Abstract
American flirtation with a negative income tax ended with a turn toward the Earned Income Tax Credit for low-income families. The post-war U.S. and European welfare systems provided inadequate benefits with bureaucratically administered work conditions that imposed high tax rates on earnings to discourage work and exit from welfare, even as issues around poverty, inequality, occupational polarization, precarious employment and European unemployment manifested. The concept of a universal basic income emerged as a means to assert citizens’ rights and reinvigorate labour by disconnecting income assistance from a potentially dehumanizing wage labour market, leading to the formation of the Basic Income Europe Network, although political success was limited to the introduction of a Dutch partial basic income plan and an Alaskan universal dividend from oil revenues.
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Notes
- 1.
I include the United Kingdom in the terms “Europe” or “Western Europe” as opposed to “continental Europe” or “continental Western Europe.”
- 2.
In practice, the official U.S. poverty standard was essentially neglected for political purposes and simply adjusted according to general price inflation during the rest of the twentieth century (Burkhauser 2009).
- 3.
Intermediate or hybrid approaches, using a weighted average of the absolute and relative poverty measures, were also feasible (Foster 1998) but the choice of weights would remain arbitrary and the data demands would be more formidable.
- 4.
If n is the number of household members, then household income is adjusted by nα, where α is the equivalence scale elasticity, α = 0.5 is the square-root adjustment rule, and α = 1 represents no economies of scale in household consumption (so simply divide by the number of household members). Values between 0.5 and 1 have been considered as well as applying varying weights to each additional household member. See, for example, the OECD note at http://www.oecd.org/els/soc/OECD-Note-EquivalenceScales.pdf.
- 5.
The Gini coefficient is the most commonly used measure of inequality, based on the area between the Lorenz curve (which plots households from poorest to richest by their cumulative income shares) and the line of perfect equality. Burniaux and his colleagues present other measures of inequality, but they show a similar pattern to the Gini coefficient.
- 6.
One solution is to adopt an alternative relative standard, such as 40% of the median adjusted household income, which has been explored in some OECD publications.
- 7.
These figures are taken from the Monthly Labor Review of August, 2016 accessed at https://www.bls.gov/opub/mlr/2016/article/current-employment-statistics-survey-100-years-of-employment-hours-and-earnings.htm.
- 8.
The 1996 reforms required states to enrol a minimum fraction of welfare recipients in a work activity or something comparable, including job search but not education and training programs, leading to a reduction in exemptions from work and stronger sanctions for non-compliance at the discretion of the state. These measures fortified existing work conditions associated with the receipt of welfare benefits and, of course, the receipt of the burgeoning Earned Income Tax Credit.
- 9.
The results in this and the succeeding paragraph are based on Eardley et al. (1996, Tables 2.2 and 2.4) with my calculations for the EU-15, which are a simple average for all 15 countries.
- 10.
Figures include cash assistance tagged to housing in Sweden and France.
- 11.
This would include AFDC-UP but not General Assistance for families and individuals without child dependents, which is administered by the states and varies accordingly. It would also not apply to disability programs which are typically more generous but require medical certification.
- 12.
The Dutch Guilder was valued at 3.4 to the U.S. dollar in mid-1985, so the partial basic income would have amounted to about $132 per month per adult based on a national assistance rate of about $880 per couple. As a partial basic income, this would represent about 28% of the U.S. poverty threshold for a single adult under 65 at the time ($5593 per annum).
- 13.
My source is BIEN Denmark at https://basisindkomst.dk/, translated at https://translate.google.ca/translate?hl=en&sl=da&u=https://basisindkomst.dk/&prev=search.
- 14.
At the mid-1992 exchange rate of 0.66 USD per 1 DM, this would amount to $6070 or about 83% of the U.S. poverty threshold for a single adult under 65 at the time ($7299 per annum).
- 15.
Footnote 80, p. 298. As of December, 2000 the euro was worth $1.51 in U.S. dollars, such that the guarantee would have been $3170, about 38% of the U.S. poverty line of $8350 in 2000 for a single adult under 65. Added to assistance benefits, which were about three times the guarantee for someone without taxable income, the refundable credit would have raised a single adult above the U.S. poverty line.
- 16.
$8791 for a single adult in 2000 (https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-people.html as for other U.S. poverty threshold figures).
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Simpson, W. (2021). Basic Income Beyond the Negative Income Tax (the 80s and 90s and a Bit Before). In: Is Basic Income Within Reach?. Exploring the Basic Income Guarantee. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-66085-7_4
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