Basic Income: Characteristics Related to Presence in and Absence From the Tax System

One claim advanced for a Basic Income is that it can be administered through the tax system, making it more transparent, easier to access, and less costly to administer than other transfer approaches. Of course, these advantages are lessened to the extent that people do not file taxes. In this paper, we data from a combination of linked Census, tax and death records, data on opioid overdoses, data from BC’s IA system, and data from a survey of residents of Single Room Occupancy hotels in Vancouver to paint a picture of the extent and nature of “falling through the cracks” in the tax and transfer system. We find that between 3 and 6.6% of the Canadian population are not known to the tax system at all. Another group of people are in the tax system records but did not file in a given year. Adding these two groups together, we find that between 11% and 15% of the population are either not in the tax system at all or do not file taxes in a year.

The group who are in the tax records but did not file a T1 in a year are disproportionately non-earners from low income households. Not filing taxes shows considerable persistence across years. Thus, the problems associated with not filing taxes could end up focused on a small core of continual non-filers. The people not in the tax records or Census files at all are very disproportionately likely to have died from a death of despair (suicide, drugs or alcohol related) and to have died in low income neighbourhoods and neighbourhoods with a higher proportion of people who have moved in the previous year. This suggests that this is a vulnerable population. Given that they are missing from both tax related and survey attempts by the government to contact them, they would likely be a particularly difficult group to reach with tax-based social benefits.

Published version (January 2021)

BC Basic Income Research Papers