|
I was formerly a UBI proponent but I think, at least, in the near to medium term, it's too much of a cultural shift about the role of work in life. That's why these days I'm more a fan of a negative income tax coupled with a repeal of the minimum wage. Consider if the "tax brackets" were something like: * 0 - $2k : -1,000%
* $2k - 4k : -500%
* $4k - 6k : -100%
* $6k - $8k : 0%
* $8k - $15k : 5%
* ...
* $10M+ : 40%
(Something like that, exact numbers to be fiddled with.)What it essentially does is it provides a government money multiplier on low wage jobs. A company could offer $1/hr jobs, which the employee would perceive as $10/hr. That is, $1/hr = $2k/yr = $20k, after taxes. The negative income tax benefit decreases steadily, until eventually you start paying taxes, but there's always an incentive to work more or get a raise. Just think of it! At $1/hr there would be a gazillion jobs for things like greeters at every store, crosswalk guards, picking up trash at the park. And people would be motivated to work for them because they're actually making $10/hr. I think this is more politically palatable than UBI as well, too, since it avoids the issue of "moochers who will just sit around and collect their checks". Since with a NIT, if you don't work, you don't get anything. I do foresee some issues making this actually feasible. For example, it certainly won't work for the employee to just receive $1/hr and then a big payout on tax day. I think we could adjust "withholding" to actually pay out what the employee will receive as part of their tax benefit, but it will be important to get it right or else they could be hit with a bad tax bill. |
As usually defined, negative income tax (in an otherwise progressive income tax system) is the same as UBI in a progressive income tax system, but possibly with a range of regressive treatment (the simple credit form is isomorphic to UBI, the more common “deduction with proportional refund of unused deduction, usually at a high fraction like 50%”, has the regressiveness feature.
Unless the credited (or refundable proportion of the deduction) amount is greater than the annualized pre-policy-chnage minimum wage, it's also a decrease in the wage+credit income floor for full-time employed workers, so you risk pitting the unemployed against the working poor with this approach. A better approach, IMO, at plausibly-viable initial levels of the credit (effectively, the UBI level) is to index minimum wage to inflation, but reduce it, as an hourly wage (after applying the index) by the amount of the credit, divided by 2000.
(I'd also prefer tying the credit to a defined calculation based on a revenue stream, preferably a capital-income-heavy one, so it doesn't get reduced with automation, with a ratchet to prevent cuts in recessions.)
What you actually describe is progressive system where the bottom marginal rate is a large negative value, which isn't a typical NIT, but sort of like a super-EITC. This provides no benefit to those absolutely displaced from work, but maximum benefit to those employed at a rate which exactly exhausts the negative marginal rate brackets.