The Public Interest

Great Britain: The Negative Income Tax Rediscovered

Leslie Lenkowsky

Summer 1985

TWO DECADES AGO, few proposed public policies looked more attractive and more likely to succeed than the negative income tax.  Indeed, as the 1960s ended, a dozen major countries and an OECD working group were considering it. The president of the United States had put forth a version of it as his foremost domestic priority, and the prime minister of Great Britain was about to do the same. Support for it could be found among liberals as well as conservatives, and it enjoyed the near-unanimous acclaim of economists, a group whose views on such matters were still being taken seriously. Apart from a few oldline “welfarists” on the left and rugged individualists on the right, the prospect of replacing the costly, complicated network of social insurance and public assistance programs found in every welfare state with a simple, efficient, broadly acceptable device for providing help to the poor through the tax system seemed to have an irresistible appeal.  Yet by the end of the 1970s the idea appeared to be virtually dead.  In the United States, two presidents had tried to win approval of it; each had failed, with both of them losing considerable political capital in the process. The plans were first stalled in Britain, then abandoned entirely when the government of Prime Minister Edward Heath was defeated, and his successors showed no inclination to resurrect them.  Elsewhere, even less progress was made.

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