Paying for a Basic Income

Abstract

I became interested in basic income ideas in 1989. I came to these ideas via the issue of effective marginal tax rates (EMTRs) that was raging at both ends of the income scale. The loudest, public, and most forceful arguments were being made by the Centre for Policy Studies at Monash University who were demanding a maximum rate of 39 percent, the same as the then company tax rate (Centre of Policy Studies, 1988). Quieter and less publicized voices (especially from Peter Saunders and the University of New South Wales Centre for Social Policy Research) were putting forward the obvious point that the highest effective marginal tax rates were suffered by low-income workers for whom the tapering of a range of welfare payments could drive the effective marginal tax rates well over 100 percent without even taking into account the costs of going to work (including child care).