PROPONENTS OF AN UNCONDITIONAL BASIC INCOME IGNORE THE LESSONS FROM CANADA’S WELFARE REFORMS.

In the PBO’s version, a dollar of extra income results in a 50-cent reduction in the transfer.

The total effective “tax rate” on employment income — 50 per cent from the basic income claw back plus personal income and payroll tax rates, and potentially other reduction rates in government income-support programs — would be significant.

Indeed, past experiments job would pay. Partly in response to this growing crisis in dependency, governments across Canada reformed their welfare systems. Reforms varied by province ranging from tighter eligibility rules, work-related requirements (such as job searches), and reduced cash transfers.

These reforms helped dramatically reduce the share of the population on welfare, which fell by almost half from 12.2 per cent in 1994 to 6.3 per cent in 2012. The U.S., with a similar set of reforms, also experienced a marked decline in dependency. If income were to be unconditionally provided, as prescribed by many basic income models, irrespective of working or even searching for work, we shouldn’t be surprised if, once again, fewer Canadians end up in the workforce.

Finally, claims about an unconditional basic income “solving” poverty oversimplify what’s often a much more complex problem. First, it’s important to recognize the differences between transitory poverty, which almost all Canadians experience at one time or another (for instance, when they’re in university or college), versus long-lasting or permanent poverty, which is much more worrying.

The root causes of longlasting poverty go beyond a simple lack of income. Issues such as addiction to drugs or alcohol, mental health challenges, severe physical disabilities, and not completing high school increase the risk of chronic poverty. Crucially, a cash transfer with no restrictions may either exacerbate the problem or not address why someone is stuck in poverty in the first place.

Proponents from across the political spectrum promote the idea of an unconditional basic income. But clearly, the drawbacks are significant and should give us all pause.