Opinion of a Negative Income Tax

[Kushahontas]

http://en.wikipedia.org/wiki/Negative_income_tax

[TNF]

Horrible Policy. I prefer a universal basic income policy instead.

[DC Al Fine]

Horrible Policy. I prefer a universal basic income policy instead.

Doesn't a negative income tax effectively result in that though?

[TNF]

Horrible Policy. I prefer a universal basic income policy instead.

Doesn't a negative income tax effectively result in that though?

Not in my understanding. An NIT, afaik, is not at all un-friendly to capitalism, unlike a UBI, which would definitely cause the system to jam up and freak out because there's a ready alternative to wage labor being provided in the form of a cash payout to everyone in society.

[DC Al Fine]

Horrible Policy. I prefer a universal basic income policy instead.

Doesn't a negative income tax effectively result in that though?

Not in my understanding. An NIT, afaik, is not at all un-friendly to capitalism, unlike a UBI, which would definitely cause the system to jam up and freak out because there's a ready alternative to wage labor being provided in the form of a cash payout to everyone in society.

So the difference in your mind is that NIT is a supplement to bring people up to X, while a UBI pays out X to most everyone?

Just trying to clarify definitions here.

[TNF]

Essentially, yes, that is my understanding of what the difference is, DC.

[H.E. VOLODYMYR ZELENKSYY]

Isn't this just a paltry form of basic income?

[Atlas Has Shrugged]

I'm not against the idea, but I am not educated in economics as you all know by now, so I won't make any statements for or against it based on its sustainability.

[Grumpier Than Uncle Joe]

HP

[AggregateDemand]

Dream come true, but it would be difficult to administer.

Assume $8,000 refundable tax credit, no deductions, and 35% flat tax (15% FICA, 20% income tax). The resulting system would be a robust tax cut for everyone below median income and a sharp tax increase (2%-5% of income) for the top 20% of Americans. It would be slightly more onerous than Clinton-era taxes. According to my rough calculations, the system would generate about $2.1T in tax revenue and welfare savings, a bit short of the $2.3T we collected from FIT and FICA in 2013.

Unfortunately, my example doesn't even meet Friedman's definition of a just system, in which individuals receive a refundable credit equal to the poverty level for a single-person household ($11,500). Therefore, non-cash benefits like Medicaid and SNAP would have to be retained, which doesn't achieve economic efficiency by centralizing our entitlements into a Super IRS.

It's a tricky system to administer, and it relies heavily upon the wealthy accepting tax-subsidized labor in exchange for higher effective tax rates on the wealthy, but negative income tax has a great deal of potential.

[H. Ross Peron]

I'm not opposed to a NIT by itself but I'm opposed to attempts to use this to replace every other social welfare/insurance program

[World politics is up Schmitt creek]

I'm not morally outraged by the idea or anything, but it strikes me as a needlessly convoluted and kind of paltry excuse not to just spring for a guaranteed income.

[DC Al Fine]

Essentially, yes, that is my understanding of what the difference is, DC.

Ok.

My main issue with a negative income tax is that it is lagging measure. You still need to have some form of welfare state to keep people's incomes up if they suddenly drop. So yeah I think a basic income is more appropriate.

[Oldiesfreak1854]

I'm not opposed to a NIT by itself but I'm opposed to attempts to use this to replace every other social welfare/insurance program

[Maxwell]

I oppose any sort of basic income system.

[Peter the Lefty]

Not a fan.

[Antonio the Sixth]

Can someone explain me the difference with a guaranteed minimum income? I've never got it.

[Deus Naturae]

Can someone explain me the difference with a guaranteed minimum income? I've never got it.

A minimum income is just a flat payment for everybody. A negative income tax is typically progressive (as in, the less you make, the higher the NIT payment) and stops after you reach a certain income level.

[Antonio the Sixth]

Can someone explain me the difference with a guaranteed minimum income? I've never got it.

A minimum income is just a flat payment for everybody. A negative income tax is typically progressive (as in, the less you make, the higher the NIT payment) and stops after you reach a certain income level.

So even billionaires would get the minimum income? Well then I guess NIT makes more sense.

[TNF]

Can someone explain me the difference with a guaranteed minimum income? I've never got it.

A minimum income is just a flat payment for everybody. A negative income tax is typically progressive (as in, the less you make, the higher the NIT payment) and stops after you reach a certain income level.

So even billionaires would get the minimum income? Well then I guess NIT makes more sense.

Yes, even billionaires. The point of a minimum income is that it is solidaristic; means-tested programs make poor programs because they create instant opposition from those not benefiting from them. That's why President Clinton was able to abolished means-tested Welfare but President Bush was not able to abolish solidaristic Social Security.

[DC Al Fine]

Can someone explain me the difference with a guaranteed minimum income? I've never got it.

A minimum income is just a flat payment for everybody. A negative income tax is typically progressive (as in, the less you make, the higher the NIT payment) and stops after you reach a certain income level.

So even billionaires would get the minimum income? Well then I guess NIT makes more sense.

Yes, even billionaires. The point of a minimum income is that it is solidaristic; means-tested programs make poor programs because they create instant opposition from those not benefiting from them. That's why President Clinton was able to abolished means-tested Welfare but President Bush was not able to abolish solidaristic Social Security.

But why bother with millionaires and billionaires? The tycoons of your nightmares don't care whether they get some piddly minimum income payment.

[WalterMitty]

should be expanded.

[AggregateDemand]

So even billionaires would get the minimum income? Well then I guess NIT makes more sense.

No. Guaranteed Minimum Income usually means the government insures your income to a certain amount, like $30,000. The phase out for guaranteed minimum income is 1 to 1. If a citizen earns $0 income, the government pays $30,000 in GMI. If the citizen makes $20,000 income, the government pays $10,000 in GMI. GMI is usually adjusted based upon individual circumstance.

NIT generally uses a flat payment or tax credit (e.g. $10,000) for all citizens, which is subject to a proportional tax system. If a worker makes $0 income, they get paid $10,000. If they earn $30,000 income (20% tax), they receive $4,000 in NIT payments ($10,000 NIT - $6,000 tax owed on $30,000 income).

GMI discourages private-sector work, but generally rewards traditional societies with imputed income from stay-at-home family work. GMI caters to the individual with adjustments for circumstance, etc.

NIT encourages private-sector work, but discriminates slightly against imputed income relative to GMI. NIT encourage people to build households, traditional or non-traditional, because NIT won't cater to individual circumstance.

[ElectionsGuy]

I oppose any sort of basic income system.

[Pessimistic Antineutrino]

I oppose any sort of basic income system.