ABSTRACT
The key to understanding the mechanics of integration is the tax break-even point. Distinctions were drawn between full integration and partial integration, and between basic income, negative income tax and hybrid schemes composed of several ingredients. In 1983 Britain's Social Democrats put forward reform proposals which included "integration of the benefits and tax systems". Mr Norman Fowler's family credit was originally billed as a step towards integration, but everybody knows it is just another means-tested benefit, replacing family income supplement. One of the main characteristics of existing tax and benefit systems is the sharp distinction drawn between cash benefits and income tax reliefs. For families who pay no tax child benefit converts automatically into a cash benefit. Negative tax systems use a different concept of gross income, which includes money from gifts and the imputed value of wealth, as with existing means-tested benefit systems.
