Administrative Aspects of a Negative Income Tax

In recent years, there has been growing discontent with the nation's welfare programs. The resulting discussions have produced a broad range of criticisms. It is said that present programs do not reach all of the poor; that benefits are too small for many of those who receive them; that eligibility tests are demeaning and incentives for self-betterment are stifled, with the result.that too many people are "going on relief"; that family instability is encouraged, and that administration of the programs is inefficient and lacks uniformity. While agreement on the validity and importance of all these criticisms is lacking, there is nevertheless widespread interest in a reappraisal of our social welfare efforts. Present programs encompass a broad range of activities and benefits, including those aimed at providing money income through jobs and job training (Office of Economic Opportunity programs, for example), insurance against money income loss (social security and unemployment insurance), income in kind (housing, medical benefits, food stamps, and so forth), indirect benefits such as special tax provisions for the aged, and direct public assistance to various categories of the poorthe aged, the disabled, the blind, and dependent children. Certainly a sizeable effort has been made to alleviate poverty-and much has been accomplished-but few are satisfied with the results. Research and discussions on the subject have brought forth a variety of proposals for income maintenance. One of these, the proposal for a negative income tax, has sparked considerable interest in wide ranging segments of our society. It is, of course, an idea of particular interest to me because it has been proposed as an extension of the present tax system. The term "negative income tax" was developed from the notion that an individual whose income is too low to allow him to use all his income tax exemptions and deductions should receive from the federal government a payment determined by application of a negative tax rate to the unused value of those exemptions and deductions.1 Subse-