to draw an analogy between slavery and wage labor, and to highlight similarities between owning and employing a person...