A Reverse Income Tax: A Bold Replacement for Social Security, Welfare, Food Stamps, and others
There are two basic arguments against social welfare/safety net programs. The first is that it creates less economic incentive to work because one starts to lose their benefits once they find employment. Why work a person take a minimum wage job when your economic benefits remain the same? The second is efficiency. We as a nation have multiple agencies directing checks to a lot of different people. In some cases, they aren't really "checks" but means to pay for things with lots of regulation on the individual. For example, the society wants to control what a person can buy with food stamps. The problem is, all that control comes with administration costs. For example, 14 percent of all money that goes towards food stamps goes towards administration costs.
WIth these two arguments in mind, let me suggest a radical solution. It is the reverse income tax. If you make up to 50K a year, the government would simply credit you with 30K a year on your pay check. Once you make over 50K, the government starts to take this money back until your income reaches over 125K. Over that amount, you are taxed on all your income at the same rate. This would be a simple tax on all income and replace all other federal taxes. I imagine that money over 125K would be taxed higher rate then it is taxed today. For retirements, one could simply increase the payout to 50K a year once a person reaches 65 age.
This basic concept would replace all social safety net programs, including welfare, food stamps, unemployment and other non nonmedical programs. The benefits would be twofold. One, it is efficiency. The government isn't trying to control the money or regulate it. It is simply giving it to lower income and middle class Americans. One could eliminate the Social Security administration, for example. I imagine the administration cost could be lowed to 1 or two cents for every tax dollar. The program could be administered simply through the IRS and done so in the same way they take a monthly tax from workers. Second, there is no reason for a person not to take a low paying job and get into the American work force. If someone is living off of the 30K from this program, getting a 20K a year job would simply give them an income of 50K. That would provide a decent livelihood for them.
The other aspect is that this would create a huge middle class that could buy stuff and keep the economy going.
Thoughts?
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I understand it's also been proposed by Milton Friedman.
Having said that, I think this is the easiest vehicle to implement the wealth redistribution our economy needs. Makes a lot of sense.
--imm
Your system only pays out to some. Mine pays out to everyone. And that potential 10% left out of yours are the ones that control the vast majority of the resources. Even if you add some income to everyone in the bottom 90, they still control a much larger portion of the resources.
Our ideas provide the same benefits, I believe. I believe mine is more fair and harder to take issue with (once you get past the initial "they gonna take how much of my pay?"
Increased labor out is not really desirable. In my opinion. We have maybe more man hours than we need to accomplish the work that needs done to keep our society running. We either need to reduce the available man hours or increase the work that needs done. But there are only so many floors that need sweeping, only so many burgers to flip, and so many spreadsheets to make. I'm going off topic here, but we should really be reducing the work week to 30 or so, with a pay increase to make it viable.
