National Edition

Swiss to vote on guaranteed income; could it work?

Published: Wednesday, Oct. 9 2013 11:10 a.m. MDT

While only 13 percent of U.S. citizens earn more than $100,000, they pay 87 percent of the nation’s income tax, according to a report by the Tax Foundation.

Jacquelyn Martin, Associated Press

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Switzerland will vote on whether to have an unconditional guaranteed basic income of 2,500 Swiss francs ($2,800) per month from the state, reports Reuters. The Swiss grass-roots organization that backs the measure is proposing it with the aim of providing a financial safety net for the citizens of the country.

In Switzerland, if citizens can organize a popular initiative and get 100,000 signatures, a referendum is held on the issue. The country usually holds several referenda a year — one passed earlier this year to cap executive pay — according to Reuters.

The idea of a guaranteed basic income may sound like it comes out of socialist left field, but the idea has been supported in the past from thinkers as varied as Martin Luther King Jr. to President Richard Nixon to famous free-market economist Milton Friedman as a way to alleviate poverty.

According to Allan Sheahen at the Huffington Post, King wrote in his 1967 book, "Where Do We Go From Here: Chaos or Community?" that "I am now convinced that the simplest solution to poverty is to abolish it directly by a new widely discussed measure: the guaranteed income. A host of psychological changes inevitably will result from widespread economic security."

In the 1960s, conservative Friedman also proposed a basic income in place of what he saw as immense bureaucratic waste in administering many different social welfare programs, says Cornell economist Robert H. Frank in the New York Times. Rather than an unconditional income as Switzerland is proposing, however, Friedman proposed the idea of a "negative income tax" to sustain incentives to work.

Frank says that under a negative income tax scheme, "[a] family of four with no market income would thus receive an annual payment from the I.R.S. of $24,000. For each dollar the family then earned, this payment would be reduced by some fraction — perhaps 50 percent. A family of four earning $12,000 a year, for example, would receive a net supplement of $18,000 (the initial $24,000 less the $6,000 tax on its earnings)."

According to Dylan Matthews at the Washington Post, Friedman's proposal was taken seriously enough that it "got picked up by the Nixon administration, in particular then-aide and future U.S. Sen. Daniel Patrick Moynihan, and Congress almost passed a version of the proposal."

Frank says the idea never gained full popular support because of the concern that too many citizens would simply stop working if a basic income was instituted. Instead, Congress adopted the earned-income tax credit, which is "essentially the same program except that only people who were employed received benefits."

Since then, a guaranteed income has not been considered by the United States on the federal level, but has been experimented with in Namibia and Brazil — with "promising results," says Matthews. Now Swiss voters will have to decide if it is worth giving a shot.

Email: dmerling@deseretnews.com

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