Universal basic income is an idea usually associated with the political left. However, it also has surprising support from the Libertarian right in the form of Milton Friedman's negative income tax. Indeed, Friedman's case for NITs gets to the core of his case for free markets, freedom from coercion, and where government should intervene in our economies, writes Joshua Preiss.

After John Maynard Keynes, Milton Friedman is arguably the most influential economist of the 20^th Century. Like Keynes, his influence extends far beyond technical questions in economics. Friedman is known as a champion of small government who provided key talking points for Reaganomics, a political philosophy that in the public imagination is best captured by Reagan’s iconic declaration that “government is not the solution to our problem, government is the problem.” It may therefore come as a surprise that Friedman proposed a massive, government policy to alleviate poverty.

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This policy is a negative income tax (NIT). While the mechanism for distribution (and therefore the politics) may differ from other forms of universal basic income (UBI), NIT also functions as an income floor for all families. Friedman’s plan would work through the existing income tax system. In practice, NIT is the standard deduction in reverse. For families whose earnings are below the relevant threshold, they would simply file an estimated earnings return (like those self-employed) and receive regular payments (say bi-weekly) over the year totaling 50 cents for every dollar their income is below the threshold. This government top-up ensures that their income never drops below a set amount. The rationale for only making up 50% of the difference is to provide workers with the incentive to earn more income, rather than effectively taking every dollar that they earn back in taxes. To eliminate poverty, the NIT threshold would need to be set well above the 2023 standard deduction of $27,700 for a family of four.