The Daily Caller

The Daily Caller
              FILE - In this Friday, March 22, 2013, file photo, the exterior of the Internal Revenue Service building in Washington, is shown. The Obama administration, on Tuesday, Nov. 26, 2013, launched a bid to rein in the use of tax-exempt groups for political campaigning. The effort is an attempt to reduce the role of loosely regulated big-money political outfits like GOP political guru Karl Rove  FILE - In this Friday, March 22, 2013, file photo, the exterior of the Internal Revenue Service building in Washington, is shown. The Obama administration, on Tuesday, Nov. 26, 2013, launched a bid to rein in the use of tax-exempt groups for political campaigning. The effort is an attempt to reduce the role of loosely regulated big-money political outfits like GOP political guru Karl Rove's Crossroads GPS and the pro-Obama Priorities USA. The Internal Revenue Service and the Treasury Department said they want to prohibit such groups from using "candidate-related political activity" like running ads, registering voters or distributing campaign literature as activities that qualify them to be tax-exempt "social welfare" organizations. (AP Photo/Susan Walsh, File)   

Why a guaranteed minimum income is a terrible idea

Photo of John Linder
John Linder
Former Congressman

On Monday, CNN’s website made a big splash about income inequality. Being the day before Tax Day, I expected them to point out that the top 10 percent of the income earners pay 71 percent of all income taxes and the bottom 43 percent of the income earners pay none.

Well, they didn’t. They ran a piece by David Wheeler, a journalism professor from Asbury University in Lexington, Kentucky, that argued on behalf of an old and discredited idea, that nonetheless has experienced something of a resurgence lately, even on the right – a government-guaranteed annual income.

The introduction to the piece featured a picture of Cornelius Vanderbilt’s residence in New York City in 1908. That picture was followed by 23 more juxtaposing poverty and wealth. You get the idea. Some are more equal than others.

Wheeler breathlessly promised that something to relieve the “fear, stress and humiliation caused by unemployment (and underemployment) can be eliminated with a simple solution.”

His gauzy explanation of Brazil’s program “lifting many people out of poverty” and another pilot project “showing promising results so far” is faint praise for such a gigantic governmental offering.

The plan would provide every American with a monthly stipend such that “their basic economic needs are being met.” We are assured it would be “cheaper and much more effective than our current malfunctioning safety net, which costs nearly $1 trillion per year.”

As luck would have it, we can come to an actual number on his proposal. The federal government determines each year what a person would have to spend to pay for their basic essentials. For 2014 that number is $11,490. Multiply that by 317 million Americans and you have a simple straightforward program costing $3,642,330,000,000, or 97 percent of this year’s total budget.

Not everybody would be receiving full benefits, but it’s not “cheaper.” How might this scheme work? The Earned Income Tax Credit was designed to do for “the working poor” what Wheeler wants to do for all. Under the EITC low income tax payers receive a tax credit that exceeds the taxes they have paid. It costs taxpayers about $65 billion a year and approximately 25 percent of that is sent to people who are not eligible, but have learned how to game the system.

Medicare was designed to take care of the healthcare needs of seniors. Healthcare security was borne of the same noble sentiments as Mr. Wheeler’s income security. It is estimated that as much as $40 billion will be paid out due to fraud in 2014.

It is likely that the IRS would be the responsible agency to handle any “negative income tax” or other version of a guaranteed income. The IRS has proven to be totally corrupt, but they are not alone among government agencies. None are efficient. An error rate of just five percent in a program this size would waste $200 billion each year.