Negative Income Tax
About Negative Income Tax
Negative income tax NIT was proposed by economist Milton Friedman in his 1962 book Capitalism and Freedom. Under NIT, taxpayers below a threshold receive payments instead of paying taxes. The system combines tax collection and welfare into a single mechanism. Friedman argued NIT would be simpler and more efficient than the complex welfare system. The Earned Income Tax Credit is a partial implementation of NIT concepts. President Nixon proposed a Family Assistance Plan in 1969 based on NIT principles, but it did not pass Congress. Experiments with NIT in the US and Canada in the 1970s showed small reductions in work effort but significant improvements in health and education outcomes. NIT remains influential in tax policy discussions as a potential simplification of the welfare system.
Related Entries
Laffer Curve
The Laffer Curve is a theoretical representation of the relationship between tax rates and tax reven...
Haig Simons Income
The Haig Simons definition of income, developed by economists Robert Murray Haig and Henry C Simons ...
Inflation Tax
Inflation acts as a hidden tax. When governments print money, the resulting inflation reduces the pu...
Land Value Tax
The land value tax, advocated by economist Henry George in his 1879 book Progress and Poverty, taxes...