There has been a resurgence of political interest in Canada in the rather old idea of a universal basic income, sometimes called a guaranteed annual income. Essentially, a basic income is a “no strings attached” transfer from government to individuals or families that can be simpler to administer and provide more dignity to recipients than welfare payments and other forms of social assistance. This report simulates various potential basic income models to determine which ones do better at reducing poverty in a cost-effective way.
Specifically, this paper assesses two broad approaches: (1) the one-size-fits-all (universal) basic income, where all Canadians receive an identical cheque in the mail at regular intervals (probably annually); and (2) a negative income tax approach that is geared to income, i.e., the richest Canadians receive nothing and the poorest receive the maximum income supplement. Within these approaches, the author simulates multiple scenarios using Statistics Canada’s Social Policy Simulation Database and Model (SPSD/M) in an attempt to determine their costs and likely impacts on poverty.
