Many people who have struggled with the complexities of income tax and state social services must have wondered whether there might be a simpler way: net off the benefits against the tax bill and have a single financial transaction. Properly designed, this reform could combine redistribution with greater freedom for both rich and poor to spend their resources in their own way.

Recent supporters of such reform have stretched all the way from Professor Milton Friedman to Dutch social democrats. It has certainly occurred to many politicians, only to be crushed by the combined forces of the revenue departments and the social service bureaucracies.