Negative income tax: A radical solution to welfare

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Throughout history, poverty, economic inequality, and oppression by ruling classes have been recurring forces that drive social change and revolutionary movements. Peasant revolts have frequently emerged to challenge economic disparities and advocate for the rights of lower classes, often aligning with populist movements dedicated to the welfare of the broader population. While some uprisings sought to establish peasant-led governance and oppose wealthy landlords, economic inequality persisted despite these efforts.

Capitalism began to emerge between the 16th and 18th centuries, reaching its pinnacle in the 19th century. Even Karl Marx, one of capitalism’s most renowned critics, acknowledged capitalism as the most productive economic system the world had ever seen. However, Marx was critical of its inability to resolve fundamental socio-economic issues such as poverty and economic inequality. He extensively analyzed the conditions of the working-class under capitalism, rationalized the concept of workers’ alienation, and advocated for the dictatorship of the proletariat as a transitional phase toward a stateless society, free from poverty and inequality.

In the 20th century, the Bolsheviks expanded Marxist ideology by implementing state socialist policies in the USSR. The USSR then became involved in acts of repression, several genocides, and influenced totalitarian states such as the Burmese Way to Socialism, North Korea, and Pol Pot’s Cambodia. Regimes adopting Marxism-Leninism often succumbed to extensive bureaucratization, leading to governance dominated by a new bureaucratic class and systemic economic failures. Corruption became pervasive, exacerbating the very issues these movements sought to resolve. Consequently, socialist experiments intended to address economic injustice frequently devolved into authoritarianism and inefficiency, undermining their original objectives. Alternatively, western social democratic nations that adopted welfare systems achieved notable success in maintaining economic stability and social well-being through a mixed economy approach. This model aligns with the principles advocated by non-Bolshevik socialist groups such as the Fabians, social democrats, and democratic socialists.

The welfare system, since being led by the government which employs a lot of employees for various welfare programs some of which are not effective and inefficient, has been co-opted by the professional managerial class, notably Keynesian progressives, resulting in an overly bureaucratic and inefficient structure. Following the economic recessions tied to the New Deal in the U.S. and post-World War II policies, Keynesian economics gained widespread adoption globally. This framework promotes increased government spending and reduced taxes during economic downturns to stimulate demand, aligning closely with social democratic welfare models. Over time, Keynesian capitalism became the preferred economic strategy of the ruling classes, positioning state intervention as the primary means to address poverty and economic inequalities. Social democrats, progressive liberals, and far-left Marxist groups united around shared values of “big government” and expansive welfare systems. Despite these efforts, poverty and economic inequalities have continued to exists. Student activists, often possessing advanced degrees in disciplines such as history, anthropology, and political science—typically supported by government loans or welfare programs—have become prominent participants in advocacy groups, alongside academics. These groups are largely funded through taxation, which is primarily borne by the working class. This dynamic has contributed to growing skepticism among workers toward expansive government programs, taxation policies, and the intricate nature of welfare systems. Moreover, knowledge about government funding opportunities is often confined to activists and professionals in sectors like non-governmental organizations (NGOs), academia, and policy think tanks. Consequently, financial resources tend to be accessed primarily by those with the requisite knowledge of grant application processes, rather than by those who are most in need, leading to perceptions of systemic inequity.

There has been notable resistance to the professional managerial class of both sides, the state, corporate media, and monopolistic enterprises, which collectively exert power over the broader population, particularly the working class. While the working class struggles to afford rent and juggles multiple jobs, Keynesian progressives benefit from funding to deliberate strategies for state-led economic stimulus. Meanwhile, large corporations leverage charitable donations to secure tax deductions. This dynamic reflects the functioning of the mixed economy, particularly Keynesian capitalism, which presents itself as a remedy for poverty and economic injustice. However, it’s rational to argue that Keynesian welfare system perpetuates systemic inequities and enables such injustices to persist unnoticed with temporary band aid fixes. Prominent individuals like Julian Assange, George Carlin, and Edward Snowden played pivotal roles in broader libertarian efforts to expose such facts across the political spectrum. Assange revealed the collaboration between mainstream media, state entities, pressure groups, and think tanks to conceal truths and manipulate public opinion through narratives crafted by the warmongering ruling class. Snowden exposed the welfare state’s extensive surveillance systems, which targeted law-abiding citizens, including migrants, by exploiting its access to private information. 

Addressing economic inequalities and poverty has remained a core issue across diverse political and economic ideologies. However, many of these political ideologies and systems have unintentionally worsened the situation by increasing governmental authority, often at the expense of individual civil rights. While many libertarians with conservative leanings have historically dismissed the government’s role in addressing poverty and economic inequalities, misusing “free market capitalism” to advance their social class interests, notable free-market economists like Milton Friedman proposed a more pragmatic approach. Friedman advocated for a system that minimizes bureaucracy while enabling the state to address poverty and economic disparities. The concept, termed “Negative Income Tax,” emphasizes limited government intervention while making sure everyone gets a certain basic income threshold, focusing solely on defending private property, safeguarding individual civil rights, and upholding democratic principles. Similar ideas have been championed by progressive libertarian groups, such as Pirate Party Australia, and intellectuals with anarchist inclinations, including David Graeber. An effective solution to these challenges is the introduction of a basic income via a negative income tax, though the specifics of its implementation remain open to debate. In essence, a negative income tax provides payments to individuals whose earnings fall below a specified threshold, effectively replacing the need for them to pay taxes. These payments are to be funded by taxing individuals with significantly higher incomes above a certain threshold. This system simplifies and consolidates welfare and tax processes, ensuring a consistent and equitable approach. This approach alleviates the need for the government to independently manage numerous welfare programs, thereby significantly reducing bureaucratic inefficiencies and the potential for corruption in practice.

Introducing a basic income through a negative income tax could make welfare and income tax systems simpler, more consistent, clearer, and fairer by cutting out bureaucratic layers. This direct approach to poverty and inequality offers a practical alternative to current welfare programs. Interestingly, this idea could bridge divides between libertarians of different political leanings, as it supports individual rights and democracy while aiming for a smaller but more effective and transparent government.