Abstract

We design a hybrid guaranteed basic income and earnings subsidy for working-age Canadians that addresses federalism and work disincentive concerns associated with a conventional basic income by expanding the Canada Workers Benefit. We cost our program and propose a revenue-neutral financing model by consolidating provincial SA programs and eliminating several federal and provincial tax credits. We simulate the distributional effects of our program and financing on household disposable income across deciles and family types and discuss its impact on marginal effective tax rates and interaction with disability programs. Our program substantially reduces poverty rates among two-parent families and working-age singles and couples without children.

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