Negative income tax (English. Negative income tax , NIT) - the tax system, discussed in economic circles, but never implemented. It was first proposed by , an English political writer of the 1940s . The concept of effective negative tax rate gained popularity after the publication of Milton Friedman’s book Capitalism and Freedom .
Example
According to the idea, it is necessary to establish, for example, a proportional income tax at a rate of 25%. At the same time, the state is obliged to pay, for example, 10,000 monetary units annually to each taxpayer. Thus, it turns out that a person who has earned 8,000 monetary units will not pay taxes at all, but will receive an additional 8,000 monetary units from the state → (8,000 - (8,000 • 0.25) + 10,000) = 16,000.
The threshold is, in this case, at around 40,000 monetary units - only those who earn more actually pay taxes to the state.
But in today's practice, negative income tax is the payment of cash subsidies to low-paid workers when their income falls below the guaranteed minimum . At the same time, the negative income tax decreases with increasing labor income.
See also
- Unconditional basic income
Links
- Allen JT Negative Income Tax