Is the Answer to Poverty the Negative Income Tax?

Martin Feldstein: “The United States government now spends more than $600 billion a year on programs to help the poor. That’s about 4% of America’s total GDP.”

“But, despite this large expenditure, the proportion of the population living in poverty is officially estimated at 15%, about the same as it was 50 years ago. Experts agree, however, that the government’s poverty measure doesn’t correctly reflect the progress that has occurred, because official statistics focus only on cash income and ignore almost all of the government’s transfer payments.”

“The existing approach to helping the poor needs reform.”

“The best way to help the poor is the negative income tax plan originally proposed by both Milton Friedman (the conservative economist at the University of Chicago) and James Tobin (the liberal economist at Yale University). All households below the age of 65 would receive an amount of money that would keep them out of poverty if they had no other income; but the amount of the transfer would decline gradually as their household income rose. Above a certain threshold, the household would pay an income tax as they do today; below that level, the ‘tax’ would be negative.”

 

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  • RadicalCentrist

    This will happen eventually.

    • pisher

      And people on the right will insist that the poors are concealing income. (As people on the right do all the damn time). And the beat goes on.

    • I’d be fine with sovereign wealth and a national minimum income. that would be an actual rising tide that would lift all boats.

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