Replace the welfare state with a Negative Income Tax

Economy
1

In 2024 the U.S. spent around $3 trillion dollars on welfare programs and social security. That is almost $10,000 per American or around $25,000 per person on these insurance/safety net programs. The issue is that most of that money is not getting to the hands of people that need it the most. I propose we transition away from our current means tested welfare/insurance system to a more efficient and effective Negative Income Tax!

The best way to do this would be to slowly cut benefits received by 10% per year until complete elimination on the tenth year of all programs including Social Security and at the same time provide a Negative Income Tax increasing by 11% per year until maxing out on the 9th year.

The end Negative Income Tax program would work as follows, every citizen of the United States has a guaranteed yearly income of $1,500 per month with a phase out tax of 25%, that is to say any amount of money you make above that number would cause you to lose 25% of that income from your payout.

If you make $4,000 per month including your NIT payment ($2,500) income you would lose $625 from your $1,500 NIT and if you make $8,000 per month ($6,500) you would not receive a NIT payment because 25% of your non NIT income is more than your NIT payment, to be clear, this wouldn’t increase your taxes, you’d never owe into the system for making to much money.

I would also add to this changing tax policy to a flat 15% tax rate with no separation for capital gains income meaning your regular income is taxed less than NIT income, giving you an incentive to make more earned/invested income rather than relying solely on NIT, it also doesn’t punish you for making too much money like social security income can.

Since we are moving to a more universal safety net program there should be some stipulations put in for different scenarios like retirement, disability, medical expenses and dependents. The nice thing is with a NIT it is easy to customize how much people receive while keeping it fair. I think it makes sense retirees should receive an additional $750 bringing their NIT limit to $2,250 which is higher than the average social security income today while allowing them to work in retirement without penalty. The same should be done for any dependents probably closer to $500 per dependent while they are in your care.

This completely removes the need for a complicated tax system, simplifies and improves the government all while making sure money get to those that need it and doesn’t get to people who are already well off!

9 Likes
2

Social Security is not a “safety net” program or a type of welfare. The average SS recipient has paid in over $150,000 in their lifetime and only has a shot at withdrawing that, and more, if they live long enough.

19 Likes
3

What term would you use to describe programs that give money directly to people? I’m willing to change the wording I’m just not sure what phrase would work best

4

And I understand differentiating it because you paid in but you have to realize, you paid taxes for all of those other programs too, whether directly or indirectly

1 Like
5

I paid taxes for the needy to recieve an entitlement and I paid taxes for my future retirement— whether i became needy or not. My social security check is not a handout or charity or publicly funded financial support. The sum I draw is strictly and mathematically determined based on how much I paid in and not dependent on taxpayer pathos.

9 Likes
6

The F and I in FICA stands for Federal Insurance. Social Security is a social insurance, earned benefit program.

3 Likes
7

I just edited it, hopefully that’s better

8

This is actually a good point, would you say you’d prefer the way we have it set up now or would you prefer a flat and consistent income for everyone in retirement like I mentioned?

9

The most interesting thing about your NIT proposal is the possibility of everyone filing a federal return. We’d see who the needy are better. In any given year, 40% of adult Americans (legally) don’t file a tax return because of low income.

4 Likes
10

That’s true, it would also make it much easier to track economic data since everyone would report their incomes, I also like that it doesn’t require means testing so no one is going to be denied or have to wait to get their coverage. If you’re laid off you’d just need to let the IRS know and they will change your payout. Any inaccuracies will also be recovered at the end of the year

11

What are you nuts. We paid into social security for 50 years.it is NOT Welfare. We will not be placed in the streets after collecting for 10years. We are too old to work. Your a disgusting disgrace . No one better touch social security except to increase it for those who live off less than 1,000 a month. SSA IS NOT WELFARE FOOL. This is the stupidest idea ever heard. Leave the elderly alone. Stop making life more difficult for them. You can’t get anymore of a bottom feeder going after the elder.

11 Likes
12

SSI is which is given to all senior immigrants that arrive to this country. I would like to know which country other than the USA gives immigrants a retirement income, Medicaid and Medicare . If their families bring them here, they have to support them.

5 Likes
13

Are you referring to SSI for immigrants? They also get Medicaid and Medicare even though they never worked in the USA.

1 Like
14

I paid into social security and Medicare since I was 17 years old. Rename it, call it what you want, it’s money owed to me for my retirement.

6 Likes
15

A few points.

  1. A person with high wealth, can have periods of low income. This plan diverts resources from the poorest, to give money to the wealthy who aren’t working because they don’t need to.
  2. That aside, giving less money to someone who has income, and taxing their income more, are equivalent. One may be better than the other work-psychology wise.
  3. You are essentially suggesting a specific form of universal basic income.

While I agree that need is difficult and expensive to assess. I don’t think “just give people money directly” is the best solution for all people, especially those with severe mental health issues, or who simply don’t have the time to figure out good ways to spend the money, because they can’t survive losing their job.

2 Likes
16

First ss is NOT welfare…and in my state not sure about others you only have 60 months in you lifetime…so you would be restarting that clock giving them double the income and double the time!

2 Likes
17

Sical security and Medicare we pay into every month our entire working years. We earned that money. Welar programs or free money and free health insurance does not require drugs test, only taxpayers pay for it, the system is grossly abused, we have 2nd and 3rd generations taking advantage of it, we have illegal criminals taking advantage of both, Free programs require a total overhaul.

2 Likes
18

Replace these systems with NOTHING AT ALL, you are your problem, I am my problem.

1 Like
19

I would suggest allowing Citizens to keep what they earned. It is after all their earnings and investments.

2 Likes
20

Governments use taxation to punish activities they wish to discourage, while providing tax rebates as incentives for activities they wish to promote. This is called Social Engineering.

A progressive income tax punishes ambition and hard work… while a welfare program rewards sloth.

The current system is completely dysfunctional. Government assumes that working people are “greedy” or “stingy” with THEIR money. So Government forcibly takes that money and re-distributes it (with their Bureaucrats taking a “cut”) to those lacking ambition and a work ethic… along with “some” money going to those truly in need some form of assistance.

Recognizing that there are people who legitimately need some form of welfare through no fault of their own (e.g., a disability), we must also recognize that when people are able to keep more of their own money, people with disposable income tend to give more to charities. Since charities are more efficient than Government… more dollars go to those who need help the most.

Government should eliminate the income tax (and the Social Security “ponzi scheme”) and promote charities to take over welfare (the more local the better).

3 Likes