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Global first? Every Swiss could be guaranteed $2,600 a month tax-free

Май 6, 2016    
Global first? Every Swiss could be guaranteed $2,600 a month tax-free

635980454777802157-EPA-SWITZERLAND-WEATHER

Chalk it up to Swiss affluence. Voters here will decide next month whether all 8 million citizens and legal residents should be guaranteed a generous monthly income, something no country in the world has ever done.

On June 5, Swiss voters will weigh in on a radical proposal that would mandate the government to guarantee $2,600 a month tax-free to every adult citizen and legal resident, and $650 to each child.

The payment would be provided to everyone, regardless of work status, income level, or wealth. It is a benefit few countries can afford. But then, Switzerland is among the world's richest nations, with a per capita income of about $85,000, 40% higher than that in the USA.

The idea of an unconditional basic income is not new. It is being discussed by various cities in the Netherlands, Finland, Canada, New Zealand and other nations. But Switzerland is the first country to actually vote on a guaranteed income at the national level.

The latest polls show the proposal likely will go down in defeat, though supporters say they hope to build support for it in the coming weeks.

The initiative was put on the ballot by a group of artists, writers and intellectuals who made use of Switzerland's unique system of direct democracy, which allows any citizen to bring an issue to a referendum by collecting 100,000 legitimate signatures on a petition.

"This is a great idea," said Chloe Hubert, a student at the University of Geneva. "I only work on weekends, so this income would really help."

Though Swiss salaries are among the highest in the world, supporters say the stipend would offer people an option of reducing their working hours, while maintaining a decent standard of living.

“It would lead to a more motivated workforce and more humanized, stable and productive economy,” said Che Wagner, the initiative’s co-organizer and campaign manager.

Under the proposed law, the government would guarantee that every Swiss adult has at least $2,600 in monthly income after taxes. So if a person has no income at all, he or she will receive the full amount. If the person earns $1,600 now, the supplement would be $1,000.

Someone who currently earns, say, $6,500 month would not receive any money from the government but $2,600 of it would not be taxed.

For those getting welfare or other social benefits, payments of up to $2,600 a month would be replaced by the new basic income. Anything over this amount would continue to be provided as a separate payment and taxed accordingly.

Theoretically, a family of two non-working adults and two children at home would be eligible for $6,500 a month, or $78,000 a year tax-free. That's nearly twice the after-tax income of a typical American family.

The proposal has many critics. In a recent interview with Swiss Broadcasting Corporation, parliamentarian Raymond Clottu argued that the giveaway would "put at risk a system that motivates people to work and get training. So we should try to improve it, not bring in basic income which would destroy the motivation to work."

He and other opponents also note that financing the scheme, estimated to cost about $200 billion a year, would strain the government’s coffers.

The initiative’s backers say the plan would be funded, among other sources of revenue, by increasing Switzerland’s 8% value added tax.

The government counters that other taxes would have to rise and spending slashed to afford such a generous giveaway.

“Considerable cutbacks or tax rises would be necessary to finance this basic income, which could not replace today’s social security system entirely,” the government warns on its website, urging voters to reject the initiative.

As the concept of basic income gets traction across Europe, could a similar policy be adopted in the U.S.?

“Before it could be taken seriously, the middle class would need to experience far more job and wage loss than it has already,” Robert Reich, former U.S. secretary of Labor and now professor of public policy at the University of California, Berkeley, told USA TODAY.

“Unfortunately, those losses are inevitable,” he added. “We'll have a serious discussion about a minimum basic income about a decade from now.”

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