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The minimum wage thread turned into a thread about house size... so, I thought I'd try this out here.

Let's talk about the Milton Friedman's Negative Income Tax.

(And, to preempt SDHornet coming in to say "Communist whacko derp!!!" - Milton Friedman is one of the most influential conservative economists of the 20th century and laid the groundwork for modern libertarianism, Reaganism, etc.)

It's a variation of an old idea that was advocated by


Thomas Paine, Agrarian Justice:

Agrarian justice, opposed to agrarian law, and to agrarian monopoly. Being a plan for meliorating the conditions of man by creating in every nation, a national fund, to pay to every person, when arriving at the age of twenty-one years, the sum of fifteen pounds sterling, to enable him or her to begin the world! And also, ten pounds sterling per annum during life to every person now living of the age of fifty years, and to all others when they shall arrive at that age, to enable them to live in old age without wretchedness, and go decently out of the world.

John Stuart Mill, Principles of Political Economy

In the distribution, a certain minimum is first assigned for the subsistence of every member of the community, whether capable or not of labour.

F.A. Hayek, The Road to Serfdom (another of the most influential conservative and libertarian economists)

There can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody.
[This is] no privilege but a legitimate object of desire … [that] can be provided for all outside of and supplementary to the market system.

Daniel Moynihan, The Politics of a Guaranteed Income

Nixon tried to implement a version, but failed
http://www.britannica.com/biography/Ric ... #ref672603

Adam Smith Institute (one of the largest libertarian think tanks)
http://www.adamsmith.org/blog/welfare-p ... iving-wage
http://www.adamsmith.org/blog/welfare-p ... sic-income

http://www.libertarianism.org/columns/l ... sic-income






So, I don't think this idea is all that radical (and, certainly not Communist ).


[youtube]https://www.youtube.com/watch?v=xtpgkX588nM[/youtube]

Why Milton Friedman Supported a Guaranteed Income

1. To Reduce Government Bureaucracy

We should replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash — a negative income tax. It would provide an assured minimum to all persons in need, regardless of the reasons for their need…A negative income tax provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.

2. The Efficiency of Free Markets

The proposal for a negative income tax is a proposal to help poor people by giving them money, which is what they need, rather than as now, by requiring them to come before a government official to tally all their assets and liabilities and be told that you may spend X dollars on rent, Y dollars on food, etc.

3. To End the Welfare Trap

The number of people on welfare has been skyrocketing. Why? Because once they get on welfare, we make it almost impossible for them to get off. In order for somebody who gets on to get off, he or she has to be able to have a really good job, because to get off gradually, to earn a little bit, now doesn’t pay…

4. To Enable Work
One of the great virtues of the negative income tax, in my opinion, is that by taking off the mass burden of income maintenance it would make it possible for private charitable organizations to do [charity work].

5. Justice & Equality

The virtue of [a negative income tax] is precisely that it treats everyone the same way…there’s none of this unfortunate discrimination among people.

https://medium.com/basic-income/why-mil ... .ef1w6jmu9







So.

1. Scrap the minimum wage, social security, food stamps, and most of the rest of the social safety net.

2. Scrap the personal income tax code and replace it with a flat tax. Greatly downsize the IRS as a result. Close tax loopholes as well.

3. This is a simple example and would be modified basic on COL.

Start ouch with each citizen over lets say 18 getting a refundable tax credit of say 10,000 dollars. This means they get 10,000 dollars if they file a tax return, regardless of whether they work or not. A family of four, with two teenagers would get 40,000. For every dollar they earn, this tax credit gets reduced by 50 cents. So if you make 10,000 dollars, they only get a 5000 dollar supplement. If our family of four was all working at McDonalds making 10k a year, they would get 40,000 from wages and 20,000 supplemented for a total of 60, just the parents and they'd still have 40. By 20,000, they get zero and start paying taxes, at lets say 10-20%.

The beauty of this is, you won't starve if you're unemployed, but if you want any better standard of living then 10,000 p.a., you have to work. But the perverse incentives of the welfare system are gone and with a greatly reduced minimum wage, the cheap labor market opens up dramatically, as all sorts of jobs that were too expensive to hire for, suddenly become available. Competition goes up, and cheap labor would actually have to compete for labor, causing immediate upward pressure in wages despite the reduced minimum wage.

But even if you're working, even if you're making under 10k a year, your income still gets supplemented. You only start paying once you're above the poverty line, and even then a low rate.



How would you pay for it?
-Social Security ($760 billion-ish)
-IRS budget slashed - easier to enforce tax code
-Welfare cutbacks - unemploymnet, food stamps, etc.
-Changing the corporate tax system from a worldwide one to a territorial one - $1.7 trillion dollars of corporate profits in tax exile.

I'll bite. (working night shift right now and really tired so excuse the rambling)

As a stand alone proposal, it's plausible, however where does healthcare and the left's dreams of "free healthcare, free education, free housing", factor into this?

Are we still looking at super high taxes for the "1%"?

Super high corporate tax rates?

Having a small segment of population who already pays over 30% of taxes to the federal government pay more so they "pay their fair share".

Because their money is what is going to lead to the creation of those jobs that will be competed for.

IMO, wages SHOULD be set by the marketplaces, a $15/hr fry cook job and a $15/hr EMT job are not the same. A $15/hr grocery store bagger and a $15/hr dental assist job are not equal. A $15/hr janitorial position at a mall and a $15/hr administrative assistant position at a law firm are not in the same ballpark of qualifications.

Minimum Wage laws FORCE these positions to be on the same playing field.

But honestly the end of entitlements are going to be the biggest roadblock. How long would it take for that $10k tax credit to be demanded increased to $15k? To $20k?

Americans (and the entirety of the human race for that matter) are naturally greedy, they want to both keep what they have and what what the other person has. The problem is that 70 years ago, you were individually responsible for accomplishing your desires, nowadays, everyone looks to the government to make it happen.

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DSUrocks07 wrote: Are we still looking at super high taxes for the "1%"?

Flat tax. I said something vague: "between 10% and 20%."

But, for something more concrete we can go with Rand Paul's 14.5%.

DSUrocks07 wrote:Super high corporate tax rates?

Also, 14.5%. So, much lower - but, no loopholes, no offshore tax havens. Everything is collected.

The raw percent would be about half - but, I think the actual money collected would be much higher [citation needed].

DSUrocks07 wrote:IMO, wages SHOULD be set by the marketplaces, a $15/hr fry cook job and a $15/hr EMT job are not the same. A $15/hr grocery store bagger and a $15/hr dental assist job are not equal. A $15/hr janitorial position at a mall and a $15/hr administrative assistant position at a law firm are not in the same ballpark of qualifications.

Minimum Wage laws FORCE these positions to be on the same playing field.

Yeah, and that's what prompted this is in the other thread. I agree on minimum wage laws - and, I don't think they provide any longterm solution.

DSUrocks07 wrote:But honestly the end of entitlements are going to be the biggest roadblock. How long would it take for that $10k tax credit to be demanded increased to $15k? To $20k?

Yeah, the $10k number was very general - it should be higher in places with a higher COL. And as inflation increases and COL increasing - the number would change.

Certainly, some people will argue for the number to be higher - but, I think this idea only works if the number is too low to live on comfortably. Strictly enough for the absolute bear necessities.

Skjellyfetti wrote: Certainly, some people will argue for the number to be higher - but, I think this idea only works if the number is too low to live on comfortably. Strictly enough for the absolute bear necessities.

Determined by whom?



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DSUrocks07 wrote:I'll bite. (working night shift right now and really tired so excuse the rambling)

As a stand alone proposal, it's plausible, however where does healthcare and the left's dreams of "free healthcare, free education, free housing", factor into this?

Are we still looking at super high taxes for the "1%"?

Super high corporate tax rates?

Having a small segment of population who already pays over 30% of taxes to the federal government pay more so they "pay their fair share".

Because their money is what is going to lead to the creation of those jobs that will be competed for.

IMO, wages SHOULD be set by the marketplaces, a $15/hr fry cook job and a $15/hr EMT job are not the same. A $15/hr grocery store bagger and a $15/hr dental assist job are not equal. A $15/hr janitorial position at a mall and a $15/hr administrative assistant position at a law firm are not in the same ballpark of qualifications.

Minimum Wage laws FORCE these positions to be on the same playing field.

But honestly the end of entitlements are going to be the biggest roadblock. How long would it take for that $10k tax credit to be demanded increased to $15k? To $20k?

Americans (and the entirety of the human race for that matter) are naturally greedy, they want to both keep what they have and what what the other person has. The problem is that 70 years ago, you were individually responsible for accomplishing your desires, nowadays, everyone looks to the government to make it happen.

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Remember in the 1950's when the top marginal rates were 80-90% and no jobs were created?

I'm not sure how this gets financed. Social security is being drawn down quickly with the aging of boomers and its' reserves are projected to be negative in 2034.

http://www.pewresearch.org/fact-tank/20 ... -security/

Will these people continue paying into the system with FICA or are they exempt from that as well?

Flat tax isn't the answer. While it seems simple on the surface, the poor and lower middle class already see our progressive tax system as still being unfair in that they think the wealthy don't pay their share. Flat tax would exacerbate that situation as it's regressive, favors the wealthy, and actually is less revenue-producing than the current system.
https://www.washingtonpost.com/postever ... d-reasons/
http://www.businessinsider.com/forget-i ... nia-2010-7

I'm all for some tax reform to simplify matters, reduce bureaucracy, and also help those who really need it get the help they need. Three things IMO:
* We don't have a revenue problem, we have a spending problem
* Our current SS system isn't being funded by the current working generation as it's being drawn down by retirees
* Our welfare system doesn't provide the proper impetus to get out of the system and doesn't allow for an assisted transition to working life without having an income gap while doing so.

kalm wrote:

DSUrocks07 wrote:I'll bite. (working night shift right now and really tired so excuse the rambling)

As a stand alone proposal, it's plausible, however where does healthcare and the left's dreams of "free healthcare, free education, free housing", factor into this?

Are we still looking at super high taxes for the "1%"?

Super high corporate tax rates?

Having a small segment of population who already pays over 30% of taxes to the federal government pay more so they "pay their fair share".

Because their money is what is going to lead to the creation of those jobs that will be competed for.

IMO, wages SHOULD be set by the marketplaces, a $15/hr fry cook job and a $15/hr EMT job are not the same. A $15/hr grocery store bagger and a $15/hr dental assist job are not equal. A $15/hr janitorial position at a mall and a $15/hr administrative assistant position at a law firm are not in the same ballpark of qualifications.

Minimum Wage laws FORCE these positions to be on the same playing field.

But honestly the end of entitlements are going to be the biggest roadblock. How long would it take for that $10k tax credit to be demanded increased to $15k? To $20k?

Americans (and the entirety of the human race for that matter) are naturally greedy, they want to both keep what they have and what what the other person has. The problem is that 70 years ago, you were individually responsible for accomplishing your desires, nowadays, everyone looks to the government to make it happen.

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Remember in the 1950's when the top marginal rates were 80-90% and no jobs were created?

Do we really want to bring up what American life was in the 1950s?

I thought progressives always want to move forward? But when it comes to financing their pipe dreams THAT'S when they want to go back to the "good ol' days of America"

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Which shows that Social Security is a natural pyramid scheme, it can only function when the younger, working generation outnumbers the previous generation who is retiring.

There is ZERO motivation to escape the welfare system as it's currently built, my soon to be ex-wife and I were on Medicaid in DE because she wasn't working and I was making $10/hr at DD. I wanted to get a second job sooner but with her medical bills and the difference in SNAP benefits it would have been a wash. I still took the second job, (and a third one now too because fuck it) but that doesn't change the fact that the system (albeit in Delaware) is broken to the point where it made more sense NOT to work to get ahead than it did to work more hours.

I have an ex who hasn't worked since she gotten laid off SEVEN years ago, because she gets medicaid and SNAP and babysit her sisters kids for spending money on the side. No motivation.

And I could have made it so I took less hours at DD (because 30 hours a week is still considered full time, thanks Obama) and worked at Ace since I wouldn't have CS coming out from that check. but I didn't want to do that, because I'm not a damn freeloader looking to game the system.

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DSUrocks07 wrote:

kalm wrote:
Remember in the 1950's when the top marginal rates were 80-90% and no jobs were created?

Do we really want to bring up what American life was in the 1950s?

I thought progressives always want to move forward? But when it comes to financing their pipe dreams THAT'S when they want to go back to the "good ol' days of America"

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It's just to show you that high taxes on the top 1% does not necessarily kill job creation. There are tons more examples if you need them.

"Progressive" is just another term that has been co-opted by the right.

Think of me as a proto-republican.

kalm wrote:

DSUrocks07 wrote: Do we really want to bring up what American life was in the 1950s?

I thought progressives always want to move forward? But when it comes to financing their pipe dreams THAT'S when they want to go back to the "good ol' days of America"

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It's just to show you that high taxes on the top 1% does not necessarily kill job creation. There are tons more examples if you need them.

"Progressive" is just another term that has been co-opted by the right.

Think of me as a proto-republican.

But does it aid job creation?

I'd like to see the argument for that.

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kalm wrote:

DSUrocks07 wrote:I'll bite. (working night shift right now and really tired so excuse the rambling)

As a stand alone proposal, it's plausible, however where does healthcare and the left's dreams of "free healthcare, free education, free housing", factor into this?

Are we still looking at super high taxes for the "1%"?

Super high corporate tax rates?

Having a small segment of population who already pays over 30% of taxes to the federal government pay more so they "pay their fair share".

Because their money is what is going to lead to the creation of those jobs that will be competed for.

IMO, wages SHOULD be set by the marketplaces, a $15/hr fry cook job and a $15/hr EMT job are not the same. A $15/hr grocery store bagger and a $15/hr dental assist job are not equal. A $15/hr janitorial position at a mall and a $15/hr administrative assistant position at a law firm are not in the same ballpark of qualifications.

Minimum Wage laws FORCE these positions to be on the same playing field.

But honestly the end of entitlements are going to be the biggest roadblock. How long would it take for that $10k tax credit to be demanded increased to $15k? To $20k?

Americans (and the entirety of the human race for that matter) are naturally greedy, they want to both keep what they have and what what the other person has. The problem is that 70 years ago, you were individually responsible for accomplishing your desires, nowadays, everyone looks to the government to make it happen.

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Remember in the 1950's when the top marginal rates were 80-90% and no jobs were created?

You mean corporate taxes?

I cringe when people refer to the 90% income tax bracket of the 1950s and 1960s. And I might be getting the dates wrong, but wasn't there only 1 person in America that was taxed at that rate? Rockefeller?

DSUrocks07 wrote:

kalm wrote:
It's just to show you that high taxes on the top 1% does not necessarily kill job creation. There are tons more examples if you need them.

"Progressive" is just another term that has been co-opted by the right.

Think of me as a proto-republican.

But does it aid job creation?

I'd like to see the argument for that.

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It's only one factor among many as I'm sure you know. Clinton raised taxes and had great job numbers assisted by the .com bubble. Harding and Coolidge cut taxes and had even greater numbers also during a bubble. We had tremendous job growth in the 50's and 60's thanks to WWII and government spending on infrastructure and the GI Bill. Kansas slashed taxes on the rich and is in the shithouse with stagnant job growth. Sweden seems to do OK.

Our taxes have been relatively low now for quite some time yet we still go through boom and bust cycles. Theoretically, with low taxes and greater share of the wealth, the 1% should be creating jobs like a motherfucker...and good paying ones too.

How'd the .com boom turn out?


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Ibanez wrote:How'd the .com boom turn out?


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That's part of my point.

DSUrocks07 wrote:
But honestly the end of entitlements are going to be the biggest roadblock. How long would it take for that $10k tax credit to be demanded increased to $15k? To $20k?

Americans (and the entirety of the human race for that matter) are naturally greedy, they want to both keep what they have and what what the other person has. The problem is that 70 years ago, you were individually responsible for accomplishing your desires, nowadays, everyone looks to the government to make it happen.

And this is where that nasty thing called politics kicks in.

Ibanez wrote:

kalm wrote:
Remember in the 1950's when the top marginal rates were 80-90% and no jobs were created?

You mean corporate taxes?

I cringe when people refer to the 90% income tax bracket of the 1950s and 1960s. And I might be getting the dates wrong, but wasn't there only 1 person in America that was taxed at that rate? Rockefeller?

Agreed. How many people actually paid any taxes in the 90% income tax rate? It's a great headliner, but the devil's in the details.

Btw, I like jelly's initial post - I like the idea of creating a bottom income floor and let people determine from there how much work they are willing to do to afford a better standard of living than the bare minimum. Obviously where that minimum is will be the real fight. Some will say $10k, some will say $50k, some will say $100k. Getting that right and then making sure it doesn't grow out of control will be the key.

GannonFan wrote:

Ibanez wrote: You mean corporate taxes?

I cringe when people refer to the 90% income tax bracket of the 1950s and 1960s. And I might be getting the dates wrong, but wasn't there only 1 person in America that was taxed at that rate? Rockefeller?

Agreed. How many people actually paid any taxes in the 90% income tax rate? It's a great headliner, but the devil's in the details.

Good point and I'm not sure. It was the top marginal rate so it was only paid after a certain amount. The rates were still high though, regardless.

I'll give someone a guaranteed basic income if they give me a guaranteed basic effort of doing their job without being a bitch about it

kalm wrote:

GannonFan wrote:
Agreed. How many people actually paid any taxes in the 90% income tax rate? It's a great headliner, but the devil's in the details.

Good point and I'm not sure. It was the top marginal rate so it was only paid after a certain amount. The rates were still high though, regardless.

Britain had the same thing for awhile and it was eventually scrapped precisely because no one paid it. Either people didn't report the income to that level, or they moved the money elsewhere to avoid it, or in some cases just stopped working so that they didn't exceed that threshold. I don't think any of those outcomes are really good for society at large, do you?

GannonFan wrote:

kalm wrote:
Good point and I'm not sure. It was the top marginal rate so it was only paid after a certain amount. The rates were still high though, regardless.

Britain had the same thing for awhile and it was eventually scrapped precisely because no one paid it. Either people didn't report the income to that level, or they moved the money elsewhere to avoid it, or in some cases just stopped working so that they didn't exceed that threshold. I don't think any of those outcomes are really good for society at large, do you?

Of course not. But my original point, that higher taxes on wealth, don't necessarily kill or create jobs, is still valid.

DSUrocks07 wrote:Which shows that Social Security is a natural pyramid scheme, it can only function when the younger, working generation outnumbers the previous generation who is retiring.

There is ZERO motivation to escape the welfare system as it's currently built, my soon to be ex-wife and I were on Medicaid in DE because she wasn't working and I was making $10/hr at DD. I wanted to get a second job sooner but with her medical bills and the difference in SNAP benefits it would have been a wash. I still took the second job, (and a third one now too because **** it) but that doesn't change the fact that the system (albeit in Delaware) is broken to the point where it made more sense NOT to work to get ahead than it did to work more hours.

I have an ex who hasn't worked since she gotten laid off SEVEN years ago, because she gets medicaid and SNAP and babysit her sisters kids for spending money on the side. No motivation.

And I could have made it so I took less hours at DD (because 30 hours a week is still considered full time, thanks Obama) and worked at Ace since I wouldn't have CS coming out from that check. but I didn't want to do that, because I'm not a damn freeloader looking to game the system.

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Totally reminds me of the widely reported thing in PA back in 2012:

"....The U.S. welfare system sure creates some crazy disincentives to working your way up the ladder. Benefits stacked upon benefits can mean it is financially better, at least in the short term, to stay at a lower-paying jobs rather than taking a higher paying job and losing those benefits. This is called the “welfare cliff.”

Let’s take the example of a single mom with two kids, 1 and 4. She has a $29,000 a year job, putting the kids in daycare during the day while she works.

As the above chart — via Gary Alexander, Pennsylvania’s secretary of Public Welfare — shows, the single mom is better off earning gross income of $29,000 with $57,327 in net income and benefits than to earn gross income of $69,000 with net income & benefits of $57,045.

It would sure be tempting for that mom to keep the status quo rather than take the new job, even though the new position might lead to further career advancement and a higher standard of living. I guess this is something the Obama White House forgot to mention in its “Life of Julia” cartoons extolling government assistance."
http://www.aei.org/publication/julias-m ... 69000-job/

Thats about 30k and 71k in 2016 dollars. It would be much better to take that 28k+ in public bennies and basically pay for the woman to go to college or some type of skills training,while putting a time cap on the bennies and phase them out over a number of years, while at the same time not taxing about 20% from the woman making 71k and letting her more of what she makes.

BDKJMU wrote: It would be much better to take that 28k+ in public bennies and basically pay for the woman to go to college or some type of skills training,while putting a time cap on the bennies and phase them out over a number of years..

HOLY FUCKING SHIT!

You see that, people? This is what happens when you work on actual tangible solutions instead of constantly lamenting the problem, and either choose to ignore it completely (GOP), or throw more money at it (Dems).

There may yet be hope for this country of ours

And honestly, if we ended welfare benefits completely in a zero-sum exchange for a "free education/college/trade school" what-have-you, you would get a HELL of a lot more bang for your buck. And basically for less money as well overall. But the problem is that these pissant millenials want free education ON TOP OF everything else.


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kalm wrote:Remember in the 1950's when the top marginal rates were 80-90% and no jobs were created?

You mean after WWII when we were the only industrialized nation in the world with an infrastructure and the only game in town?

kalm wrote:It's only one factor among many as I'm sure you know. Clinton raised taxes and had great job numbers assisted by the .com bubble. Harding and Coolidge cut taxes and had even greater numbers also during a bubble. We had tremendous job growth in the 50's and 60's thanks to WWII and government spending on infrastructure and the GI Bill. Kansas slashed taxes on the rich and is in the shithouse with stagnant job growth. Sweden seems to do OK.

Our taxes have been relatively low now for quite some time yet we still go through boom and bust cycles. Theoretically, with low taxes and greater share of the wealth, the 1% should be creating jobs like a motherfucker...and good paying ones too.

Is that the same Sweden with a 22% corporate income tax rate?