this post was submitted on 29 Nov 2024
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[–] [email protected] 2 points 2 days ago* (last edited 2 days ago) (1 children)

NIT is paid to workers and non workers alike. As is UBI. The maximum NIT refund you get is at 0 earned income. When you earn income, your refund is lowered. That starts at $1 of income. Even if it is called a negative tax, it is still a positive marginal tax rate that reduces your net income for every $ earned.

An NIT refund comes from the IRS, while UBI can come from IRS or another department. They are still highly related concepts. Other than the most famous NIT proposal has a 50% tax rate on the lower incomes, and frequenly left leaning politicians, instead of UBI propose Guaranteed Minimum Income, with tax rates of 50% to 100% on the lowest incomes.

Sensible UBI plans use normal tax rates with higher rates on upper incomes if needed.

[–] Maggoty 1 points 2 days ago (1 children)

When you say a tax rate of 50-100 percent, are you referring to the negative tax rate?

[–] [email protected] 1 points 2 days ago (1 children)

Guaranteed minimum income plans are either a 100% tax, when literally, all get a minimum income of say $20k, if you earned less than $20k, you don't keep any of those earnings. Practical, still left of center plans do change this to a more modest 50% clawback rate similar to welfare/EI. The most famous NIT proposal had a 50% tax rate on the lowest income. That is the exact same as the flawed GMI plans.

[–] Maggoty 1 points 1 day ago (1 children)

That sounds like a great way to do a poverty trap when you could simply add 20k-reported income to their account. It's entirely unnecessary to the concept of an NIT.

[–] [email protected] 2 points 1 day ago

That

If you mean 50% tax bracket for the poor, yes it is a poverty trap. UBI is an improvement over welfare and employment insurance because it doesn't trap people into not working due to high clawbacks. There is also administration and annoyance savings from not policing/applying for benefits.