WE NEED TO I N N O VAT E ECONOMIC POLICY For thirty years, economic policies have led to growing financial insecurity for the middle class. It's an anxiety-provoking concern to many and for good reason. People are worried they won’t be able to afford utilities or basic needs.
WHAT'S THE SOLUTION? There are two simple, yet equally transformative, solutions to fix this issue: a universal basic income and lower taxes for the middle class.
HOW DID NORTH AMERICA GET INTO THIS MESS? The philosophy that has been the go-to of policymakers for the last three decades was neoliberalism. Neoliberalism is the idea that markets should be minimally taxed and regulated. Proponents and adherents believed that minimal interference would increase commercial and public services efficiency. In the 80s and 90s, governments made substantial cuts to public spending and tax rates. The policy spurred growth but was buoyed by to low interest rates.4
A universal basic income of $1,000–$2,000 a month would significantly increase an individual's or family's spending ability. Universal basic income would allow them to afford their needs including food, rent and utilities. While an additional $12,000 to $24,000 a year is still considered low income, the money would typically not be taxed and would recirculate into the economy, boosting the overall GDP. It would also give low-income families and individuals a secure financial foundation, so they can gradually make investments for education or have the resources to join the workforce.²
Corporate and income tax spending cuts for the highest earners (the 1%) and public services respectively worsened income inequality. Public services, particularly welfare, were weakened as a result. This left individuals with no social safety net to fall on if left financially vulnerable or even in poverty or deprivation. Meanwhile, the tax burden shifted mainly to smaller businesses, middle, and lower-income earners to pay for the cuts.
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Someone who earns around $500,000 can easily afford basic living needs and utilities but you have to work eight hours a day, five days a week, four weeks of the month just to pay a month's worth of basic necessities.¹
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Reductions in personal and corporate income taxes for middle and lower-income earners and businesses (98% of Canadians) will also add to disposable income. The extra income would allow individuals, families, and small businesses to make more meaningful investments in their futures. They could invest in raising a family, buy a home to start building equity, further their education, or establish and expand their own business.5 Because small businesses and the middle class make up most of Canada's economy, their personal and business income growth would significantly boost the overall economy nationally.³ The same would apply to employees and/or part-timers who attend school. Increased amounts of disposable income would benefit them in numerous ways; for example, paying off student debt, paying rent and/or utilities, contributing more to personal savings, pensions, or investments in their home.
