Science, Math, and Making Sense of the Insensible: How the NIT-VAT Policy Can Make America Prosper in the 21st Century

A concept championed by the famous conservative economist, Milton Friedman, the NIT-VAT policy may be the only policy capable of fostering capitalism while liberating those in poverty and reversing the divergence of the wealth gap.
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Decades ago, the conservative economist Milton Friedman championed the concept of a Negative Income Tax. Essentially, it’s a tax refund of an equal absolute amount given to all citizens on a regular basis. It’s administered unconditionally, to cut out the waste of bureaucracy and the chance for fraud and other inefficiencies. It’s not something to be given in addition to assistance for things like food or housing, but an alternative. In effect, it ensures that every citizen remains cash flow positive with enough cash to pay for its essentials. This leaves economic units (adult citizens) to operate as independent micro businesses rather than dependents of the state. 

There are numerous qualities with the NIT-VAT policy that act to create an environment that naturally flows towards the desired outcomes of society — decreased poverty, homelessness, disease, and crime; and increased health, wellness, happiness, and economic, cultural, and technological growth and opportunities.

There are three key elements that make the NIT a more effective economic policy than needs based qualified assistance. First, there is no transfer of wealth, the opportunity is distributed to all citizens equally. Second, there is no disincentive to do better nor incentive to defraud or give up. Third, it is capitalistic rather than communistic — everyone is free to spend the cash the way they best see fit and a free market gets to compete for that cash.

The NIT-VAT policy is not a reckless spending spree. People are not given enough cash to live a life of luxury and leisure. Citizens are given enough cash to meet, or come relatively close to, the amount of cash needed to meet the poverty line. This ensures every citizen has the means to obtain food and shelter and the ability to access more. The direct result is not that the poor will now become rich, it is that society will operate free of poverty and despair. 

There is a common fear that if people aren’t desperate for food and shelter that they will have no incentive to work. That’s a knee jerk reaction we all have but it’s not a notion supported by data or science. You don’t even need a Ph.D. in Social Behavior to figure that one out, ask your friends if they would simply stop desiring more if they were guaranteed enough cash every month to meet the poverty line threshold. In fact, a recent study from a pilot program testing NIT in Stockton, CA just showed that those receiving a monthly cash stipend were far more likely to gain employment than a comparative group not receiving the cash. Not only do those receiving monthly cash stipends find employment at a higher rate, studies have also shown that raising people out of financial despair raises operating IQ and is reduces the likelihood of them committing crimes.

In comparison to the current needs-based qualified assistance the NIT-VAT policy is a vastly superior option for the middle class. Under our current system the middle class (those making between $50-200k) foots the bill for those who require assistance. Food, housing, and education for the poor are all supplemented by the middle class tax payer; and they receive nothing in return. Under the NIT-VAT policy there is no transfer of wealth, they receive the same benefits as the poor, albeit less dramatic on a relative basis. In addition, though, is that the majority of spending from those along the poverty line goes directly into their community that they live their day-to-day life in — the small businesses selling goods and services to the members of their community [a.k.a. the middle class]. Main Street America finally gets some cash because stimulus will be coming straight to them via their consumer, and the demand for their products or services will increase due to the increased purchasing power within their target market.

The NIT-VAT policy will not just lift the needy out of poverty. It also provides a safety net to those who will be losing a job due to technology; and it will provide a floor for those entrepreneurs and developers that move our culture and capitalist world forward.

The question is not if but when. 

Do you support the NIT-VAT policy? Share your questions and support in the comments section below.

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