YSK: In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level.
YSK: In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level.
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Wouldn’t it make more sense to, like, have the first 12k dollars tax free and then increase the percentage for everything exceeding this threshold? The more money you earn, the more taxes you can afford to pay. Especially when you earn only little money this is important for you to survive, while $100k/yr managers could easily afford to pay 50k of those in taxes
A negative income that is better than that. It says, if you're working, but only making $12k, the state will give you money so you now have $20k. (Not real numbers.)
The idea is that it incentivizes participation in the work force, with hopes that the extra money helps you get stable and move up the payscale where you may stop needing the external support.
How does that incentivizes workforce participation? You're giving them money to not work, I think graduated taxes should just not have the NIT portion.
No. If you reported $0 in income on your taxes, you get nothing. There's a minimum income to get anything back. So if you don't work, you get nothing, so you are incentivized to find a job of some kind.
But that minimum should be quite low and attainable.
Ah got it.
NIT is specifically letting people start in a refund position. 0 income gets the largest total refund.
Living on $50k/year is not easy. The federal poverty line for a family of 4 is $31,200, and many consider those numbers to be much too low.
There's absolutely no need to target normal American households with more taxes. Billionaires already don't pay their (too low) taxes and have far, far more than they need that they've taken from the labor of others. Actually taxing them appropriately would cover everything we could possibly need and then some.
We should be raising substantially the minimum income needed before you have to pay taxes. It's fucking stupid to be levying a bunch of tax on people who are struggling to make ends meet.
What? $50k is even in the richest European countries about as much as 2 people earn per year. €25k/year is the median, give or take 2k. Subtracted are about 5k in taxes.
Crazy how expensive the US is…
Yeah, European salaries across the board are generally lower than the US by quite a bit, but we also typically pay for a lot more services than Europeans do as generally a lot more is privatized (healthcare, etc.). $100k is typically what most middle class Americans are striving for in order to have a relatively "comfortable" life, buy a house, etc. (though honestly, the housing market today is so fucking insane that even that isn't really enough to buy a house in many places now). The median household income in 2023 was $80,610, for reference.
Everything is relative, who made the product, how long did it take to get where it is, who had to be paid to get it there, how far did it travel, how many tariffs or taxes were paid between here or there, etc, shit Americans forget entirely while voting.
The system you are describing is what most countries use. This is basically just an extension of that intended for people who make so little they need extra assistance.
Actually, the US Earned Income Tax Credit is basically a version of negative income tax.
It is not. EITC is a tax reduction for the first few $1000s of employment income. NIT is a tax refund even if you pay no taxes.
EIT is a refundable tax credit. Meaning if your total tax burden is less than the credit, federal government will pay you the difference. A part of the child tax credit is the same.