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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
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