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Objectives and implementation of the Basic Income Experiment
Objectives of the Basic Income Experiment
Finland conducted an experiment testing a basic income in 2017-2018. The experiment was implemented by Kela, the Social Insurance Institution of Finland.
The basic income is a form of social security in which all citizens receive a regular, unconditional sum of money towards their expenses. It is intended to reduce the amount of work involved in seeking financial assistance and to free up time and resources for other activities such as working or seeking employment.
The basic income experiment seeks answers to the following questions:
- How could the social security system be redesigned to address the changing nature of work?
- Can the social security system be reshaped in a way that promotes active participation and gives people a stronger incentive to work?
- Can bureaucracy be reduced and the complicated benefits system simplified?
Implementation of the basic income experiment
Because of the nature of the experiment, all Finnish citizens were not paid a basic income. The study population consisted of 2,000 persons selected at random in December 2016.
Included in the random sampling were all individuals between ages 25 and 58 whom Kela paid labour market subsidy or basic unemployment allowance in November 2016 for some other reason than a temporary layoff. Random sampling means that all who satisfied the requirements for inclusion in the experiment had an equal probability of being selected into the study population.
Those selected for the experiment could not turn it down because that would skew the results.
Basic income: Amount and payment
Those participating in the experiment got a basic income from 1 January 2017 until 31 December 2018. The basic income was paid out at a rate of €560 per month. Everyone included in the experiment received the same amount.
The amount of the basic income remained the same throughout the experiment, and it was not reduced by any other income the participant may have. Participants who found work during the experiment continued to be paid a basic income.
How basic income affected the other social security benefits
The experiment was designed in a way that ensured that no participant suffered negative financial consequences. Persons receiving a basic income could claim any benefits to which they were entitled as they normally would. An amount equal to the basic income was deducted from certain social security benefits paid to participants. The remaining amount was paid to the person receiving a basic income. For example if the net amount of unemployment benefits exceeded the amount paid as a basic income, the exceeding part was paid to the person applying for benefits.
Anyone receiving a basic income should remain registered with the Employment and Economic Development Office as an unemployed jobseeker and apply to Kela or their unemployment fund for unemployment benefits.
Taxation of the basic income
The basic income was exempt from tax. Because it was not included in taxable income, it had no consequences for the participants' taxation. The benefits from which the basic income was deducted were for tax purposes treated as if they were paid without the deduction for the basic income.