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View Full Version : Why Not a Negative Income Tax? Your thoughts




Bastiat's The Law
01-04-2014, 09:42 AM
http://www.city-journal.org/assets/images/21_1-gs.jpg

Negative Income Tax vs. Welfare State

Why Not a Negative Income Tax? Replace the welfare state with a cash subsidy for the poor. This would basically be an annual tax-free cash grant to everyone 18 or 21 years of age for $11,500, which roughly where the poverty line is for an individual. They would then do whatever they desired with the cash. All welfare programs would cease, so no food stamps, subsidized student loans, etc.

otherone
01-04-2014, 09:47 AM
This would basically be an annual tax-free cash grant

It's called Earned Income Credit. It already exists for those with dependents.

Ronin Truth
01-04-2014, 09:56 AM
Why not?

Because economically I'm an Austrian, not a Friedman monetarist.

http://en.wikipedia.org/wiki/Negative_income_tax

Acala
01-04-2014, 09:58 AM
Because the money to pay that subsidy will be extracted from innocent people at gunpoint. That is understood to be theft in most moral systems.

muh_roads
01-04-2014, 10:15 AM
It is somewhat better in the hands of the banks as shitty as that sounds. Do you remember the Dubya checks in 2008? Remember how quickly prices like gas soared to $4-5 for the first time? We just need a better money first before we just poop the supply out all over the place.

ghengis86
01-04-2014, 10:28 AM
It is somewhat better in the hands of the banks as shitty as that sounds. Do you remember the Dubya checks in 2008? Remember how quickly prices like gas soared to $4-5 for the first time? We just need a better money first before we just poop the supply out all over the place.

What?

It would have been better for the Fed to give a couple trillion to the people than to the banks, price inflation included. Right now, the first people to get the money (banks, primary dealers) use it to out bid and buy resources first, causing prices to rise. So they get the benefit if the new money, while everyone else has to deal with the inflation and loss of purchasing power. At least of everyone got some cash, they could join in the bidding process. Right now, they're too poor/money too worthless.

Regardless, sound money is the solution and government is the problem. Never forget that when entertaining these mental gymnastics.

Bastiat's The Law
01-04-2014, 10:28 AM
It's called Earned Income Credit. It already exists for those with dependents.

Somewhat, yes. But the EIC would be done away with.

Bastiat's The Law
01-04-2014, 10:29 AM
Because the money to pay that subsidy will be extracted from innocent people at gunpoint. That is understood to be theft in most moral systems.

Agreed, but humor me here.

Bastiat's The Law
01-04-2014, 10:34 AM
No, this is not an ideal system. I agree its theft. Even Ron Paul said we would need a transition and education period to eventually ween people off welfare all-together.

I guess this would be a more direct form of welfare with the caveat of giving the recipient some sembalance of responsibility to manage their affairs. Could this be a possible transition away from the churning welfare bureaucracy in Washington?

otherone
01-04-2014, 10:40 AM
I guess this would be a more direct form of welfare with the caveat of giving the recipient some sembalance of responsibility to manage their affairs. Could this be a possible transition away from the churning welfare bureaucracy in Washington?

The answer to eliminating the welfare state is by taking it out of DC's hands and returning full responsibility to the individual States. Anti-federalism is the first step to Voluntarism.

Carson
01-04-2014, 10:47 AM
I don't think I would be against a negative income tax.

I would like to take it a step further. Imagine every legal citizen having an account that was credited with their share of the revenue collected from the sale of our natural resources. Not only would it be a step in the direction of people having a say in the looting, it might lead to some conservation. Now so few seem to have to be bought off to gain access.

Alaskan's have a say in what happens in the state. While I was there there was several measures on ballots whether to allow mining and other ventures.

Look at the way they share in some of the sale of the oil in Alaska. They have something called the "Alaska Permanent Fund" (Named by the government.(?) Not sure how permanent it will be.)

Anyway check out the yearly income just from oil. That still leaves room for a little more from all of the other resources like coal, lumber, water, and a slew of other publicly held resources you might share in, in your state or nationally.

http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

2013 $900.00
2012 $878.00
2011 $1,174.00
2010 $1,281.00
2009 $1,305.00
2008 $2,069.00 + $1,200 Alaska Resource Rebate
2007 $1,654.00
2006 $1,106.96
2005 $845.76
2004 $919.84
2003 $1,107.56
2002 $1,540.76
2001 $1,850.28
2000 $1,963.86
1999 $1,769.84
1998 $1,540.88
1997 $1,296.54
1996 $1,130.68
1995 $990.30
1994 $983.90
1993 $949.46
1992 $915.84
1991 $931.34
1990 $952.63
1989 $873.16
1988 $826.93
1987 $708.19
1986 $556.26
1985 $404.00
1984 $331.29
1983 $386.15
1982 $1,000.00

^^^^^^^^^^^^^^^
Multiply that amount by each one of your family members! Not only does it add up to some nice income it also translates the resources into some that needs to be treasured and protected on its merits not because some entity demands so.

silverhandorder
01-04-2014, 10:56 AM
Negative income tax would be better then what we have now. But no one who is in the position to decide would ever want that. Why? Because they would be killed by all the state workers that might lose their jobs. The same reason taxes can never go down. Just got to ride this out to collapse.

Bastiat's The Law
01-04-2014, 12:45 PM
The answer to eliminating the welfare state is by taking it out of DC's hands and returning full responsibility to the individual States. Anti-federalism is the first step to Voluntarism.

True. That would likely be it's biggest flaw. It would be DC and central planning dependent.

The counter argument is that the system we have now is already that way and the litany of welfare programs we currently have corrupt and infect all other processees in DC.

Bastiat's The Law
01-04-2014, 12:52 PM
Negative income tax would be better then what we have now. But no one who is in the position to decide would ever want that. Why? Because they would be killed by all the state workers that might lose their jobs. The same reason taxes can never go down. Just got to ride this out to collapse.

There are certainly a lot of fingers going into multiple pies up there. The system won't collapse, especially in some type of post-apocalyptic way anarchists yearn for, in our lifetimes.

Keith and stuff
01-04-2014, 01:11 PM
It's called Earned Income Credit. It already exists for those with dependents.

Exactly. People can already get several grand from this plus $25,000 grand in other welfare if they work part-time and have kids.

The idea of ending welfare and giving every family of 4 $23,000 in cash isn't going to happen. For 1 thing, it would mean less welfare for poor families so they wouldn't like it. All of the people that get paid to give out welfare (and they get paid more than they give out) wouldn't want to lose their jobs. All of the nonprofits involved wouldn't like it. The built in constituency is too large. That's also why there is rarely major tax reform that doesn't involve increasing taxes.

Bastiat's The Law
01-04-2014, 01:36 PM
Exactly. People can already get several grand from this plus $25,000 grand in other welfare if they work part-time and have kids.

The idea of ending welfare and giving every family of 4 $23,000 in cash isn't going to happen. For 1 thing, it would mean less welfare for poor families so they wouldn't like it. All of the people that get paid to give out welfare (and they get paid more than they give out) wouldn't want to lose their jobs. All of the nonprofits involved wouldn't like it. The built in constituency is too large. That's also why there is rarely major tax reform that doesn't involve increasing taxes.

I think the jury would be out whether or not they would like to opt for a cash option so-to-speak. Look at the behavior of lottery winners. The vast majority opt for the cash now option even though they take a major hit in the process. It's really odd. They could get an annual payment (salary) of say $10-20 million every year for essentially their entire life, yet people always opt to take the lump sum now.

I think poor people would likely behave the same way with the negative income tax payments. Psychologically they would enjoy receiving a check with their name on it for $11,500 over all these other hidden subsidies/benefits they receive. Plus, if everyone in the country received this payment on the same date poor people could theoretically band together and either start a business or buy a house. They could do something constructive with the lump sum income and build their way out of poverty. If used wisely there would really be no excuse for living in poverty after a certain age. High-schoolers on the verge of graduating could band together and purchase a house that could be used when they attend school the next year. I know that's asking for a lot of forethought of 18-year-olds, but it still makes for intriguing possibilities.

Keith and stuff
01-04-2014, 01:46 PM
I think poor people would likely behave the same way with the negative income tax payments. Psychologically they would enjoy receiving a check with their name on it for $11,500 over all these other hidden subsidies/benefits they receive. Plus, if everyone in the country received this payment on the same date poor people could theoretically band together and either start a business or buy a house. They could do something constructive with the lump sum income and build their way out of poverty. If used wisely there would really be no excuse for living in poverty after a certain age. High-schoolers on the verge of graduating could band together and purchase a house that could be used when they attend school the next year. I know that's asking for a lot of forethought of 18-year-olds, but it still makes for intriguing possibilities.

There you go. You just listed several additional reasons why it won't happen :(

silverhandorder
01-04-2014, 02:08 PM
Then what you propose will never happen.