Negative income tax

[Traveler]

In another thread I mentioned the term negative income tax. I am convinced that few understand what this really means. Any time money that is taxed is used to help or benefit the poor – it could be said that the money involved was a form on negative income tax.

One of the concerns I have of government is the propensity to use any control that government has to be come the exercise of power and control. The efforts to control the people through the issuing of government programs are of great concern to me. When I proposed the idea of negative income tax it was to remove control over people by individuals within the government.

Under our current system of social engineering the government skims off the top of the funds intended to help the poor and needy, over 60% of the funds collected and set aside for such purposes. Those in the government speak of welfare reform but what they really mean is that they intend to collect more taxes, increase the controlling bureaucracy and place less funds among the poor and needy.

Negative income tax changes this need of government control over people. This is how it works. Those that earn and create wealth above a “poverty level” pay taxes and support the government with monies. Those that earn and create wealth below a “poverty level” can apply for a subsidy to help them. How any individual spends the money at their disposal is their business and not that of government.

The subsidy that is received by the poor is designed such that any person that is willing to work and earn an income will always have more disposal money to spend. The more money they make the less subsidy they receive but that ratio is not dollar for dollar. So a person earning a dollar may only lose 60 cents in subsidy. Thus every person has incentive to work for more money. Note that this would eliminate the need for a minimum wage. Also note that to qualify for a tax subsidy, one must be a citizen.

The Traveler

[Elphaba]

Those that earn and create wealth below a “poverty level” can apply for a subsidy to help them.

No one below a "poverty level" will ever earn and create wealth.

<snip>

The subsidy that is received by the poor is designed such that any person that is willing to work and earn an income will always have more disposal money to spend.

Those obnoxious poor people! But you're right. They won't get off their bums and do anything about it on their own. So, we've got to make them do it, don't we? Your idea of a subsidy is brilliant!

The more money they make the less subsidy they receive but that ratio is not dollar for dollar. So a person earning a dollar may only lose 60 cents in subsidy. Thus every person has incentive to work for more money. Note that this would eliminate the need for a minimum wage.

Wow, I am just astonished at the elegance of your solution. And best of all, these poor people won't know they're being manipulated. No miminum wage--you are a genius!

Of course your simplistic, and insulting solutions to the problem of the "poor people," will not solve anything. There are a myriad of reasons why people are poor, and your belief that a subsidy will solve the them belies your complete ignorance of the problem.

Don't get me wrong. There are people who are poor because they want to mooch off of other people, because they are lazy and could not care less. They exist, and I do not deny that. And to that I say so what?

We've been her before, and I think I've figured out what bothers me so much when you discuss the poor. It's what I perceive as a completely lack of dignity you have for these people. Maybe it's there, but I seriously do not see it.

To you, the poor are a problem that YOU feel YOU have the answers to fix. Do you hear any dignity in that?

Elphaba

[Traveler]

A note to the forum - I have blocked Elphaba post. Of course anyone that wishes can respond to her post but I ask you to please do not attempt to explain any of my post or concepts to Elphaba - If you want to express your opinions that is your concern. I am very capable of expressing my personal opinions. Thank you

The Traveler

[a-train]

I think the solution that is the most humanitarian, the most fair, the most respectful to all, and the most efficient is for governement to get out of the equation altogether. Eliminate the income tax and return to real money. A person's personal labor and the fruits thereof are their own. Any system that deprives them of this liberty is either robbery or slavery.

When our nation was born, Americans were paid with real money that had intrinsic value, not fiat currency. There was no income tax. There was no welfare state. A return to this would be a return to prosperity. Americans could afford to bless one another working in charity more. Individual Americans would be empowered, not corporations or bureaucracies which are the only real beneficiaries of the unconstitutional redistribution of wealth that goes on in this country.

As our government takes more and more from American pockets, it crushes the genuine humanitarian efforts of free citizens and replaces that work with the ineffective centrally controlled efforts of the government. And all the while we are told that American's are greedy and will withhold their substance. No better example is available to my mind within recent years than the image of the private organizations and individuals who helped the victims of Katrina while government officials played poor politics and pointed fingers. And while people stood waiting to be delivered from the disaster, our government did more to slow efforts to save than to save.

Social Security is a disaster and we have known it for decades. Government efforts to offer more healthcare have proven to only increase the number of the uninsured as people have less and less income while taxes increase.

Solution?

Real Money.

No Federal Reserve.

No IRS.

No Social Security.

No Medicare.

No Medicaid.

No welfare state.

Give America back her financial Independence.

-a-train

[WANDERER]

I don't really know what the solution to poverty is...I find it complex and when I start helping individuals it becomes hard to see general solutions.

In countries where they don't have these things in place, does it work?

[Dr T]

I think the Bible says there will always be the poor. Maybe someone knows the reference.

[MorningStar]

A-train, that would be an interesting system to try. The poor would probably be more likely to do their part because those willing to help them would stop helping if they were just looking for a hand-out. With the government welfare system, there isn't that much motivation for people to get off welfare. My husband used to work for a maintenance program for the city - it had reduced costs for low income people. He ran into so many people who were just sitting there watching Judge Judy and doing drugs while he was there fixing their stuff for a really cheap rate.

[Moksha]

Did you all know that many of the poor in the US are disabled and elderly?

[a-train]

The system I am advocating would not be a first try. 19th Century America was based on a free system. Churches and other organizations funded hospitals and welfare providers throughout the country. Individuals were more financially capable of providing for their elderly family members as their labor wasn't taxed and their dollar wasn't inflated.

Imagine for a moment how much more your fast offering might be if the taxes taken from you were left in your pocket. Imagine how much easier retirement would be if prices didn't inflate beyond your wildest dreams during your most elderly years. This is what it was like to live in the 19th Century before ideals of socialism swept over American policy.

Imagine the success of privately owned organizations built on the donations of caring individuals without competition from inefficient government bureaucracies whose main beneficiaries are profit taking corporations under government contracts.

Corporations and governments are incapable of charity, humanity, or concern. We have replaced the good works of the people with the cold failures of corporate socialism. God bless America.

-a-train

[Alaskagain]

Did you all know that many of the poor in the US are disabled and elderly?

I was curious, so I found Census Report on Poverty for 2006:

http://www.census.gov/prod/2007pubs/p60-233.pdf

On page 19 is stated:

"Both the poverty rate and the number in poverty decreased for people aged 65 and older (9.4 percent and 3.4 million in 2006, down from 10.1 percent and 3.6 million in 2005.)

So, 9.4% of all of the people considered to be in poverty, are the "elderly" (although the more time passes, the harder it is for me to think of age 65 as "elderly":)). Am I reading that correctly? 9.4% of all in poverty?

I could not find a percentage for those who are disabled, although disability benefits were included in the measurements of income, there does not seem to be a breakdown for this category, that I see. Maybe those stats are elsewhere?

On page 22, I found this:

"Work Experience

People 16 and older who worked some or all of 2006 had a lower poverty rate than those who did not work at any time (5.8 percent compared with 21.1 percent) (Table 3).

The poverty rate among full-time year-round workers (2.7 percent) was lower than the rate for those who worked part-time or part-year (12.6 percent) in 2006. In addition, among people 16 and older, those who did not work in 2006 represented 43.1 percent of people in poverty, compared with 25.1 percent of all people."

The more one works, the lower his poverty rate?

Oh.

(I realize with compassion that there are many who cannot work.)

[FrankJL]

The more one works, the lower his poverty rate?

Oh.

Imagine that...

[Traveler]

I think the Bible says there will always be the poor. Maybe someone knows the reference.

Mark 14:7

Also please note that by the ancient biblical standards there are no poor in the USA.

The Traveler

[Traveler]

Did you all know that many of the poor in the US are disabled and elderly?

You might be interested to know that in 1960 that 60% of the poor in the US were elderly.

The Traveler

[Traveler]

The system I am advocating would not be a first try. 19th Century America was based on a free system. Churches and other organizations funded hospitals and welfare providers throughout the country. Individuals were more financially capable of providing for their elderly family members as their labor wasn't taxed and their dollar wasn't inflated.

Imagine for a moment how much more your fast offering might be if the taxes taken from you were left in your pocket. Imagine how much easier retirement would be if prices didn't inflate beyond your wildest dreams during your most elderly years. This is what it was like to live in the 19th Century before ideals of socialism swept over American policy.

Imagine the success of privately owned organizations built on the donations of caring individuals without competition from inefficient government bureaucracies whose main beneficiaries are profit taking corporations under government contracts.

Corporations and governments are incapable of charity, humanity, or concern. We have replaced the good works of the people with the cold failures of corporate socialism. God bless America.

-a-train

The economy of the USA during the 19th century was more recession and depression than prosperity, over 50% of the banks failed and those that invested lost their entire life savings. More than 60% of farmers lost their farms (as did the Smith family twice). It was not until the 20th century that the federal government guaranteed and backed banks. And if I remember correctly the average life expectancy was less than 40 years of age.

The concept of allowing business to operate without government regulation has not done well in just the last year. Two of the USA largest lending institutions booked over 20 billion dollars in loss. Thousands have lost their jobs and hundreds of thousands lost their homes and the economy of the entire industrialized world is now at risk. Not smart and it could get worse. I remember reading about a CEO that gave back over 700 million dollars and it was agreed that no “Laws” were broken so no prosecution. He took over 700 million that did not belong to him and no laws were broken?

There needs to be some serious changes or the dollar will continue to shrink and the USA will cease to be a dominate power or even a major industrialized nation. How many products do you know of that are made (not assembled) in the USA? The largest contributor to the GNP? - are the pharmaceuticals.

Lets put more people to work. Once we convince this nation to work there will be a difference.

The Traveler

[cjcampbell]

...

Negative income tax changes this need of government control over people. This is how it works. Those that earn and create wealth above a “poverty level” pay taxes and support the government with monies. Those that earn and create wealth below a “poverty level” can apply for a subsidy to help them. How any individual spends the money at their disposal is their business and not that of government.

The subsidy that is received by the poor is designed such that any person that is willing to work and earn an income will always have more disposal money to spend. The more money they make the less subsidy they receive but that ratio is not dollar for dollar. So a person earning a dollar may only lose 60 cents in subsidy. Thus every person has incentive to work for more money. Note that this would eliminate the need for a minimum wage. Also note that to qualify for a tax subsidy, one must be a citizen.

The Traveler

The trouble with this "subsidy" for the 'poor' is it is paid with money that the government seized at gunpoint from the 'rich.' Talk about oppressive government control!

If three guys get together and rob a fourth guy and then split up the money equally among themselves, we call it robbery. When three million people get together to rob a fourth million and split it up among themselves, we call it democracy. But the only real difference is the scale of the robbery. The misery, oppression, and violation of basic human rights remains the same.

You should help the poor because you think it is the right thing to do, not because someone else thinks it is the right thing for you to do.

[a-train]

The economy of the USA during the 19th century was more recession and depression than prosperity, over 50% of the banks failed and those that invested lost their entire life savings. More than 60% of farmers lost their farms (as did the Smith family twice). It was not until the 20th century that the federal government guaranteed...

If you will examine your statements about the 19th century, you will see that the trouble in all cases was the same: DEBT.

What so many have called 'the business cycle' is actually the debt cycle. Debt creates artificial economic advance which accelerates until credit limits are reached and then comes the slow down. If nobody was borrowing money or paying interest, growth in the economy would be real. We would not see these cycles of tremendous growth followed by recessions or depressions.

Now, we WOULD still have times of plenty and times of famine based soley on environmental conditions. That cannot be changed. But the solution is to save real assets, rather than borrow in times of famine. Nobody likes to hear this sort of reality check. But, if we lived within our means, saved real money, and never borrowed or lent on interest, and helped one another out, we would have tremendous prosperity. Many achieved this in the 1800's. Today, this is far more difficult because of our current monetary policy in the U.S.

As far as government regulation in business and the economy goes, I believe it is government intervention that has caused all this trouble, not the opposite. This is why these guys get away with such gigantic crimes, the government is in on it.

-a-train

[Traveler]

If you will examine your statements about the 19th century, you will see that the trouble in all cases was the same: DEBT.

What so many have called 'the business cycle' is actually the debt cycle. Debt creates artificial economic advance which accelerates until credit limits are reached and then comes the slow down. If nobody was borrowing money or paying interest, growth in the economy would be real. We would not see these cycles of tremendous growth followed by recessions or depressions.

Now, we WOULD still have times of plenty and times of famine based soley on environmental conditions. That cannot be changed. But the solution is to save real assets, rather than borrow in times of famine. Nobody likes to hear this sort of reality check. But, if we lived within our means, saved real money, and never borrowed or lent on interest, and helped one another out, we would have tremendous prosperity. Many achieved this in the 1800's. Today, this is far more difficult because of our current monetary policy in the U.S.

As far as government regulation in business and the economy goes, I believe it is government intervention that has caused all this trouble, not the opposite. This is why these guys get away with such gigantic crimes, the government is in on it.

-a-train

How can there be investment on one side and not debt on the other? What is the difference between “return” on investment and interest?

Can you point out to me any major private business venture of the 19th century that had the best interest of their workers in mind? Do you know why there was blood shed in forming unions? Should government require proper labeling? It was not required in the 19th century. Should government prevent addictive drugs like coke from being put into drinks and sold as safe and helpful (healthy) to the public – Do you know what business but in Coke during the 19th Century?

The Traveler

[Moksha]

I was curious, so I found Census Report on Poverty for 2006:

http://www.census.gov/prod/2007pubs/p60-233.pdf

On page 19 is stated:

"Both the poverty rate and the number in poverty decreased for people aged 65 and older (9.4 percent and 3.4 million in 2006, down from 10.1 percent and 3.6 million in 2005.)

So, 9.4% of all of the people considered to be in poverty, are the "elderly" (although the more time passes, the harder it is for me to think of age 65 as "elderly":)). Am I reading that correctly? 9.4% of all in poverty?

(I realize with compassion that there are many who cannot work.)

I would read that 9.4% to mean the total of all elderly, rather than the total for all the poor. I really do not know the exact percentage of the Elderly and the Disabled in the total percentage, just that when many begin their deliberations as to how these people should live their lives, these two categories need to be reckoned with.

[Elphaba]

Traveler: You might be interested to know that in 1960 that 60% of the poor in the US were elderly.

Actually, according to the census records Alaskagain provided, the poverty rate for people 65 years and older in 1959 was 35 percent, not the 60 percent you wrote of above.

And then in 2006 it had reduced to 9.4 percent.

Additionally, all other indicators in the report showed poverty had reduced in the last fifty years.

Elphaba

[cjcampbell]

One thing to remember about the elderly is that income is not a good indicator of wealth. Many elderly fall below the poverty line, but in fact few would consider them poor. I know multi-millionaires who have almost no income. They tie up their estates in trusts and other vehicles in order to mitigate estate taxes. So the trust gets the income, not the person. The little income they have is usually retirement pensions and insurance annuities.

Their expenses are smaller, too. Their homes are paid off. They are not buying new cars. All their medical is covered.

This is not to say that poverty is not a problem among the elderly. But the statistics can be grossly distorted by arbitrary definitions of poverty. I can guarantee, though, that if you do not accumulate savings for your old age, continually re-finance your house so that it is never paid off, insist on buying a new car every few years, etc., that in old age you will indeed face extreme poverty.

[Traveler]

The trouble with this "subsidy" for the 'poor' is it is paid with money that the government seized at gunpoint from the 'rich.' Talk about oppressive government control!

If three guys get together and rob a fourth guy and then split up the money equally among themselves, we call it robbery. When three million people get together to rob a fourth million and split it up among themselves, we call it democracy. But the only real difference is the scale of the robbery. The misery, oppression, and violation of basic human rights remains the same.

You should help the poor because you think it is the right thing to do, not because someone else thinks it is the right thing for you to do.

I do not disagree with you entirely. There is a little book called “The Law” written by Frederic Bastiat that purports your notion of legal plunder. It is one of my favorite books on defining good law. One thing we all should have learned from economics 101 is that nothing is free – somebody pays for everything. The other thing we should have learned is that the rich pay for precious little; that is why they are rich. On the other hand the poor pay for a great deal; that is in part of why they are poor.

Part of the problem is that we need a bridge to get us from where we are currently to a position of a more ideal economy – if such a thing is possible.

In your economic example every dollar the poor receive must come from the wealthier and every one of those dollars is for ever lost. That may not be entirely true. I believe there are many examples contrary to this model. But let us think instead in terms of cooperative investments in a human trust. If a community pools resources for fire protection the cost of savings is enormous; compared to each property owner responsible for their own. The concept of collective sharing needs and responsibilities is the very engine of community and society.

However, if there is to be any community or society there must be rules established for the sharing of needs and responsibilities. I submit that the best way to establish such rules is by the “power” of the majority. I do not say that it is the perfect way or always the best way but that it is overall the best that I have been able to determine.

It would appear to me that you believe that if you have the power that you should exercise that power for your benefit and your wants and desires. And just so you know – I oppose such methods of social engineering.

The Traveler

[Moksha]

I think it was in Cleon Benson McConkie's book, Why Burden Your Pocketbook with Ethics, that the suggestion was made for Conservatives to consider setting adrift the poor and destitute on the ice-flows of Canada. I was wondering if that idea has gathered any momentum here?

[cjcampbell]

I do not disagree with you entirely. There is a little book called “The Law” written by Frederic Bastiat that purports your notion of legal plunder. It is one of my favorite books on defining good law. One thing we all should have learned from economics 101 is that nothing is free – somebody pays for everything. The other thing we should have learned is that the rich pay for precious little; that is why they are rich. On the other hand the poor pay for a great deal; that is in part of why they are poor.

Nonsense. Name one thing that the poor pay that the rich do not pay for. I have never heard such a ridiculous thesis in my entire life.

Part of the problem is that we need a bridge to get us from where we are currently to a position of a more ideal economy – if such a thing is possible.

In your economic example every dollar the poor receive must come from the wealthier and every one of those dollars is for ever lost.

I think you are confused. Your argument is an attempt to justify robbing a man because you plan on patronizing his store later. Your ideal economy appears to be that those who refuse to work should benefit from the labors of those that do.

That may not be entirely true. I believe there are many examples contrary to this model. But let us think instead in terms of cooperative investments in a human trust. If a community pools resources for fire protection the cost of savings is enormous; compared to each property owner responsible for their own. The concept of collective sharing needs and responsibilities is the very engine of community and society.

However, if there is to be any community or society there must be rules established for the sharing of needs and responsibilities. I submit that the best way to establish such rules is by the “power” of the majority. I do not say that it is the perfect way or always the best way but that it is overall the best that I have been able to determine.

It would appear to me that you believe that if you have the power that you should exercise that power for your benefit and your wants and desires. And just so you know – I oppose such methods of social engineering.

No, what I object to is armed robbery. So now you are claiming that those who object to being robbed are engaging in social engineering?!? What an incredibly arrogant thing to say! I have no objection to voluntary cooperative agreements. If people in a community want to get together and build a road or build a fire station that is one thing. But a negative income tax is blatant theft -- there is no mutual benefit. It takes money, at gunpoint, from those that earned it for the sole benefit of those that did not. There is no just rationalization for armed robbery.

[cjcampbell]

I think it was in Cleon Benson McConkie's book, Why Burden Your Pocketbook with Ethics, that the suggestion was made for Conservatives to consider setting adrift the poor and destitute on the ice-flows of Canada. I was wondering if that idea has gathered any momentum here?

That is an outrageous suggestion, if he really made it. No one is suggesting that the poor and destitute should be left to starve. However, the poor are not helped in any way by armed robbery of the rich. Even if they were, it would not be just.

The poor should be educated and made productive and paid a proper wage.

The number one cause of poverty in the US is divorce. Every CPA and divorce lawyer knows this. You can take almost any millionaire couple and impoverish them with divorce. Poverty is caused by single parent households. It is caused by illicit use of drugs. It is caused by sloth. It is caused by corruption and exploitation and slavery. It is caused by every evil that the prophets have warned us against since the time of Adam. If you want to fight poverty, then fight evil. Then poverty will disappear on its own.

I cannot cure worldwide poverty any more than I can take away everybody's free agency and cure evil. But I can work to keep myself from becoming poor. I can teach others who are willing to listen from becoming poor. I do not pretend that I can cure poverty or even alleviate significantly with a negative income tax or any other government program. But I can fight it on an individual level, one person at a time. So that is what I do.

[Moksha]

That is an outrageous suggestion, if he really made it. No one is suggesting that the poor and destitute should be left to starve.

As far as I know, there is no Cleon Benson McConkie. The name just sounded worthy of such a fictional book. However, this issue is real since many suggestions on what to do with "those people" frequently have a bottom line approach to casting them adrift from the help they may need.