The author of the following article makes some interesting points:
Against the Negative Income Tax
Would $900 per person give you "the freedom to elect to work less"? At its high water mark of roughly $2,000 per person, would you have had "the freedom to elect to work less"?
And as you'll note, the Alaska dividend floats year-to-year based on fund performance. Would a true guaranteed minimum income payment financed by taxes work the same way? I doubt it.
Alaska Dividend Blog
Against the Negative Income Tax
There were four large NIT experiments conducted in the U.S. between 1968 and 1980. These tested a wide variety of program variants among the urban and rural poor, in better and worse macroeconomic periods, and in geographies from New Jersey to Seattle. There was, and is, a lot of scholarly debate about many of the experimental results, and their potential application to policymaking. But there are two consistent findings across this body of experiments.
First, the tested NIT programs reduce number of hours worked versus the existing welfare system.
Second, the tested levels of progressivity of implicit tax rates did not get around this problem by encouraging work...
But what about the argument that there is an important benefit — namely, the elimination of the welfare bureaucracy and the dog’s breakfast of “food stamps, public housing, Medicaid, cash welfare, and a myriad of community development programs” that according to Sorman’s article accounts for $522 billion of annual federal spending?
... there is nothing inherent about an NIT that will prevent Congress from creating thousands of pages of special rules, exemptions, tax expenditures and so on, that are collectively just as convoluted as the current welfare system. After all, “tax each person a given fraction of income” is a pretty simple idea too, but look at the 2011 federal income tax code.
...a huge portion of the costs of the list of programs Sorman provides is health care. Suppose we gave every adult in America an annual grant of $10,000, and some person who did not buy health insurance with it got sick with an acute, easily treatable condition. Would we really bar them from any urgent medical care and just say “Tough luck, but it’s time to die”? Even if you think this would be a desirable public policy, it’s not plausible that the existence of an NIT would somehow change the political calculus enough to make it substantially more of a reality than it is today.
Inevitably, and justifiably, the taxpayers who will have to work more overtime, take shorter vacations, and eat out less in order to come up with the taxes to pay for an NIT or any other welfare system, will demand some degree of accountability from the recipients; which will, in turn, require monitoring, enforcement, adjudication, and the other manifestations of a welfare bureaucracy.
Regarding the article originally posted, I had a good chuckle over the author's use of the Alaska Permanent Fund as some sort of shining example of the success of a guaranteed minimum income...as if a dividend payment tied to oil revenues and stock market performance is equivalent to an income payment tied to taxes that are taken out of my pocket. "Joint ownership" my derrière.The NIT is a fascinating and useful thought experiment, but it’s not a practical public policy.
Would $900 per person give you "the freedom to elect to work less"? At its high water mark of roughly $2,000 per person, would you have had "the freedom to elect to work less"?
And as you'll note, the Alaska dividend floats year-to-year based on fund performance. Would a true guaranteed minimum income payment financed by taxes work the same way? I doubt it.
Alaska Dividend Blog
On October 3, 2013, most Alaskans received their yearly dividend check—Alaska’s small, nearly unconditional, and nearly universal basic income. This year the dividend was $900, up slightly from last year’s dividend of $878, but still far below the level dividends reached at the height of the stock market bubble in 2008. Now that the fund that finances the dividend has recovered from the financial crisis of 2008-2009, dividends are like to rise over the next few years. However, the long-term future of the dividend is in danger from falling oil revenues.
Every U.S. citizen who meets Alaska’s residency requirement (and fills out forms verifying their residency) receives a yearly dividend from the state government. A dividend of $900 per person, therefore, amounts to $4,500 for a family of five. The dividend is financed by the Alaska Permanent Fund, a sovereign wealth fund created out of state oil revenues in 1976. Since then, each year a small fraction of Alaska’s oil revenues have been deposited into the fund, which as grown to $48.5 billion as of December 1, 2013. The fund began paying dividends in 1982. Nearly 600,000 Alaskans received the 2013 dividend.
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