Uploaded January 2026 | Updated September 2026, 1 week ago
Milton Friedman (1912–2006) explains his proposal for a negative income tax as an alternative to traditional welfare systems.
Friedman offers a direct critique of bureaucracy. He proposed transferring cash to low-income individuals through the tax system itself.
Under his proposal, if a person begins to earn income, the subsidy does not disappear abruptly but is reduced gradually. Each additional dollar earned improves their overall situation. Once income reaches the deduction threshold, the subsidy disappears and the person enters the regular tax system.
His idea did not go without criticism, even within libertarian circles. Friedman, pragmatic as he often was, sought a way to reduce the burden of the state efficiently without immediately harming (in his view) the poorest.
Milton Friedman (1912–2006) explains his proposal for a negative income tax as an alternative to traditional welfare systems.
Friedman offers a direct critique of bureaucracy. He proposed transferring cash to low-income individuals through the tax system itself.
Under his proposal, if a person begins to earn income, the subsidy does not disappear abruptly but is reduced gradually. Each additional dollar earned improves their overall situation. Once income reaches the deduction threshold, the subsidy disappears and the person enters the regular tax system.
His idea did not go without criticism, even within libertarian circles. Friedman, pragmatic as he often was, sought a way to reduce the burden of the state efficiently without immediately harming (in his view) the poorest.
