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
F.A. Hayek, The Road to Serfdom (another of the most influential conservative and libertarian economists)In the distribution, a certain minimum is first assigned for the subsistence of every member of the community, whether capable or not of labour.
Daniel Moynihan, The Politics of a Guaranteed IncomeThere 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.
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]
https://medium.com/basic-income/why-mil ... .ef1w6jmu9Why Milton Friedman Supported a Guaranteed Income
1. To Reduce Government Bureaucracy2. The Efficiency of Free MarketsWe 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.3. To End the Welfare TrapThe 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.4. To Enable WorkThe 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…
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 & EqualityThe virtue of [a negative income tax] is precisely that it treats everyone the same way…there’s none of this unfortunate discrimination among people.
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.
