The Freeman 1972 - The Ludwig von Mises Institute

104 THE FREEMAN Februaryoriginal monetary illustrations,proposed that the "break-off point"of their scheme. would be somethinglike the official "povertythreshold"income - which.is now(1972) about $4,320 for a nonfarmfamily of four. At this pointno NIT benefits would be paid. Ifthe family's income was only$3,320, falling short of the poverty-lineincome by $1,000, then a$500 NIT benefit would be paid.And if the family's earned incomewas zero, then a benefit of $2,160would be paid.But, of course, if no other governmentsubsidy were paid to thefamily (and the original NITsponsors proposed that their planbe a complete substitute for allother welfare payments) then thegovernment would be paying thepoorest families only half of whatits own administrators officiallydeclared to be the minimum onwhich such families could reasonablybe expected to live. How couldsuch a program be politically defended?As soon as the NIT programgets into practical politics, therefore,the pressure will be irresistibleto make the payment to afamily with zero income at leastequal to the official poverty-lineincome. If this means $4,320 fora family of four, say, then someNIT payment must be made toeach family until its incomereaches twice the official povertylineincome, or $8,640 for everyfamily of four. And this meansthat even if a family were alreadyearning much more than the officialpoverty-line income - say,$8,000 a year - it would still haveto be subsidized by the government."Everybody must be treatedalike."• 4. This would be ruinously expensive,but it is still not the end.The subsidized families would object to paying a 50 per cent incometax (as their spokesmen would putit) on everything they earned forthemselves. So they would be allowedto earn a certain amountentirely exempted from such a deduction.(Such an exemption hasalready been granted on self-earningsof Social Security recipients,and it is proposed in a. pendingCongressional bill to enact anNIT.) This would make the NITstill more crushingly expensive forthe remaining taxpayers.• 5. There would be politicalpressures every year for increasingthe amount of these·exemptedearnings. In fact, a 50 per cent"income. tax on the poor" wouldbe denounced as an outrage. Intime the proposal would be certainto be made that all theself-earningsof the NIT subsidy recipientsbe exempted from any offsettingdeductions whatever. But thiswould mean that once a family had