A beautiful idea

Yesterday, we posted a link to our most recent work-in-progress entitled “Guaranteed Income: Chronicle of a Political Death Foretold,” which  revisits the rise and fall of The Family Assistance Act of 1970. Had this historic bill been enacted into law, it would have provided every poor family with children a guaranteed minimum income. My history of this guaranteed income bill is structured as a three-act play. Here is an excerpt from Act I (footnotes are below the fold):

“The hero of our three-act play is not a person, but rather an idea: a guaranteed minimum income to all persons via a negative income tax. The idea of a guaranteed income has an illustrious pedigree. Historical figures as diverse as Bertrand Russell, Edward Bellamy, and Thomas Paine—polymath, utopian planner, and patriot alike—all advocated for some form of universal basic income in their day.[a] But it was the conservative economist and future Nobel Laureate, Milton Friedman, along with his wife Rose Friedman, who coined the term ‘negative income tax’ in his best-selling book Capitalism and Freedom and in the popular press.[b]

“Although the idea of a reverse income tax predates Friedman,[c] it was Milton and Rose Friedman who brought this idea to a popular audience and made it palatable to social conservatives. If Capitalism and Freedom was destined to become Friedman’s most famous work,[d] the negative income tax chapter of his book put forth one of his most original, provocative, and beautiful ideas.[e] In summary, Friedman proposed that the federal income tax should be graduated, not only upward, but also downward. Under Friedman’s proposed negative income tax scheme, a person without any income would receive a modest guaranteed income of $300 per year.[f] Later, Friedman would revise this amount upward, recommending a minimum guaranteed income of $1,500 for a family of four.[g] Friedman’s negative income tax thus inspired the 1970 guaranteed minimum income bill ….”

[I will post an excerpt from Act II in my next post.]

Image result for negative income tax

           [a]  See Bertrand Russell, The Proposed Roads to Freedom, 109–10 (2004); see also Thomas Paine, Agrarian Justice (1797), in John Cunliffe & Guido Erreygers, eds., The Origins of Universal Grants 3–16 (2004); Edward Bellamy, Looking Backward: 2000–1887 (Daniel H. Borus ed., 1995).

           [b]  See Milton Friedman, Capitalism and Freedom 191–94 (40th Anniversary ed. 2002); see also Milton Friedman, Negative Income Tax—I (1968), in Milton Friedman, Bright Promises Dismal Performance: An Economist’s Protest 348–50 (William R. Allen, ed., 1972); Milton Friedman, Negative Income Tax—II (1968), in id. at 351–53. Professor Friedman would be awarded “The Prize in Economic Sciences in Memory of Alfred Nobel” in 1976. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, Columbia Economics, http://econ.columbia.edu/faculty/nobel-laureates/the-sveriges-riksbank-prize-in-economic-sciences-in-memory-of-alfred-nobel/ [http://perma.cc/96HA-S2KD]. Although Milton Friedman’s name appears as the sole author on the front cover of Capitalism and Freedom, he wrote this book in collaboration with his wife, Rose D. Friedman. See Lanny Ebenstein, Milton Friedman: A Biography 140 (2007).

           [c]  See Burke & Burke, op cit. As an historical aside, the first Anglo-American person to propose a negative income tax as the mechanism for providing a guaranteed income was Lady Juliet Rhys-Williams. See Peter Sloman, Beveridge’s Rival: Juliet Rhys-Williams and the Campaign for Basic Income, 1942–55, 30 Contemp. Brit. Hist. 203, 203–04 (2016); see also Evelyn L. Forget, Canada: The Case for Basic Income, in Matthew C. Murray & Carole Pateman, eds., Basic Income Worldwide: Horizons of Reform 83 (2012).

           [d]  According to the University of Chicago Press, for example, Capitalism and Freedom has been translated into eighteen languages and has sold over 500,000 copies since its initial publication in 1962. See Friedman, Capitalism and Freedom, op cit.

           [e]  Friedman was one of the most (if not the most) prominent North American economists at the time. See, for example, the cover of December 19, 1969 issue of Time magazine, which is included in Appendix A to this Article.

           [f]  See Friedman, Capitalism and Freedom, op cit., at p. 192.

           [g]  See Friedman, Negative Income Tax—I, op cit., at p. 349.

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s