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A score of organizations—not least of which is the Federal Government's Office of Economic Opportunity—have encouraged the poor to drop whatever inhibitions they had about welfare. Sharp-eyed lawyers and organizers are discovering hidden benefits that scarcely anyone knew existed. Welfare officials, in turn, are being pressured to grant new benefits, such as money for telephones and Christmas gifts, so that life on welfare can more closely approximate life in the rest of America. Yet the welfare militants have more in mind than just getting a little more. By stretching the current system to its farthest limit, they reason, they will make it so expensive that the nation will have to search for an alternative.
And the alternative—some form of automatic income supplement, such as the negative income tax or family allowance—is what they are really after.
A Considerable Consensus
As it happens, so are many economists and Government officials, together with surprising numbers of business and political leaders. Milton Friedman, Barry Goldwater's conservative economist in 1964, has long called for what he terms the negative income tax. Yale's James Tobin, a leading liberal economist, has been an effective proponent of what is sometimes called the guaranteed annual income. Though the plans vary considerably in detail, the principle is the same: everyone is entitled to a basic income as a matter of right. Under Tobin's plan, the most carefully thought out, no family of four would receive less than $2,600 a year. As income rises, the payment from the Government would drop, until a breakeven point of $5,200 is reached. At $6,144, the family would start paying full taxes (see chart, following page). According to Tobin's arithmetic, no family would ever be better or as well off not working—as is often the case with today's welfare program—and work would always be encouraged with dollars.
While economists tend to favor the negative-income-tax principle, sociologists, most notably Daniel Patrick Moynihan, tend to prefer another kind of income supplement: family or children's allowances. Under this scheme, every family in the country, rich or poor, would receive a certain amount of money for each child. The affluent would return it with their income taxes, but those who really need it would keep it for basic needs. The main beneficiaries would be the children. No fewer than 62 nations, including Canada and all the countries of Europe, already give family allowances. The family allowance, unlike the negative income tax, could be sold politically as a program for children rather than the poor, and thus would probably be more acceptable to Congress and the public. A "negative income tax," on the other hand, sounds like what it is, an economist's conceit, while a "guaranteed annual income" suggests featherbedding on a grand scale.