[News Terms] Oh Se-hoon's Income Security Policy Experiment 'Ansim Income'

Seoul Mayor Oh Se-hoon's flagship pledge, Seoul's 'Safe Income,' is a system that provides differentiated subsidies for households below a certain income level. It is a policy implementation of the 'negative income tax' proposed by Nobel laureate Milton Friedman. The core of the negative income tax is to set a tax exemption threshold, where those above the threshold pay income tax, and those below receive subsidies. This subsidy is called the negative income tax or minus income tax. A distinctive feature is that all households receiving subsidies have existing welfare programs abolished. As a selective welfare system for low-income groups, it differs from the universal basic income system, which provides a fixed amount of cash to all citizens.

Seoul Mayor Oh Se-hoon is making an announcement related to the 'Seoul Basic Income Pilot Project' at the Seoul City Hall briefing room. Photo by Kang Jin-hyung aymsdream@

The Safe Income structure is similar to this principle, following a bottom-heavy approach. In other words, those with income above a certain level pay taxes and receive fewer subsidies, while those below do not pay taxes and receive more subsidies. The ultimate goal of Safe Income is to reduce polarization and improve welfare efficiency. It can be implemented with fewer resources than the basic income system and increases welfare efficiency through administrative simplification by consolidating existing welfare programs. According to the Seoul Metropolitan Government, this results in increased income for lower-income groups, helping to alleviate polarization.

Since July 2022, Seoul has been experimenting with the Safe Income policy targeting low-income households with income below 85% of the median income and assets below 326 million KRW. Participating households in the Safe Income policy experiment receive half of the difference between the 85% median income benchmark and their household income. For example, a three-person household with no income would receive half of the 85% median income benchmark (3,769,594 KRW per month), which is 1,884,800 KRW per month. However, Safe Income cannot be received concurrently with existing cash welfare benefits such as ▲Living and Housing Benefits ▲Basic Pension ▲Seoul-type Basic Livelihood Security ▲Seoul-type Housing Voucher ▲Youth Allowance ▲Youth Monthly Rent. Households receiving Basic Pension, Seoul-type Housing Voucher, Youth Allowance, or Youth Monthly Rent receive Safe Income support reduced by the corresponding amount. Recipients of Living and Housing Benefits will have their existing cash benefits suspended. However, since eligibility is maintained, previous benefits such as medical aid and electricity bill discounts remain available.

Meanwhile, according to the first interim survey results of the pilot project announced by Seoul at the 'Seoul International Safe Income Forum' on the 20th, households receiving Safe Income support showed increased earned income and higher consumption of essential goods. Specifically, among the 1st phase pilot project support households, 104 households (21.8%) showed increased earned income as of last month. Notably, 23 households (4.8%) increased their household income above 85% of the median income and thus no longer received Safe Income. Additionally, expenditures on groceries, medical services, and transportation among the 1st phase pilot project support households increased by 12.4%, 30.8%, and 18.6%, respectively, compared to the control group.