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More Thoughts on a Better Income Support System for the Next Crisis

Summary:
This post was written by Mike Veall of the Department of Economics at McMaster University. I appreciated the comments on my earlier post, where I suggested that a small monthly Basic Income system would have the advantage of being able to be scaled-up in a crisis. Incenting participation in the tax/transfer system is responsive to the work of Anna Cameron, Lindsay Tedds, Jennifer Robson and Saul Schwartz pointed out by Frances even though those authors seek a different, automatic-enrolment approach. (Advertising: More on nonfiling by Robson and Schwartz is coming out in September’s Canadian Public Policy/Analyse de politiques; CPP/Adp is also currently working on expedited publishing/special issues for pandemic-related articles.) The skepticism in the comments on my post is well-taken,

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This post was written by Mike Veall of the Department of Economics at McMaster University.

I appreciated the comments on my earlier post, where I suggested that a small monthly Basic Income system would have the advantage of being able to be scaled-up in a crisis.

Incenting participation in the tax/transfer system is responsive to the work of Anna Cameron, Lindsay Tedds, Jennifer Robson and Saul Schwartz pointed out by Frances even though those authors seek a different, automatic-enrolment approach.

(Advertising: More on nonfiling by Robson and Schwartz is coming out in September’s Canadian Public Policy/Analyse de politiques; CPP/Adp is also currently working on expedited publishing/special issues for pandemic-related articles.)

The skepticism in the comments on my post is well-taken, and if we can get a better emergency benefit delivery system by other means, better is better.

But I would hope it would end up monthly. Especially during an emergency, “monthliness” is much superior to the quarterly delivery of the GST/HST credit and the CWB.

However it is obtained, there is a need for an improved starting point. While COVID policy so far has been the economics equivalent of meatball surgery, it already appears that CERB take-up was under-predicted. I fear overpayment will also prove an issue. While an automatic system with 100% coverage is unrealistic, the alternative has been 7 million CERB applications. With that many, CRA had to rubber stamp, and follow-up has to be at least questionable.

And a pure application system seems to require a lowest common denominator approach with consequent sharp edges. If someone’s 2019 income = $5K, CERB = $8K. If 2019 income = $4.9K, CERB =$0.

Finally, I have been thinking about whether emergency income support to a family could and should be conditioned on rent. Particularly in an emergency, rent looms large, and it varies a lot across the country. I’d be particularly interested in learning the thoughts of others.

A postscript: Privacy concerns sometimes come up, as mentioned in one comment. I think most taxpayers would accept this rather modest incremental risk to their privacy if it means better effectiveness for the substantial tax dollars being spent on programs like CERB.

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