Tuesday, April 19, 2011

Stroke of Boldness

Why Not Eliminate the IRS AND the Welfare Bureaucracy

IMG_0922Springtime is tax time. Dogwood Photo by Bob Kirchman

Once again American tax season has come upon us. Many have again put forth the idea of a simpler and fairer tax system. It is an idea that is gaining interest. Here's an interesting Article [click to read] about an idea put forth by Milton Friedman. His idea is both revolutionary and simple, a NEGATIVE income tax.

If the bureaucracy necessary to collect taxes is ridiculously complex, the bureaucracy necessary to redistribute makes our current system twice as cumbersome. Statistics tell us that about 30% of welfare dollars actually get to beneficiaries. The rest is consumed by the agencies that manage the programs.

"Republicans would do well to revisit Friedman’s alternatives. The most familiar is the school voucher, which students could use as tuition at any school, public or private, willing to accept them. But one of the most inventive and potentially effective of Friedman’s alternatives to statist bureaucracy receives far less attention than vouchers do. Liberals tend to dismiss Friedman as an extremist libertarian, a blind advocate of selfishness, an enemy of any kind of social help. This was always an absurd charge. In his 1962 book Capitalism and Freedom, Friedman acknowledged that some form of welfare was necessary in capitalist societies and that the state would likely play a role in its provision. The trick was to imagine a very different, radically improved, and more efficient form of welfare—what Friedman’s son, David, also an economist, calls “libertarian redistributionism.” What kind of program could help protect every citizen from destitution without granting excessive power to bureaucrats, creating disincentives to work, and clogging up the free-market economy, as the modern welfare state has done? Friedman’s answer was the negative income tax, or NIT." -- Guy Sormon

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