From: cbbrowne@csi.uottawa.ca (Christopher Browne)
Subject: Re: Negative Income Tax (Was: Social programs)
Organization: Dept. of Computer Science, University of Ottawa
Date: Sat, 2 Jan 93 03:40:12 GMT

In article <1993Jan2.013912.12749@ee.ubc.ca> jmorriso@ee.ubc.ca (John Paul Morrison) writes:
>[ Christopher ]
>>>>>Much of the discussion has been very long-winded on the excessively
>>>>>philosophical side.  Sure - NIT isn't the PERFECT answer.  But that
>>>>>wasn't the question.  It's probably about the BEST answer that the
>>>>>politicians would conceivably be able to get into place.
>>>>
>[ Charles ]
>>>>maybe, but it serves as a distraction from dealing with the real problem.
>>>>you are just substituting one bad system for another. and i have seen
>>>>no evidence yet to suggest that it is even better.

[Charles]
>>my point was simply that i have seen no argument that realistically
>>suggests that the NIT *is* any better than the current system, which
>>is a brutal failure. simply changing systems for the sake of changing
>>can in many circumstances serve as a distraction and allow people not
>>to address the real problem.
>
>Well, then let's hack at the problem, with some specifics if we can.
>A few dozen articles on politcal philosphy have gone by (fine and dandy)
>but we haven't got much further on Negative income 'tax', (if we have,
>I'm sure we've forgotten :-)
>
>First, some negatives of negative income tax (does that make it positive ;-)
>
>1. Doesn't change the motivation (or lack of) for working vs.
>starving

I disagree on two counts: 
(a) the issue is not "working vs. starving," but rather "working vs.
living on the dole."
(b) Right now, there is an absolute DIS-incentive to work if your
income is below about $20K.  NIT would at the very least smooth the
"discontinuity" here.

>2. Could fail as splendidly as any other government program

Always a risk.

>3. could be worse, if old system is retained, even if only partially

This is almost certainly the greatest danger in the NIT.  If it claims
to solve the problems, but is not in fact the ONLY means test, then it
at best lies about its value.

>Some positives:
>1. Could simplify things, by sacking a lot of civil servants
>   (eliminate the social ministries, and let Revenue Canada collect
>   taxes and print cheques...seems simpler(?))

It would be Supply & Services that would print the cheques; that's the
way things work now, and that IS a fairly appropriate division of
responsibilities.  Don't let the same people that RECEIVE cash PAY OUT
money.

The improvement would be in the removal of "social ministries."

>2. could let private sector, free enterprise expand:
>   Ie, if Governments withdraws from running social services, and instead
>   merely hands out money, letting recipients spend it, and letting
>   the private sector compete to provide cheaper, better services.

Good thought.

>3. payments could be deindexed, letting inflation reduce costs to government
>    :-) :-)

>OK, that ought to be a start.
>PLease, let's keep on topic....

Hear, hear!  (Not "here, here!" as those who have neither read
Hansard, nor know what it is, might say.)

>>>>how can it be otherwise? the NIT is not going to solve the enormous
>>>>deficit problems due to social spending. so what kind of solution
>>>>is it?
>
>Perhaps by streamlining. Cutting a lot of departments. By targeting
>funds to where they can be better used, or eliminated, since some people
>don't need them anyway. Universality has been a failure, and already
>there have been good steps to cut payments (Family allowance) to people
>who don't need it.

The stupid part of the Family allowance thing is that (if what I hear
is correct) they now do a means test that is totally separate from the
Income Tax system.  They apparently have taken on means evalutation as
a task of their own.  The universal payout, with claw-back, was a LOT
simpler to administer.

>And why do we have so many different levels of subsidies, payments,
>handouts etc.? At least if we are going to stay with handouts, just
>give individuals one big lump sum. Surely the administrative costs
>would go down? 

Even if admin. costs don't go down, it at least becomes more clear
that it IS a handout.  People can't ignore it anymore then.

I have a feeling that the TOTAL PAYOUT would go up, but that admin.
costs would go down, since it would no longer cost roughly $4 for
every $1 that actually gets to someone, as is the case with welfare.

If twice as much money goes out in "welfare-like" payments than goes
out now, that's only HALF what gets spent now.

-- 
Christopher Browne                |     PGP 2.0 key available
cbbrowne@csi.uottawa.ca           |======================================
University of Ottawa              | Genius may have its limitations, but
Master of System Science Program  | stupidity is not thus handicapped.