ABSTRACT
Negative income tax (NIT) tries to overcome the problem of excessive cost associated with Basic Income (BI), by reducing the amount of benefit leakage to people with incomes above the poverty line. Three Presidents–Presidents Nixon, Ford, and Carter–have considered or recommended a program including elements of a negative income tax. Usually the NIT is payable to any assessment unit where the combined income of all its members is less than the guaranteed minimum income. With NIT the curve of net income starts off almost flat and falls behind net income from BI, but above the break-even level it shoots ahead. The purpose of the US experiments was to ascertain the work incentive effects of extending an income guarantee to able-bodied heads of low income, two-parent working families. Any family whose income during the accounting period came to less than the appropriate guaranteed amount would have it topped up.
