Minimum income programs, also known as a negative income tax, mincome (Forget, 2011), have long been considered a left wing or socialist proposal, and on the surface they are; using taxpayer dollars to subsidize the income of lower earning individuals is undeniably a form of wealth redistribution. By that logic, many conservatives would naturally oppose negative income tax programs, and in fact, many do. But what if a minimum income tax actually saved the government money while doing a better job to help those in need than existing social assistance programs? If we could find a way for fewer tax dollars spent on needless bureaucracy, every Tory should be on board. Not only does negative income tax provide a significantly higher standard of living province wide, it bolsters the provincial economy by decreasing government waste and keeping Ontario competitive. Conservatives across Ontario should embrace negative income tax, allowing for the removal or prevention of no fewer than five costly government programs. Ontario Disability Support Program (ODSP), Ontario Works (OW), Affordable Housing and Homelessness Prevention Programs, as well as Legal Aid cost in excess of seven billion dollars in 2010-11 (Ministry of Finance, 2010), with small budgeted increases since then. The proposed Ontario Registered Pension Plan can also be eliminated with a negative income tax. The poverty line is a figure which can be debated (Sarlo, 2013); however, for the sake of discussion we will assume a negative income tax top up to $20,000, which is roughly the generally accepted poverty line in Ontario.

Ontario overpays significantly for inefficient social assistance programs. ODSP and OW are very similar programs, paying out similar amounts for different reasons. ODSP is a program to assist the permanently disabled, while OW is meant to be a program for shorter term assistance to those who have come upon hard times. Unfortunately, the application process for ODSP is designed in a way that makes it nearly impossible for the most vulnerable citizens to navigate, and has a rejection rate over 50%. In the event of initial rejection the applicant must appeal and appear before a tribunal of bureaucrats to prove their disability (ISAC, 2003). The initial process for an ODSP application can take as long as five months before a decision is reached, at which time a substantial number of applicants are rejected and thus required to appeal the decision. This lengthy application process involves a number of government employees, medical doctoral billed hours as well as significant stress for the disabled applicant. The overall cost of fighting an application is likely significantly higher than the cost of paying benefits to the disabled citizen.

Ontario Works sees a high fraud rate as it is possible to be approved for OW in less than a week, with similar benefits being paid to disability. In 2009, the Auditor General reported that over “$600 million has been spent on welfare overpayments made because of a poor record of checking eligibility — in some cases with no proof of identity or legal status in Canada — compounded by only 'minimal efforts' to get the money back” (Talaga, Ferguson, 2009). Overpayment is just one of the many problems faced by OW, which carries with it another office of bureaucrats. Both ODSP and OW penalize recipients for working part-time jobs, which encourages people to stay in the programs, including claw-backs and removal from the program for earning even a small wage.

The problems with both ODSP and OW can be solved by a negative income tax. Primarily, a negative income tax doesn’t penalize recipients for working. While some will choose, or be unable to work at all, many others will work part-time jobs, allowing smaller sums to be paid from tax dollars without drastically reducing cost of living. A simple, flat negative income tax also allows the disabled, or otherwise unable to work individual, to receive benefits immediately, rather than be forced to suffer while awaiting a tribunal of bureaucrats to conclude that a doctor recommendation is correct in advising a disability payment. Another social program that can be eliminated by a flat negative income tax is Legal Aid. Legal Aid has an assistance threshold of $14,888 for an individual, with a lower threshold for families (Legal Aid Ontario, 2015). With a negative income tax top-up of $20,000, no Ontario resident would qualify for legal aid, allowing for a total elimination of the program.

In a given year approximately 16,000 people use an emergency shelter in the City of Toronto alone (Monsebraaten, 2015). The Government of Ontario has committed $9.1 million to build and repair just 126 units of affordable housing (Monsebraated, 2015). $9.1 million could have provided a full $20,000 top-up to 445 homeless individuals, allowing for those people to afford housing. Many homeless struggle to find employment due to a lack of address, so providing $20,000 income to 445 people for even a year has the potential to get many of those individuals working sooner, thus lowering the amount they receive in their negative income tax top-up. This system is a much better return on investment, with the ability to help as many as 400% more homeless than building housing units with the money.

In 2015, Ontario Premier Kathleen Wynne proposed the Ontario Registered Pension Plan. This job killing pension is intended to compliment the CPP, but will have severe consequences for the Ontario economy. Current estimates place direct job losses at 23,000 by 2023 (McGrath, 2016) and will cost every Ontario worker 1.9% of their income, which is matched by their employer (McFarland, 2015). This means a worker earning $45,000 will pay an additional $855 per year, with their employer matching that figure. After contributing to the ORPP for 40 years that worker earning $45,000 would be entitled to $6,410 per year. This timeframe means that many Ontarians paying into ORPP now are overpaying for future recipients, as they will not be alive in 40 years. Rather than paying into an overstuffed pension plan requiring a number of additional staff to operate, Ontario could replace ORPP benefits with a negative income tax top up after calculating CPP and personal retirement savings payouts. This will eliminate the need for any top-up for many seniors, and will significantly lower the cost per senior for the provincial payment in lieu of ORPP.

Overall, these programs cost Ontario billions and can all be replaced by a single negative income tax. Additionally, each of these five programs requires hundreds of government staff. Some of these staff can be reassigned to other departments which are understaffed allowing for increased efficiency, while others still can be laid off. These laid off staff will be able to count on employment insurance until they can find another job. Some may have trouble finding new employment, and will themselves require an income top-up, however the total they would receive in a top-up until they find new work would be far less than the salary they were paid to do redundant work. While this would be a difficult transition period, the overall net cost would still be significantly lower. This is a prime example of an inefficiency that can be repaired while improving the quality of life for more Ontarians by combining these five programs under the umbrella of a negative income tax. While it is a socialist proposal on the surface, there is nothing more conservative than eliminating millions — even billions — in excess red tape, and streamlining a number of inefficient government programs into one program. The savings in cost alone justify minimum income as an idea to be embraced by conservatives. We have before us an opportunity to eliminate more government red tape than we ever have in the past, while simultaneously improving quality of life for thousands of people across the province, from Atikokan to Windsor, and all points in between.

Sources Cited

"Chapter 8: Social Programs." Commission on the Reform of Ontario's Public Services. Ontario Ministry of Finance, 2010. Web

Fraser, John, Cynthia Wilkey, and JoAnn Frenschkowksi. "DENIAL BY DESIGN.... ....THE ONTARIO DISABILITY SUPPORT PROGRAM."Income Security Advocacy Centre (2003): n. pag. Income Security Advocacy Centre, 2003. Web.

Talaga, Tanya, and Rob Ferguson. "Millions Wasted on Welfare: Ontario Auditor General." Thestar.com. Toronto Star Newspapers Ltd., 7 Dec. 2009. Web.

"Am I Eligible for a Legal Aid Certificate?" Legal Aid Ontario. Legal Aid Ontario, 2015. Web.

Monsebraaten, Laurie. "Ontario Sets 10-year Deadline to End Homelessness." Thestar.com. Toronto Star Newspapers Ltd., 29 Oct. 2015. Web.

McGrath, John Michael. "ORPP Made Easy: What You Get and What It Costs." TVO. The Ontario Educational Communications Authority, 28 Jan. 2016. Web

McFarland, Janet. "What You Need to Know about the Ontario Retirement Pension Plan." The Globe and Mail. The Globe and Mail Inc, 15 Aug. 2015. Web.

Forget, Evelyn L. THE TOWN WITH NO POVERTY. The University of Manitoba, Feb. 2011. Web.

Sarlo, Christopher A. "Poverty: Where Do We Draw the Line?" (n.d.): n. pag. Fraser Institute. Fraser Institute, Nov. 2013. Web.