Negative income tax (NIT) ?

[Neotrotsky]

Often the idea had been discussed in class.

Economist Milton Friedman advocated it in his book, Capitalism and Freedom.

Though I do believe that it could be a flat tax combined with certain luxury taxes to equate the amount of negative impact on any taxpayer.

-People earning a certain income level would owe no taxes
-People earning more than that would pay a percentage of their income above that level
-People below that level would receive a payment to bring them up to the lowest level

Of course, the idea being to dismantle large, cumbersome bureaucracies.

[ame=http://youtu.be/xtpgkX588nM]Milton Friedman - The Negative Income Tax - YouTube[/ame]


Published on May 11, 2012
In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration

 

[jwoodie]

Tax reform would put a million accountants out of work. Tort reform would do the same thing to lawyers. Oh, the horror!

 

[Katzndogz]

You aren't familiar with the earned income tax credit are you?

 

[Neotrotsky]

The EIC is a movement in that direction but as implemented, it is incomplete.

 

[Neotrotsky]

Tax reform would put a million accountants out of work. Tort reform would do the same thing to lawyers. Oh, the horror!

No doubt real tort reform would help in general.

Lawyers extracting basically 'economic rent ' has distorted many businesses.

The tax system we have now unnecessarily feeds and maintains the improper power/control
of a centralized gov't.

 

[oldfart]

Tax reform would put a million accountants out of work. Tort reform would do the same thing to lawyers. Oh, the horror!

People have been telling me that I would be out of business since Reagan took office. I am comfortably retired and my son has taken over so he can be put out of business too. Somehow tax reform always increases the demand for tax litigators. And about half of the people who told me that were in industries or jobs that no longer exist.

 

[Neotrotsky]

Talk of real reform no doubt puts lawyers and lobbyists to work
- in attempts to stop it

 

[Daktoria]

NIT contradicts itself.

It takes a percentage of what people are missing from the poverty line, and gives it to them. The less you're missing, the less you get. The more you earn, the less you get.

Therefore, it encourages people not to work until they leapfrog above the poverty line enough to overcome the difference in real utility. For many, there's more real utility in not working at all since work is a cost.

On the other hand, if you reduce the percentage of the difference from the poverty line so much in order to reduce the real utility gained, it defeats the purpose of NIT.

Is it a more streamlined form of welfare though? You betcha.

 

[Neotrotsky]

Considering that we have the same percentage on welfare today
as with the start of the Great Society, I see no real loss there.

The 'free rider' will always exist.

Shrinking the size/number of gov't agencies along with it
will free up the negative and unnecessary political and economical impact

 

[Daktoria]

Well I wasn't talking about the free rider problem. I was just talking about perverse incentives. Even in an honest society, it doesn't necessarily make sense to work under NIT since you can have more utility without working, but preventing this reduces the amount of utility necessary to be effective.

Maybe a graph will help.

Now if we reduce the subsidy to discourage perverse incentive, it might not be effective enough to combat poverty in the first place.

It really depends on whether or not the income earned before breaching the poverty line adds enough pleasure to someone's life to be worth it, but underneath poverty, that's no guarantee. You need to leapfrog over poverty for work to be effective.

To be clear, when I refer to pleasure here, I'm not referring to motivators either. I'm talking about hygiene factors.

 

[whitehall]

Basically the system we have now and it don't freaking work.

 

[Daktoria]

Well Friedman had a valid point in saying that NIT is better since it consolidates bureaucracy.

Even with the free rider problem, NIT is much cheaper that conventional welfare, food stamps, etc. because it streamlines everything, makes it easier to understand, and removes loopholes.

 

[whitehall]

"From each according to his abilities to each according to his needs". Milt Friedman or Karl Marx?

 

[Daktoria]

Well some have said that NIT is socialist. lol

Friedman was a utilitarian though, and that's how utilitarianism works. If it's useful to burden some at the benefit of others, then it ought to be done.

 

[auditor0007]

Often the idea had been discussed in class.

Economist Milton Friedman advocated it in his book, Capitalism and Freedom.

Though I do believe that it could be a flat tax combined with certain luxury taxes to equate the amount of negative impact on any taxpayer.

-People earning a certain income level would owe no taxes
-People earning more than that would pay a percentage of their income above that level
-People below that level would receive a payment to bring them up to the lowest level

Of course, the idea being to dismantle large, cumbersome bureaucracies.

Milton Friedman - The Negative Income Tax - YouTube


Published on May 11, 2012
In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration

The best way to do this would be to make the tax rate the highest for the lowest income earners and make it negative for the very wealthy. For instance, give the very wealthy a twenty percent tax refund for every dollar they spend. This would encourage the very wealthy to spend more of their money helping the economy to grow. The trickle down effect would lead to many more jobs for those low income people, so they could work two or three full-time jobs to help them pay the 40% tax rates they would be required to pay for being poor.

 

[Politico]

Bahahahaha!

 

[PaulS1950]

If you have been to our national parks you may have noticed the signs that tell you not to feed the animals. The reason provided for those signs are that the animals become accustomed to being fed and forget how to feed themselves. Maybe we should use the same philosophy where people are concerned.

If you give a man a fish you feed him for a day but if you teach him to fish he can feed himself for life and catch enough fish to make an income too.

 

[Neotrotsky]

Often the idea had been discussed in class.

Economist Milton Friedman advocated it in his book, Capitalism and Freedom.

Though I do believe that it could be a flat tax combined with certain luxury taxes to equate the amount of negative impact on any taxpayer.

-People earning a certain income level would owe no taxes
-People earning more than that would pay a percentage of their income above that level
-People below that level would receive a payment to bring them up to the lowest level

Of course, the idea being to dismantle large, cumbersome bureaucracies.

Milton Friedman - The Negative Income Tax - YouTube


Published on May 11, 2012
In this 1968 interview, Milton Friedman explained the negative income tax, a proposal that at minimum would save taxpayers the 72 percent of our current welfare budget spent on administration

The best way to do this would be to make the tax rate the highest for the lowest income earners and make it negative for the very wealthy. For instance, give the very wealthy a twenty percent tax refund for every dollar they spend. This would encourage the very wealthy to spend more of their money helping the economy to grow. The trickle down effect would lead to many more jobs for those low income people, so they could work two or three full-time jobs to help them pay the 40% tax rates they would be required to pay for being poor.

Since you agree that social policy can subsidize a behavior,
I agree that if one subsides poor behaviors, you will get more of them.
Which is the reason, we see three generations on welfare. It is no longer a 'hand up'
but a way of life.

While your sarcasm is noted, your point highlights the fact of the lefts' falsehood on taxes.

We can take all the money from the rich (however defined this month) and it still would not be enough to feed all the gov't programs and associated bureaucracies.
Which is why, the majority of taxes will always come from the middle class, there is just more of them, for now.

 

[Neotrotsky]

Well some have said that NIT is socialist. lol

Friedman was a utilitarian though, and that's how utilitarianism works. If it's useful to burden some at the benefit of others, then it ought to be done.

Does it have a element of being a CPE, sure does.
if done proper along with the decrease in gov't agencies, it would be a move towards less
gov't and therefore less statism. If done proper, it would also be a move towards less
crony capitalism that we have now and both parties promote.


The existing programs we have now are nothing more than a redistribution of wealth.
They are very inefficient, take too much individual control away and unnecessarily increase the size/power of gov't and politicians.

 

[Neotrotsky]

Well Friedman had a valid point in saying that NIT is better since it consolidates bureaucracy.

Even with the free rider problem, NIT is much cheaper that conventional welfare, food stamps, etc. because it streamlines everything, makes it easier to understand, and removes loopholes.

That would be a good thing


As for incentive too work, always will be
We have three generations on welfare now.
It has become a way of life.