2 PARAGRAPHS 4 LIBERTY #262 “TURN A CRUTCH INTO A LADDER”
What if we could implement a system that would vastly reduce the intrusions, expense, bureaucracy and fraud now present with the IRS? And what if at the same time we could pre-empt and abolish the welfare system except for those people with truly special needs? What if we could provide incentives for everyone to earn the extra dollar and to improve themselves, which are demonstrably lacking in today’s system? What if we could at the same time implement an institutional program to assist the homeless? Would you be interested? In other words, what if we could vastly simplify the tax system and also change the welfare system from a Crutch to a Ladder? Please review this proposal, because I believe it will accomplish these goals, thus making so many things better for virtually everyone (except for government bureaucrats and companies like H & R Block!) As you will see, it combines a graduated flat tax with Milton Friedman’s proposal of a Safety Net. So, with these figures used only for illustration, no one will pay any income taxes on their first $30,000 of income (which will be defined as net revenues from virtually any source, including wages, capital gains, interest, etc.) Then they will pay a flat fee of 10 cents for every dollar earned between $30,000 and $100,000, 15 cents for every dollar between $100,001 and $500,000 and 20 cents for every dollar over $500,000. No deductions, so the government won’t have any reason to pry into your private life to see how you spend your money! But what about people who earn no income? Well, regardless of whether they just lost their jobs to a robot, want to go back to school or are just plain lazy, if they are either citizens or hold a valid Green Card and are over 18 years old they will receive a stipend from the federal government for $15,000 per year, probably broken down into monthly payments of $1,250. And, importantly enough, they would lose 50 cents of that stipend for every dollar they earned up to $30,000 – so they would always have an incentive to earn the extra dollar! (Thus, as you can see, $30,000 is the cut-off point where people would pay no taxes but receive no stipend.) Of course this incentive to earn the extra dollar is almost entirely lacking in today’s system, which often provides more incentives not to work than to be productive! (BTW Milton Friedman called his system a “negative income tax,” but I don’t like the word negative so I call it a stipend.) In addition, importantly enough, all other welfare programs would be abolished, except those for people with truly special needs. Think of the benefits! People’s tax returns could be submitted on a postcard, and the savings from not having to keep records and prepare taxes would be staggering. And if the government tried to increase our taxes or – imagine this – reduce our taxes, it would be transparent! Furthermore, imagine the effect of getting rid of all of the bureaucracy, administration expenses, government intrusions and fraud both regarding the IRS and the welfare agencies! And a ladder would be extended where necessary to help people like single parents, veterans, people just released from prison and those going back to school to avoid or to climb up out of poverty.
But what about the homeless? To begin with, I want to make it clear that if I were bleeding on the street, no one would have a legal obligation to help me unless they caused my injuries. But I believe that we will because we want to – we are compassionate people. That would also mean the recipients would not be entitled to receive anything, so maybe they might even be grateful! But if homeless people were receiving $1,250 every month automatically in their ATM accounts, the private sector would quickly create some fairly inexpensive room and board facilities where people could have a roof over their heads and three meals per day for about $1,100 per month, which would still leave the recipients some money to purchase clothing and other personal items. In today’s world, politicians mostly on occasion throw lots of money at the homeless problems, like temporarily opening some shelters and soup kitchens or paying for the homeless to stay in various motel rooms for a while, etc. But these “fixes” don’t last. And, even worse, most of these governmental actions actually increase homelessness, because if people can receive free beds, televisions and meals at a motel, why should they go back to work? But Friedman’s institutional response would last because it contains incentives for everyone to become more productive.
I was in the Peace Corps – I care about people – and I believe that homelessness is a blight upon who we are as a country. Of course, many of the homeless people have additional problems, such as mental disabilities, drug addiction and more. But if people need a conservatorship or drug treatment, the local governments can and should address those problems. So this is a program I am advocating out on the Libertarian Campaign Trail. What do you think? If you have suggestions or criticisms, please let me know. But if you like the proposal, please help me by spreading the word.
Quote for the week: “If a cluttered desk is a sign of a cluttered mind, then what is an empty desk a sign of? Albert Einstein
Judge Jim Gray (Ret.) Superior Court of Orange County, California 2012 Libertarian Candidate for Vice President
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