From: jmorriso@ee.ubc.ca (John Paul Morrison)
Subject: Re: Negative Income Tax (Was: Social programs)
Organization: University of BC, Electrical Engineering
Date: Tue, 29 Dec 1992 10:33:13 GMT

In article <1992Dec27.163509.12337@athena.mit.edu> cmk@athena.mit.edu (Charles M Kozierok) writes:
>In article <1992Dec18.223847.9286@alchemy.chem.utoronto.ca> golchowy@alchemy.chem.utoronto.ca (Gerald Olchowy) writes:
>>>>>
>>>>
>>>>No...you can have a negative income tax and a flat tax...you just
>>>>assign a sufficient personal exemption (and basic exemptions for
>>>>dependents).  Say, for an individual, the first $15,000 is tax-free
>>>>and then the flat tax is 25% of every dollar after than...if you
>>>>earn less than $15000 or X dollars, the government pays you the
>>>>difference...           
>>>
>>>do you mean by this that the government would pay dollar-for-dollar
>>>every dollar under $15,000? so that if i earned $9,000, the government
>>>would pay me $6,000?
>>>
>>>is that the concept behind a "negative income tax" system?
>>>
>>
>>Basically, yes, and it would be a lot more efficient than hiring the
>>thousands upon thousands of bureaucrats to deliver the complicated
>>set of social programs which essentially do the same thing now.
>
>no.
>there are some important differences. first and foremost is that this
>money would be paid to all those who are currently working as well
>as those who are not. it would destroy the incentive for anyone
>with earning potential less than $15,000 to work. it would create
>a de facto $7.50 minimum wage, hurting canada's companies.
>

Working people already receive hidden payments, through subsididies, lower
tax rates that aren't based on how many services they use (such as medical
care etc.)

A negative income tax (I dislike this term) would bring the subsidies out
into the open, where you could see them.

Philospohies based on self interest can even explain the need for social
programs, up to a point. Basically, a certain amount of social programs,
ie. the rich/middle class paying money to people who are poorer/haven't
earned it, is NOT altruistic, and therefore makes sense (if improving
your self interest is your prime motivation). Why? because you have to take
a long term view with some things: subsidize a small amount to the poor,
or pay more for a police state needed to preserve your own security
(drastic), or wind up guilloutined with the aristocrats? Paying a certain
amount to the poor can actually advance your self interest.
(that 'certain' amount is open for study...)

>>If we are going to have a social safety net...it might as well be
>>the most efficient one possible, and the negative income tax is
>>that.
>
>another major problem with this, and i do see it as major, maybe others
>don't, is how it legitimizes social welfare. it sends the message that
>there is nothing wrong with allowing yourself to be borne upon the backs
>of others. it will accelerate the already out-of-control social spending.
>
As if the system doesn't already do that. Negative income tax is a bogus
term. The term is tax-and-transfer (ie tax people who make money, transfer
to people who do not). This would cut out a lot of beauracratic fat:
if we AGREE to the notion of subsidizing people, then the best way is
simply to hand over the X dollars we were going to pay in subsidies anyway
(cut out the middleman), not give it to government agencies to fritter away.
Suppose government is going to spend $1000 dollars on someone (due to whatever
need), you can be damn sure that the needy person will be happier with the
$1000 to spend the way he thinks is best, than to get $500 in cash, and
be told that $500 disappeared into the government boondoggle of paper-pushers!
The taxpayers said 'out of compassion, we deem that this person deserves
$1000 of support' but the current way the government implements
state sponsored charity gaurantees that money will be wasted by clerks,
ministries of regional misdevelopments, special interest groups etc.

We really have to realise that social programs etc. are mostly an act of
compassion, or personal philosphy, they aren't something that the laws
of the market say we must or must not do. But if we do decide to have
social programs (and it kind of looks like Canadians do support this),
we SHOULD follow the economic laws that drive the market, not try and 
distort the free market the way the socialists insist on doing.
(unfortunately, the dim witted liberal-socialists-communists think
that free market economics PRECLUDES being compassionate towards others,
when it DOESN'T!)


There is always the risk that social programs, ie subsidies to the poor,
can become the causes of dependency, fraud etc. the tax and transfer system,
can have built in incentives to help minimize that, such as conditional
payments: based on enrolment in re-training programs or face a deduction
(ie this would apply to basically healthy, employable people). One could
expand on this to minimize abuse and/or dependency creation.
As always, harness natural market forces to make things work more efficiently,
instead of working against them (which leads to inefficiency and failure).


>>The same goes for the flat tax...it reduces the need for bureaucrats
>>in tax department, and reduces the need for wasting valuable human
>>resources in the fields of tax law and accounting. 
>
>flat taxes will never work because the general public is under the
>impression that the more money you make, not only the more tax
>should you pay, but the higher *percentage* of income should you pay.
>a flat tax would be labelled "regressive" and shouted down by the
>majority who has the most to gain from higher marginal tax rates.

there ought to be mandatory reviews by the voters for taxes, or some
mechanism to make sure that: taxpayers only pay for services they
want to receive or they voted to approve. *WE* delegate to government,
government does not have the right to impose itself on US; we should
not be expected to give government a blank cheque. If I pay a tax, I want
to know exactly what I'm paying for, and whether it benefits me (or
if I approve of its social notions); I don't want to be the convenient
cash cow for government to bleed dry for to pay for its mistakes or
its own agenda. In short, there should be a closer safegaurd that
taxes represent the level of services.

>
>--
>charles


-- 
__________________________________________________________________________
 John Paul Morrison                     |  
 University of British Columbia, Canada |  
 Electrical Engineering                 |   .sig file without a cause
 jmorriso@ee.ubc.ca              VE7JPM |  
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