In the winter of 2015, the government, which is dominated by the right-leaning Centre Party, announced a formal study, run by Kela, to see if basic income was viable. The public adored the idea. In national polls, almost 70 percent of Finns supported it. Asked what level of income would be sufficient, on average they suggested €1,000 a month, almost one and a half times the minimum retirement pension in Finland. But the plan didn’t go over well with the Central Organisation of Finnish Trade Unions (SAK), the country’s largest union. “It takes social policy in the wrong direction,” Ilkka Kaukoranta, chief economist of SAK, told Bloomberg News last year, arguing that people would stop working.
Wahlroos says that isn’t the point. “I don’t mind if someone says, ‘OK, pay me hundreds of euros, and I’ll just start painting ugly pictures or writing bad poems,’ ” he says. “We are actually paying many of those people more in other benefits right now. And it’s possible many of those paintings won’t be that bad.”
Kela designed Finland’s experiment with help from think tanks and economists from around the continent, following parameters set by the government. The payments would start in January 2017 and run for two years, concluding in time for parliamentary elections in 2019. Kela’s then head researcher, Olli Kangas, oversaw the project.
Kela’s researchers originally envisioned the experiment as the first in a series that would help them understand the implications of expanding basic income nationwide. “With basic income, there will be a lot of winners, but there will be a lot of losers also,” Kangas says. “We have to study the losers.” For one thing, he points out, to provide Finns with the level of financial security they enjoy under their current system, basic income payments would have to be at least twice those of the trial. And to pay everyone, the country would have to change its tax structure.
In their proposals for further studies, the researchers estimated that a flat tax of about 55 percent would be required. Kangas says they tried calculations involving progressive taxation but worried that another showdown with the constitutional committee would result. Benefits are taxed in Finland just as income is, and the researchers didn’t think the committee would allow basic income payments to be taxed at different rates when the whole idea was to ensure people received the same amount.
The wealthiest would be relatively unaffected by such a change because their taxes are already high, but a swath of middle- and upper-middle-class Finns would pay more in taxes than they’d get back in basic income. In national polls, when the possibility of a 55 percent flat tax was raised, the percentage of Finns who supported basic income dropped from 70 to about 30. “We would need to implement another study for the whole population to understand it,” says Miska Simanainen, a tax specialist who was part of Kangas’s team. No such studies are planned.
“Whatever happens in this experiment, it’s unrealistic to think that basic income will be implemented in this country,” Kangas says. “Politics is often much stronger than scientific results.”
Chosen excerpts by Job Market Monitor. Read the whole story at What If Everyone Got a Monthly Check From the Government? – Bloomberg