Friday, April 22, 2011

Negative Income Tax Is Lower Cost Way To Provide Government Benefits

My comment to Arnold Kling's post on Econlog, "Where is My Free Lunch?" about cost cutting and government programs:
Cutting costs is a good idea if one remembers that all government services and programs have intended economic and social benefits and that there is usually a more direct and lower cost way to achieve the same end goal.

Milton Friedman set out one way. He was in favor of a negative income tax that would give the "needy" money to spend. It is a low cost way to distribute funds to those who cannot afford food, healthcare, shelter, daycare, or who are unemployed, disabled, retired, etc.

The cost of using a negative income tax versus a government benefit program should be the basis and gold standard for determining the cost effectiveness of a specific program.

Since the IRS is already collecting taxes, the incremental cost to the government to administer a negative income tax is very low.

A negative income tax could replace many social and subsidy government programs at a lower cost with more funds reaching the intended beneficiaries.

Even if some of the beneficiaries spend wastefully, the final costs to the government would most likely be less than the cost to run the government benefits programs.

The government has too many programs with too many employees and bureaucracy spending too many dollars that do not achieve their intended social goals. A negative income tax is a more efficient, lower cost way to for the government to take care of those in need.
Also see my earler post, "Time To Consider A Negative Income Tax To Balance The Budget" on this blog.

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