For people who have a job, we already have a system for them to pay taxes with each paycheck (withholding). By reversing that, you could make negative income tax payments year-round rather than at tax return time.
Withholding adjustments would help those in low-paying jobs, part time workers, etc. But how does it address temporary or long-term joblessness without requiring individuals to self-fund until refund time?
> A negative income tax is basically equivalent to a basic income funded with a progressive income tax.
I disagree. The funding structure is substantially similar -- some people pay more in taxes than they receive. However, by only distributing the payments to a subset of the population, there is a social stigma associated with receiving benefits. With a universal payment, there is no stigma.
Consider food stamps. The funding structure is set up so some people pay more in taxes than they get from food stamps, and some pay less. But because only some people receive food stamps, there is a stigma associated with them. By contrast, consider the Alaska dividend, which is given equally to every citizen, regardless of income. There is no stigma associated with receiving or using an Alaska dividend. It isn't seen as welfare, but as a right.
People aren't so naive that they would ignore the fact that their basic income is being immediately taken out of their pockets to pay for other people's basic incomes.
As of 2011, an individual paying >$12k/yr in USA federal taxes is in the top 25%. [0] With a basic income of $1k/yr, anyone in the bottom 75% would effectively be receiving a 100% refund of all taxes, not only the funds earmarked for BI.
There is also the option of voluntary basic income systems, which have the advantage of being immediately implementable. [Disclosure: currently developing a voluntary basic income project/study]
[0] Apologies for the outdated info. http://www.fool.com/investing/general/2015/01/31/the-average...
I only claim economic equivalence, not political or marketing equivalence. On the other hand, we already have a negative income tax for working people (the earned income tax credit) and no national basic income, so maybe the marketing advantages aren't a slam dunk.
The linked article hypothesized "reduced pressure on the breadwinner to remain". Too many fights over money, financial ability to leave a bad relationship, and no need to "stay together for the bills" could all be causes.
http://www.widerquist.com/karl/Articles--scholarly/Failure2c...
You get the same effect with basic income. Those who pay more in taxes than basic income gives and those who don't. You could effectively create a negative income tax that gives the exact same payouts as basic income.
x is income, b is basic income, F(x) is tax someone has to pay at x income under the basic income scheme, G(x) is the tax scheme someone has to pay out without basic income that includes some negative taxes.
If G(x) = F(x) - b, then x + b - F(x) = x - G(x). Yes, they are coded up on law a bit differently, but the outcome on everyone's pay would be the same. All that is different is the talking points. Kinda like how people are charged higher tax rates for not having children currently in the US.
The negative income tax experiment in New Jersey showed that the negative income tax created a disincentive to work, and increased family breakups. [0]
Negative income tax, by virtue of being tied to the tax system, operates on a year-based system and pays retroactively. Regardless of whether the year's overall income would qualify for negative income tax, the individual still needs to self-fund any time off. A negative income tax does nothing to help those who are temporarily out of work, or who only want a few months off to help with childcare, learn a new skill, or address an illness.
[0] http://www.econlib.org/library/Enc1/NegativeIncomeTax.html