The argument that we cannot improve upon welfare has come up enough times that I feel like I need to argue for the natural alternative: the negative income tax (NIT).

There have been a number of proposals that I would consider to fit under this heading, most famously Milton Friedman’s proposal in “Capitalism and Freedom.” For the purposes of clarity, I define a NIT proposal to satisfy:

1. People who have no income receive something analogous to welfare, but smaller.

2. The amount of money that a poor person receives varies continuously with their income. That is, they gradually lose their welfare check as they make more and more money. Beyond a certain point, this decreasing payment becomes zero and then becomes the income tax.

If economic theory is remotely a good approximation of human behavior, it seems to be a no-brainer to me that this will lead to higher income among poor people than standard welfare. In the current system, welfare recipients have a disincentive to work- it is quite possible that with an especially shitty job, they will make less money in the workforce than they do on welfare. Thus, some people who would work if welfare did not exist will now not be working. By making payments gradually reduce as income grows, this disincentive becomes many times weaker. No matter what, having a job will increase your income. Simple, no?

Given that pure reasoning in an economic framework is not 100% reliable and might sometimes lead to thinking tinged with the libertarian bias inherent in economic theory (as much as I label myself as a libertarian, I feel that it is important to recognize that the intuition behind even very scientific models might have an ideological bias), I think it is good to see how this hits the data in the real world. The Earned Income Tax Credit functions in a manner similar to how a negative income tax would work. Here is an empirical paper on its effects http://harrisschool.uchicago.edu/About/publications/working-papers/pdf/wp_07_20.pdf .

Given how both theory and data seem to make the NIT seem like a better thought out choice than welfare, why is this not a political issue? How can people spend so much effort arguing back and forth about political ideologies when more good could come from simply improving the policies we have, regardless of the ideologies that brought them there in the first place?