From: cbbrowne@csi.uottawa.ca (Christopher Browne)
Subject: Re: Negative Income Tax (Was: Social programs)
Organization: Dept. of Computer Science, University of Ottawa
Date: Tue, 15 Dec 92 20:25:07 GMT

In article <92350.133138SPRAGGEJ@QUCDN.QueensU.CA> John G. Spragge <SPRAGGEJ@QUCDN.QueensU.CA> writes:
>In article <1992Dec15.170313.9431@alchemy.chem.utoronto.ca>,
>golchowy@alchemy.chem.utoronto.ca (Gerald Olchowy) says:
>
>>Universality as it has been come to be known in Canada means paying
>>millionaires government pensions and family allowance cheques.  It
>>means less money is available for the needy.
>
>Universality to my mind means recognising that people with $1 million
>a year and people with eight thousand a year have much the same needs.
>...
>
>I could go on. Police protection, fire services: everyone needs them,
>everyone uses them.

Well put.  This is the point at which some people would suggest that a
"fixed" tax is appropriate; it's the point at which I'd say "Let's
look at how these things are to be paid for."

>>A negative income tax is a targetted social program for the needy.
>
>What ever you call it, it makes more sense than the jumble we have
>now.

Certainly.  The system that we now have is so convoluted, and has so
many unusual exceptions that it's been easy for some people to milk
it, and for others to be let down by it.

What the "negative income tax" amounts to is an INTEGRATION of all of
the other economic social programs.  The way things work now is that
under various programs like welfare and regional assistance, there's
several means tests, and if you qualify under one of them, you get a
whole pile of different benefits.  And "close" isn't good enough.

"Negative income tax" allows the discontinuities (i.e. - if you make
$1000 a year more, you lose benefits worth $3000) to get smoothed out.
It allows it to be at least POSSIBLE that the system will work more
fairly.  People would be compared on more purely economic grounds,
unlike the current system that has a LOT of obscure social
comparisons.

It makes the whole system simpler, in principle.  (On the other hand,
it could turn into another GST.  I agree with the PRINCIPLE behind the
GST, but am very unhappy with the implementation.  There shouldn't
have been any exceptions...)

The scary part of it is that it may allow people to better analyze the
costs/benefits of the welfare system.  By changing the numbers on your
tax return, you can see something about either what benefits you could
pull out of the system.  Alternatively, you can see how easy it is for
others to abuse this new system.

There HAS been some analysis of this idea, and I recall seeing the
conclusion that it is difficult to build ANY welfare system that
provides incentive for people to go off of welfare.  (The notable
exception being the "earn or starve" welfare system.  But that one's a
rather unacceptable alternative to all but the most cold-blooded
complaintants.) 

>>negative income tax.  With it we can eliminate every other social
>>program and its related bureaucracy, and turn UI into a European-like
>>training fund completely.
>
>If you mean we can eliminate every other redistributive social program
>(welfare, etc.) you're right. 

I'd disagree slightly, and say "We can eliminate MOST of the
bureaucracy involved in administering other redistributive social
programs."

There would still be a need to determine if there are still people
falling through the cracks, and Revenue Canada would get somewhat
larger.  More need to audit that "Net Income" figure, because it's
even more important than it used to be.

>If you mean the medical system, school
>system, et al. you do not mean eliminate, you mean privatise. While I
>see a great deal of virtue in eliminating bureaucracy (which is why I
>support a negative income tax), I see little virtue in going from
>government bureaucracy to commercial bureaucracy.

It's not obvious that anything about such parts of the system would
actually be changed by the "negative income tax."  The medical system
is not one of the redistributive social programs.  Nor is the school
system.  They provide non-economic benefits (such as health and
education).

The way that they COULD be factored in would be if one's use of them
was "charged" onto your tax return.  i.e.: "Went to see the doctor?
Add $150 to taxable income!"  "3 Children in school - Add $7500 to
taxable income!"  I don't think that people would stand for this idea,
as "neat" as it sounds.

-- 
Christopher Browne                |     PGP 2.0 key available
cbbrowne@csi.uottawa.ca           |===================================
University of Ottawa              |  The Personal Computer:  Colt 45
Master of System Science Program  |  of the Information Frontier
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