The Case for the Negative Income Tax

Once Upon a Time

. . . NATIONAL REVIEW ran an editorial remarking on several proposals for a guaranteed minimum wage, some of which would achieve their aim by means of a “negative income tax.” Our editorialist concluded: Now the July issue of the Freeman carries a brilliant essay by Mr. Henry Hazlitt on the whole topic, and the fat’s in the fire. For Mr. Hazlitt, a pillar of free-market wisdom, rightly tags Prof. Milton Friedman, another pillar, with the responsibility for giving the greatest recent boost to the idea of a guaranteed annual income. … A lot of people think Friedman was tongue-in-cheek, hoping to smoke the liberals out into the open where they’d have to admit they don’t think the poor folk have enough sense to spend real money properly, and therefore they have to be given services in lieu of cash. Friedman hasn’t offered any reply, at least on the Machiavellian level. Now Hazlitt has demolished Friedman on every level but the Machiavellian. We have not heard the last from the guaranteed income, nor, we hope, from Mr. Goldwater’s chief economic theorist of 1964, the illustrious Prof. Friedman to whom, herewith, an open invitation. The good Professor replied with a will, and we are pleased to print first, his response to our editorial, and, second, the passage from Capitalism and Freedom (1962) in which he first proposed the negative income tax.

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Milton Friedman

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Once Upon a Time

. . . NATIONAL REVIEW ran an editorial remarking on several proposals for a guaranteed minimum wage, some of which would achieve their aim by means of a “negative income tax.” Our editorialist concluded: Now the July issue of the Freeman carries a brilliant essay by Mr. Henry Hazlitt on the whole topic, and the fat’s in the fire. For Mr. Hazlitt, a pillar of free-market wisdom, rightly tags Prof. Milton Friedman, another pillar, with the responsibility for giving the greatest recent boost to the idea of a guaranteed annual income. … A lot of people think Friedman was tongue-in-cheek, hoping to smoke the liberals out into the open where they’d have to admit they don’t think the poor folk have enough sense to spend real money properly, and therefore they have to be given services in lieu of cash. Friedman hasn’t offered any reply, at least on the Machiavellian level. Now Hazlitt has demolished Friedman on every level but the Machiavellian. We have not heard the last from the guaranteed income, nor, we hope, from Mr. Goldwater’s chief economic theorist of 1964, the illustrious Prof. Friedman to whom, herewith, an open invitation. The good Professor replied with a will, and we are pleased to print first, his response to our editorial, and, second, the passage from Capitalism and Freedom (1962) in which he first proposed the negative income tax.