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.
Friedman outlines his "negative income tax" (I'm paraphrasing) this way:
First, the very poorest households with children (those earning below $12,000) experience large negative income tax rates (in absolute value terms) because of the EITC.
It is a "negative tax" in the sense that the government pays you instead of you paying the government, but it doesn't create an income floor as the "negative income tax" was designed to do.
Steensland outlines some of the highly advanced social science experiments that were devised and carried out in the late 1960s and 1970s to determine the impact upon "work ethic" among other things of the NIT (Negative Income Tax) form of guaranteed income.
Friedman proposed his idea of a negative income tax as a poverty-alleviation measure and as an alternative to all other existing government programs.
But he also urged the adoption of a 'negative income tax' in which people who earn less than a certain amount would get money from the government.
Also, significant differences in the ages of beneficiaries can result in negative income tax consequences for the younger beneficiaries.
Perhaps we could agree that poverty could and should be abolished by means of basic income guarantee (BIG) via a negative income tax. Perhaps we all could back a new federal public works program to provide jobs for all those who want to work but cannot find employment in the private market.