Re: AltInst: Welfare Reform Proposal

Milton Friedman devised a similar proposal in the late '60's called the
"Negative Income Tax." It generated a certain amount of discussion.

The arguments for "Negative Income Tax" seemed compelling within the
context of the stated goals of the welfare state. By eliminating the
plethora of expensive and overlapping programs, it would eliminate
considerable overhead and ensure the money would go to where it was most
needed. It would permit easier transition into the work place, create
opportunities for low pay entry level training jobs, and eliminate the
incentives to game the system.

The proposal went nowhere. The institutional support for the status quo
was far too great. The main beneficiaries of the status quo are the
upscale, educated middle class "helping class" who administer the system.
They have no incentive to eliminate their jobs.

The status quo delivers quite a large proportion of "social welfare" money
to people who would not be considered "poor", but are prepared to vote for
the status quo.

George L. O'Brien

At 07:53 PM 6/22/98 -0700, you wrote:
>I like my system better: Every person is guaranteed an income at the
>poverty level, say $6000 for a head of household and $2000 per other
>member of the household. This money is Welfare and Social Security and
>unemployment insurance. Then for every dollar earned, you pay 40% tax.
>
>People who want to live at the poverty level can do so, and receive a
>check every year from the government (or apportioned throughout the
>year -- details can be worked out).
>
>People who don't want to live at the poverty level are motivated to
>earn money. At 2.5 times the poverty level, one starts paying tax.
>(If you earn $15,000, your tax is $6,000, offset by the $6,000 you
>would get as head of household.) People in the highest tax brackets
>would pay a little more tax than they do now.
>
>This solves the problem of people getting off welfare. You wouldn't
>lose your welfare if you earned a couple of dollars. You wouldn't
>lose it completely until you were making 2.5 times the poverty level.
>
>This solves the problem of administering different systems, like
>Social Security and Welfare and Unemployment Compensation. It is all
>done through the mechanism of the Income Tax (or refund).
>
>This would balance the budget.
>
>I am sure people more knowledgeable will nit-pick this idea. I ask you,
>if you are more knowledgeable, first to think about this idea, and
>then help work out the details to make it work.
>
>-- Bob Gebelein
>
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>
>

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Received on Tue Jun 23 23:17:30 1998