Guaranteed Income Supplement Research Articles

Social Security—Adequacy, Equity, and Progressiveness

This paper reviews and compares the Canadian and U.S. social security systems, based on criteria defined in a paper by Knox and Cornish, as to their adequacy, equity, and progressiveness. It concludes that the Canadian system provides larger minimum benefits and, thus, greater adequacy for the poor than does the U.S. system. On the other hand, the analysis indicates more emphasis on equity in the U.S. system (in total) than in the Canadian. Finally, both systems are shown to be highly progressive in that lower-wage earners get larger benefits per dollar of contribution than do higher-wage earners. The paper also studies the Seniors Benefit recently proposed in Canada that would have replaced the Old Age Security and the Guaranteed Income Supplement. The proposal was rescinded in July, 1998. Its failure points out the need for a further criterion for optimal social security design beyond those listed by Knox and Cornish. We conclude by noting that the social security systems in both Canada and the U.S. achieve the basic criteria defined in the paper despite having remarkably different actuarial formulas for determining benefits and remarkably different structures.

The Working Poor, Wage Earners and the Failure of Income Security Policies

This book provides a very useful review of the development of income security policies up to the beginning of the 1980s. Ross identifies the nature and extent of low incomes in Canada and is particularly concerned with the wage-earning poor, people who work full-time but who do not bring home an income sufficient to put them above the various poverty levels which obtain in Canada. He deals with existing income support and supplementation programmes and who receives them, acknowledging the difficulty of identifying all benefits and subsidies received by people of all income levels, and recognizing the role played by tax expenditures and benefits conferred without reference to income or wealth level. Ross reports on the record of attempts made to reform the taxation system but does not urge that this should be a high priority at the present time. Instead, Ross advocates a further extension of the tax credit principle already embodied in the child tax credit and in the guaranteed income supplement. He favours making the child tax credit more generous, and reducing the income threshold level and eliminating the dependent child exemption, thus achieving a saving with which to pay the more generous credit. He makes other suggestions for paying the credit on a monthly or quarterly basis rather than annually as at present. Generally, therefore, Ross is making a cautious proposal which he sees as politically feasible in the uncertain economic climate of the early 1980s. Since the book appeared, the economic and unemployment picture has further darkened, with considerably increased demands being made on unemployment insurance and social assistance programmes, their importance as financial safety nets being further exemplified. It is quite clear that the issues of income inequality and inadequacy are not likely to be tackled in the near future. The general question of a guaranteed annual income remains, as always, as much a political as an economic issue. There is scope but no political support for tax reform. As Ross indicates, the use of the demogrant approach remains a feasible way of increasing benefits to families with children and is administratively the simplest and cheapest way to transfer benefits. Such benefits can be taxed back from wealthier families more efficiently than now. Furthermore, payments would remain monthly, and go to mothers. As one who has always favoured demogrants, I believe their merits should be recognized. At the same time I do think the tax system