Efficient Welfare Payment

One of the mainstays of libertarianism is that government assistance to the poor decreases economic efficiency in two ways. One, by giving only to the poor, it incentivizes being poor. Two, by paying the poor, you must tax the rich, thereby dis-incentivizing being rich. However, I'd never considered the negative income tax popularized by libertarian icon Milton Friedmen. It starts with a flat tax, at say 25%. Everyone, rich and poor pays the same percentage. Then, a minimum income is established, at say $10,000.  Everyone, rich and poor gets the same $10,000 from the government. It's easier to pay taxes (which now costs hundreds of dollars per person just to file). It's easier to enforce (there are more people in the IRS's tax army than in Iraq). It's more equitable to both the poor and the rich. Here are a couple of examples using different incomes and my numbers of $10,000 and 25%:

Income earned: $0
Taxes paid: $0

Minimum income: $10,000

Total amount: $10,000

Income earned: $30,000

Taxes paid: $7500

Minimum income: $10,000

Total amount: $32,500

Income earned: $100,000

Taxes paid: $25,000

Minimum income: $10,000

Total amount: $85,000

Income earned: $1,000,000

Taxes paid: $250,000

Minimum income: $10,000

Total amount: $760,000

Freidmen supported this idea, but only as a replacement for the current income tax and welfare system. For joint households the credit would be double and there could be an amount given per child, say $5,000. The minimum income credit could also be given in monthly increments so as not to require much money management.

This was part four of my series against self-verification.