Choosing to Have a Safety Net


             I was in the Peace Corps: I care about people.  So I believe we should have a Safety Net for our people.  Not because we have to, because we don’t – we have no legal obligation to support anybody!  But we will because we choose to – because that is who we are.  What do I believe the Safety Net should look like?  (Sorry, this will take more than two paragraphs.)  It should combine a Federal Graduated Flat Tax with the Negative Income Tax proposed by Milton Friedman.

                The flat tax means, with the numbers provided only for purposes of illustration, that no one will pay any federal income taxes on their first $30,000 of earnings: not you, me or Bill Gates – and all differentiations between earned and interest income and capital gains would be dissolved.  Then for every dollar earned between $30,000 and $100,000, each person would pay 11 cents to the government.  No deductions!  For those fortunate to earn between $100,001 and $500,000 in a year, they would pay 19 cents, and those blessed like Kobe Bryant would pay 29 cents for every dollar they earned above $500,000.

                So now what about the poor?  Everyone in our country who is 18 years of age or older and is either a citizen or has a green card who earns no money would receive a stipend from the federal government of $15,000 per year – probably broken into monthly payments of $1,250.  It would not matter if they had lost their jobs, were students or were just plain lazy.  Then for every dollar they earned they would lose 50 cents of that stipend.  This means they would always have an incentive to earn the extra dollar.  (And, as we know, Incentives Matter!)  Thus $30,000 would be the break-even point where people would receive no money but pay no taxes.  Then we eliminate all other forms of welfare – but with the understanding that life can be complicated and some extra provisions would be made for people with truly special needs.

                Although certainly not perfect, this proposed system would be much more efficient, fair and transparent.  It would not only make the amount of taxes we pay abundantly clear, it would also make it clear when politicians were raising (or, imagine that, lowering) our taxes.  Plus it would come close to resolving the homeless problem, because those people would have resources to spend – and the free market responds well in those circumstances.  Yes, to some degree this would be a “Nanny State” program, but it would reflect our values and be far far better than what we are doing now!  So what do you think?

Judge Jim Gray (Ret.)
2012 Libertarian candidate for Vice President, along with
Governor Gary Johnson as the candidate for President