negative income tax


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Negative income tax

A proposal to assist taxpayer with below-subsistence-level incomes. After filing a tax return, such persons would receive a subsidy to bring them up above the poverty level.

Negative Income Tax

A tax system or bracket in which persons with an adjusted gross income below a certain amount receive money from the government. This system intends to bring people out of poverty, or at least to make their situations less difficult.

negative income tax

a proposed TAX system aimed at linking the TAXATION and SOCIAL-SECURITY BENEFITS systems for low-income or no-income members of society. This is done by replacing the separate systems for collecting PROGRESSIVE TAXATION and for paying social security benefits by a single system that links the two together by establishing a common stipulated minimum income level, taxing those above it and giving tax credits to those below it.

Proponents of the negative income-tax system point to its advantages in assisting in the removal of the POVERTY TRAP and in making labour markets more flexible. See SUPPLY-SIDE ECONOMICS.

References in periodicals archive ?
But in the late '70s, the news ensured that Jimmy Carter's variation on the negative income tax would not pass.
After observing the effect of such tax on these low income earners under the PAYE, there is need for negative income tax policy as obtainable in countries like Britain.
For instance, Murray Rothbard--a hard-core libertarian if there ever was one--argued that "it is difficult to consider [Friedman] a free-market economist at all," and a prominent item on his bill of particulars was precisely the negative income tax idea.
By substituting income from this negative income tax for welfare, the NCBS has enabled poor families with children to exit provincial welfare at a lower level of earnings.
Both the negative income tax as well as the employment subsidy would eliminate the minimum wage in the present system.
Any EIC in excess of total tax liability is refundable and the refundable portion is included in the transfer payments component of personal income rather than as a negative income tax in the payments series.
Thus, the credit is a form of a negative income tax and therefore refundable to taxpayers who have no tax liability or whose tax liability is less than the amount of the credit.
Regardless of whether you are a disenchanted poverty warrior who sees a negative income tax as the only true reform, a believer in a Charles Murray scorched-earth policy, or an advocate of incremental fine-tuning (such as workfare), David Ellwood wants to talk with you.
The concept of a negative income tax had surfaced in academic and political discussions.
Milton Friedman's proposed negative income tax boiled down to a plan more or less equivalent to Gordon's, phasing out as work income increased.
In face of this, defenders of Basic Income argue that as advanced technology progressively reduces the amount of human labour required to expand our productive capacity, all members of society should be entitled to receive a dividend from the social investment in technology in the form of a guaranteed income, citizens' income, minimum liveable income--the concept goes by many names, some of which describe specific schemes associated with a particular politics, such as the negative income tax favoured by Milton Friedman and his ilk.