# Negative Income Tax -- good idea? **URL:** \ **Category:** Great Debates\ **Created:** [June 16, 2011, 7:12pm UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733 "2011-06-16T19:12:29Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 18, 2011, 5:44am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/61 "2011-06-18T05:44:08Z")
Even as a child I was able to reason out that if you pay stupid people to breed they will. I even wrote a paper on it in grade school. Of course I worded it more politely but that’s the basic premise. If you want to get rid of poverty then tax people fairly and that means taxing labor hours and not income. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [June 18, 2011, 4:35pm UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/62 "2011-06-18T16:35:52Z")
If you have the same understanding of a concept as an adult that you did as a child, you almost certainly don’t understand it. ---
**Author:** ![Blalron](https://avatars.discourse-cdn.com/v4/letter/b/35a633/32.png) [@Blalron](https://boards.straightdope.com/u/Blalron)\ **Post date:** [June 19, 2011, 12:59am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/63 "2011-06-19T00:59:39Z")
> [@Magiver](#): > > Even as a child I was able to reason out that if you pay stupid people to breed they will. I even wrote a paper on it in grade school. Of course I worded it more politely but that’s the basic premise. If you want to get rid of poverty then tax people fairly and that means taxing labor hours and not income. What’s odd is that if you actually look at the evidence, there’s an inverse correlation between government welfare programs and child birth. Look at Europe. They have more generous social programs than we do, and yet their birth rate is below the replacement rate. Look at the statistics for the poorest parts of Africa. They are some of the highest on the planet, and yet there’s no welfare checks to incentivize them. Why is that? ---
**Author:** ![Blalron](https://avatars.discourse-cdn.com/v4/letter/b/35a633/32.png) [@Blalron](https://boards.straightdope.com/u/Blalron)\ **Post date:** [June 19, 2011, 1:00am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/64 "2011-06-19T01:00:59Z")
> [@curlcoat](#): > > OK, I think I’ve read every post and I am still not seeing a true answer to my original question - what do you do with the people who chose not to work? If you are going to give them free money for merely existing, and even more money for every child they have, as well as free education, health care and whatever else I’ve missed, you are going to have a fairly significant number of people who are not going to bother to work, or are going to supplement their income by illegal means. Do you propose just supporting them, generation after generation? If I promise to get a vasectomy and never have a child, would you be cool with me getting a guaranteed income? 😃 ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [June 19, 2011, 1:20am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/65 "2011-06-19T01:20:34Z")
> [@Blalron](#): > > What’s odd is that if you actually look at the evidence, there’s an inverse correlation between government welfare programs and child birth. Look at Europe. They have more generous social programs than we do, and yet their birth rate is below the replacement rate. > > Look at the statistics for the poorest parts of Africa. They are some of the highest on the planet, and yet there’s no welfare checks to incentivize them. Why is that? It’s one thing to compare fertility rates between rich countries (with social welfare programs) and poor countries (without such programs), where the well documented conclusion is that higher wealth and education means lower fertility rates. But have you considered the demographics within countries with social welfare programs? This paper found that the key factor in lowering birth rates was the availability of a public pension plan [http://www.pensiondevelopment.org/394/the-impact-pension-systems-fertility.htm](http://www.pensiondevelopment.org/394/the-impact-pension-systems-fertility.htm) This pdf is rather long but interesting [http://faculty.chicagobooth.edu/workshops/international/archive/pdf/fertility.pdf](http://faculty.chicagobooth.edu/workshops/international/archive/pdf/fertility.pdf) I don’t know how common place it is, but there have been problems with the foster care system where people abuse it by taking in more children to get more money from the system. I was trying to find birthrates in the US listed by income brackets and ended up finding these two articles > **[CARPE DIEM: Birth Rate 3X Higher for Women Receiving Welfare](http://mjperry.blogspot.com/2008/08/if-you-subsidize-something-you-get-more.html)** [http://itsteatime.net/blogs/blog4.php/2009/10/01/birth-rates-by-income](http://itsteatime.net/blogs/blog4.php/2009/10/01/birth-rates-by-income) They are most likely junk sites, but make the claim that those receiving welfare have 3 times the birthrate as those that don’t. I’m trying to find a better site with some real data. Does anyone know how fertility rates in the US break down by income? ---
**Author:** ![Blalron](https://avatars.discourse-cdn.com/v4/letter/b/35a633/32.png) [@Blalron](https://boards.straightdope.com/u/Blalron)\ **Post date:** [June 19, 2011, 1:44am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/66 "2011-06-19T01:44:03Z")
I think with the threat of global warming looming over us, and technological advances which have greatly reduced the amount of labor neccesary to secure the basics of life for all, we should seriously re-examine our Protestant Work Ethic. The notion that “those who don’t work shouldn’t eat.” The problem isn’t that people in America aren’t producing enough stuff. It’s actually that we (and the other industrialized countries on Earth) are producing **too much stuff**. At the present time, it may be in the best interests of humanity to pay a certain segment of the population to “do nothing” and live on a bare minimum subsistance level, neither producing nor consuming much more than they need to keep themselves alive. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [June 19, 2011, 1:53am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/67 "2011-06-19T01:53:16Z")
> [@Blalron](#): > > I think with the threat of global warming looming over us, and technological advances which have greatly reduced the amount of labor neccesary to secure the basics of life for all, we should seriously re-examine our Protestant Work Ethic. The notion that “those who don’t work shouldn’t eat.” > > The problem isn’t that people in America aren’t producing enough stuff. It’s actually that we (and the other industrialized countries on Earth) are producing **too much stuff**. At the present time, it may be in the best interests of humanity to pay a certain segment of the population to “do nothing” and live on a bare minimum subsistance level, neither producing nor consuming much more than they need to keep themselves alive. Isn’t that technically what we do with social security? And wouldn’t the obvious problem be that in 50 years there won’t be enough people working to support the people not working? As mentioned earlier: what ever guaranteed income you set, $6000 or $14000, as more people cluster into that income the market is going to follow. There will be lots of money made from people living for free. Cars, tvs, apartments, restaurants, will all adjust to milk that cow. If you thought the income disparity was bad now wait until a few generations are born knowing nothing but government paychecks. Now, obviously this is a good idea, no question there. But what happens if in 50 years it turns out to be a not-so-great idea, changing it would be a million times worse than trying to alter Medicare and Social Security at the same time. ---
**Author:** ![curlcoat](https://avatars.discourse-cdn.com/v4/letter/c/ea5d25/32.png) [@curlcoat](https://boards.straightdope.com/u/curlcoat)\ **Post date:** [June 19, 2011, 2:23am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/68 "2011-06-19T02:23:53Z")
> [@Zeriel](#): > > A question implied by your post: What ought we do with people who refuse to work NOW? Let them starve? Arrest them and put them in workhouses? Please don’t answer “private charity will provide” because that’s not a guarantee. Well, essentially that is what we do now - if you don’t have any children, there isn’t anything out there after unemployment runs out. This is one reason why people have children when they are dirt poor - it’s the only way to support themselves. Well, legally anyway. I’m going to be way behind on this, since I only have internet access once a day for now! ---
**Author:** ![curlcoat](https://avatars.discourse-cdn.com/v4/letter/c/ea5d25/32.png) [@curlcoat](https://boards.straightdope.com/u/curlcoat)\ **Post date:** [June 19, 2011, 2:30am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/69 "2011-06-19T02:30:35Z")
> [@Bosstone](#): > > Sure. Living on $10,000 isn’t a great life, nor is it a great deal of money. I certainly wouldn’t want to live on that. Neither would I but I used to live among folks who lived on far less than that and were satisfied with it. > [@](#): > > And we’re going to have to deal with the problem eventually anyway as technology continues to improve and fewer and fewer jobs for humans are created. Sounds like high unemployment rates are going to be the thing of the future then. > [@Zeriel](#): > > This is my general experience with the population of “people on welfare” as well–most of them are not there by choice, and will not just sit on their duff. Sitting on your duff doesn’t get you a new TV, or pay for cable, or whatever–and it won’t under the system proposed in the OP either. The folks I mentioned above didn’t seem to care. Many of the men were hopeless alcoholics, which of course doesn’t help, and I guess the women didn’t think much of themselves because they not only stayed with these men, they bred with them. Their kids were damn near feral. > [@Magiver](#): > > Even as a child I was able to reason out that if you pay stupid people to breed they will. I even wrote a paper on it in grade school. Of course I worded it more politely but that’s the basic premise. If you want to get rid of poverty then tax people fairly and that means taxing labor hours and not income. Um, many rich people don’t work, so they’d end up paying no tax. > [@Blalron](#): > > What’s odd is that if you actually look at the evidence, there’s an inverse correlation between government welfare programs and child birth. Look at Europe. They have more generous social programs than we do, and yet their birth rate is below the replacement rate. > > Look at the statistics for the poorest parts of Africa. They are some of the highest on the planet, and yet there’s no welfare checks to incentivize them. Why is that? How about some stats like that for the good ol’ USA? > [@Blalron](#): > > If I promise to get a vasectomy and never have a child, would you be cool with me getting a guaranteed income? 😃 Heh, as tempting as it is to say yes, the answer is still no. Well, may if it was a _small_ income? 😃 ---
**Author:** ![Blalron](https://avatars.discourse-cdn.com/v4/letter/b/35a633/32.png) [@Blalron](https://boards.straightdope.com/u/Blalron)\ **Post date:** [June 19, 2011, 2:30am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/70 "2011-06-19T02:30:56Z")
> [@emacknight](#): > > Isn’t that technically what we do with social security? > > And wouldn’t the obvious problem be that in 50 years there won’t be enough people working to support the people not working? > > As mentioned earlier: what ever guaranteed income you set, $6000 or $14000, as more people cluster into that income the market is going to follow. There will be lots of money made from people living for free. Cars, tvs, apartments, restaurants, will all adjust to milk that cow. > > If you thought the income disparity was bad now wait until a few generations are born knowing nothing but government paychecks. Now, obviously this is a good idea, no question there. But what happens if in 50 years it turns out to be a not-so-great idea, changing it would be a million times worse than trying to alter Medicare and Social Security at the same time. You are of the opinion that so many people are going to live off the bare minimum that the economy will collapse. If the the only thing that keeps people working is the threat of starvation, that may be the case. But I have a better opinion of human nature than you do. I think people work for a host of other reasons besides not starving to death or being homeless. Self mastery, the esteem of peers, impressing an attractive member of the opposite sex, the sheer enjoyment of accomplishing something, and other factors will induce people to work even though they don’t technically have to. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [June 19, 2011, 2:35am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/71 "2011-06-19T02:35:34Z")
> [@curlcoat](#): > > Um, many rich people don’t work, so they’d end up paying no tax. This brings up an interesting question: what happens if a person is independently wealth, and can report income low enough to qualify for negative income tax? A person with millions in savings could set it up to earn $8k in interest, then get $6k from the government, and dip into savings when he wants something big. If his mansion and Ferraris are paid for his cost of living is pretty low. ---
**Author:** ![Bosstone](https://avatars.discourse-cdn.com/v4/letter/b/22d042/32.png) [@Bosstone](https://boards.straightdope.com/u/Bosstone)\ **Post date:** [June 19, 2011, 2:40am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/72 "2011-06-19T02:40:21Z")
> [@curlcoat](#): > > Sounds like high unemployment rates are going to be the thing of the future then. Yep. And as cold and ruthless as you might profess to be, eventually people simply won’t accept letting such a high number of people starve in the streets. We’re going to have to find a way to make a minimum subsistence allowance work; certainly not now, and probably not in the next couple of decades. But I wouldn’t be surprised if it happens in my lifetime. In science fiction the valve for this problem is usually space travel. All those people who’d otherwise be jobless can instead choose to colonize a new planet. I don’t think we’re going to be lucky enough that that’ll be an option any time soon, though. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [June 19, 2011, 2:43am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/73 "2011-06-19T02:43:29Z")
> [@Bosstone](#): > > Yep. And as cold and ruthless as you might profess to be, eventually people simply won’t accept letting such a high number of people starve in the streets. We’re going to have to find a way to make a minimum subsistence allowance work; certainly not now, and probably not in the next couple of decades. But I wouldn’t be surprised if it happens in my lifetime. > > In science fiction the valve for this problem is usually space travel. All those people who’d otherwise be jobless can instead choose to colonize a new planet. I don’t think we’re going to be lucky enough that that’ll be an option any time soon, though. I just assumed unemployment would be next to zero with this system. Essentially the government is paying people not to work, so employers that want to hire will need to compete. ---
**Author:** ![Bosstone](https://avatars.discourse-cdn.com/v4/letter/b/22d042/32.png) [@Bosstone](https://boards.straightdope.com/u/Bosstone)\ **Post date:** [June 19, 2011, 2:46am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/74 "2011-06-19T02:46:32Z")
> [@emacknight](#): > > I just assumed unemployment would be next to zero with this system. Essentially the government is paying people not to work, so employers that want to hire will need to compete. I was just responding to **curlcoat**. Ever-growing unemployment rates will drive the need for this system, and this system will drive unemployment rates down for the reason you describe. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [June 19, 2011, 2:51am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/75 "2011-06-19T02:51:31Z")
It also seems that a parent who stays home to raise children will want to remain unmarried, so as to file “single” with no income, thus discouraging marriage. One cool this about this though would be that it’s essentially a guaranteed scholarship. I only earned $1000 per month during grad school and that felt like a ton of money. And looking back to undergrad I worked my ass off all summer, then part time through the year, still making less than $13k. Getting $14k a year would have been luxury, and made going to school a hell of a lot easier. ---
**Author:** ![curlcoat](https://avatars.discourse-cdn.com/v4/letter/c/ea5d25/32.png) [@curlcoat](https://boards.straightdope.com/u/curlcoat)\ **Post date:** [June 19, 2011, 2:54am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/76 "2011-06-19T02:54:22Z")
> [@emacknight](#): > > It’s one thing to compare fertility rates between rich countries (with social welfare programs) and poor countries (without such programs), where the well documented conclusion is that higher wealth and education means lower fertility rates. > > But have you considered the demographics within countries with social welfare programs? > > This paper found that the key factor in lowering birth rates was the availability of a public pension plan > [http://www.pensiondevelopment.org/394/the-impact-pension-systems-fertility.htm](http://www.pensiondevelopment.org/394/the-impact-pension-systems-fertility.htm) > > This pdf is rather long but interesting > [http://faculty.chicagobooth.edu/workshops/international/archive/pdf/fertility.pdf](http://faculty.chicagobooth.edu/workshops/international/archive/pdf/fertility.pdf) > > I don’t know how common place it is, but there have been problems with the foster care system where people abuse it by taking in more children to get more money from the system. > > I was trying to find birthrates in the US listed by income brackets and ended up finding these two articles > [CARPE DIEM: Birth Rate 3X Higher for Women Receiving Welfare](http://mjperry.blogspot.com/2008/08/if-you-subsidize-something-you-get-more.html) > [http://itsteatime.net/blogs/blog4.php/2009/10/01/birth-rates-by-income](http://itsteatime.net/blogs/blog4.php/2009/10/01/birth-rates-by-income) > > They are most likely junk sites, but make the claim that those receiving welfare have 3 times the birthrate as those that don’t. > > I’m trying to find a better site with some real data. Does anyone know how fertility rates in the US break down by income? Since I’m about to get tossed out of this free wifi, I’m going to go with your summaries of these links and point out that this - “those receiving welfare have 3 times the birthrate as those that don’t” - is what I’ve been saying all along and what I am afraid of should we start paying people to not work. What else are they going to do but have babies? > [@Blalron](#): > > The problem isn’t that people in America aren’t producing enough stuff. It’s actually that we (and the other industrialized countries on Earth) are producing **too much stuff**. At the present time, it may be in the best interests of humanity to pay a certain segment of the population to “do nothing” and live on a bare minimum subsistance level, neither producing nor consuming much more than they need to keep themselves alive. Producing too much what stuff? > [@Bosstone](#): > > Yep. And as cold and ruthless as you might profess to be, I have never professed that. There are those that assume it about me merely because I don’t like children. > [@](#): > > eventually people simply won’t accept letting such a high number of people starve in the streets. We’re going to have to find a way to make a minimum subsistence allowance work; certainly not now, and probably not in the next couple of decades. But I wouldn’t be surprised if it happens in my lifetime. So you think continuing to hand them a living, as we have been doing, is the answer to taking care of this problem? ---
**Author:** ![Bosstone](https://avatars.discourse-cdn.com/v4/letter/b/22d042/32.png) [@Bosstone](https://boards.straightdope.com/u/Bosstone)\ **Post date:** [June 19, 2011, 3:02am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/77 "2011-06-19T03:02:58Z")
> [@curlcoat](#): > > I have never professed that. There are those that assume it about me merely because I don’t like children. I assume it about you because you’ve professed similar ideas before. Nothing to do with children. > [@](#): > > So you think continuing to hand them a living, as we have been doing, is the answer to taking care of this problem? What’s the alternative? Let them starve in the streets? Re-enact _The Lottery_? I think **Blalron** ’s idea of getting a salary for having a vasectomy is probably the most workable solution in order to gradually reduce population to sustainable levels, but I foresee a lot of resistance to that idea. ---
**Author:** ![Maeglin](https://avatars.discourse-cdn.com/v4/letter/m/8baadc/32.png) [@Maeglin](https://boards.straightdope.com/u/Maeglin)\ **Post date:** [June 19, 2011, 3:31am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/78 "2011-06-19T03:31:05Z")
Just to give a little context, the basic canonical model that supports this idea is Meltzer & Richard;s classic 1981 paper, _A rational theory of the size of government_. You can find it [here](http://www.people.fas.harvard.edu/~iversen/PDFfiles/Meltzer%26Richard1981.pdf). The conclusion you want to read is on page 12. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 19, 2011, 3:40am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/79 "2011-06-19T03:40:36Z")
> [@Zeriel](#): > > As part of a Pit discussion, I brought up the idea of the negative income tax. > > The essential concept is that one does away with welfare, subsidies to the poor, social security, minimum wage, and essentially all of the social safety net programs and replaces them with a single set of rules: > > A minimum income per household is fixed by some reasonable means, generally associated with but somewhat above the poverty level and adjusted by family size. > > Any income above that minimum is taxed as “normal”. > Any household making exactly that minimum is not taxed. > Any household making below that minimum is given credits in the form of direct cash payouts from the government. > > The most commonly seen proposal for implementation of this is Milton Friedman’s, which has those payouts equal to half of the difference between the household’s actual income and the minimum–for example, a household of one (poverty level approximately $11,000 in 2011 in the US according to HHS) that makes $6000 in income is given a tax credit of $2500 at tax time. If that same person is the sole breadwinner in a family of four (2011 poverty level approximately $22,000), the family gets an $8000 tax credit. This was seen by Milton as an acceptable way of removing perverse incentives–every dollar you earn results in more money in your pocket on a yearly basis, no matter your income level, so you always have financial incentive to work more. > > Would this be a workable plan? Would it be an effective means of cutting the (administrative) cost of social welfare in the US while delivering similar results? Sure it can work as long as you put a progressive income tax on top of it. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 19, 2011, 3:41am UTC](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733/80 "2011-06-19T03:41:57Z")
> [@emacknight](#): > > As an example, if we said the poverty line was $14k a year for a single person, that would be the guaranteed minimum. > > But if a person makes $6.50 an hour they’ll only earn $13k a year, meaning they’re worse off working. You said your system would then reward them by giving them extra, how much more? > > If we said they’ll end up with a guaranteed $14k, it means they are effectively working for $7/hour, but what is their incentive to work if they could just stay home and make the same? > > Next, consider someone that works a bit harder and earns $7.50 per hour bringing home about $15k per year, does he also kept a bump in his salary? Right now he’s working way harder than they guy making $6.50 but only earning a small amount more. I don’t think you understand how this is supposed to work. [Previous page](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733.md?page=3) [Next page](https://boards.straightdope.com/t/negative-income-tax-good-idea/585733.md?page=5)