Negetive Income Tax

[Knoss]

Negative income tax involves a flat tax with deductions for home payments, food, children's clothing, medical care, etc. Rather then having a minimum income of $0.00 taxpayers can have a negative income if deductible expenses exceed income meaning they have a negative income tax debt and are paid their income tax credit replaceing our current social assistance which is a collection of rag tag programs each with its own bureaucracy. Everyone would receive a $600 poverty deduction, which would ensure anyone without income gets a tax credit and existing earned income tax credit would provide a money to the working poor.

[August1991]

The idea is excellent and we have the technology to implement it.

A negative income tax turns the personal deduction into a refundable tax credit. If a person's income is smaller than the deduction, the government would make up the difference. This may sound expensive but it wouldn't be. A negative income tax sets the right incentive for poor people. They get to keep most of each dollar earned by working. (At present, they don't. People on welfare lose a dollar of welfare for each dollar earned by work unless they break a certain, rather high threshold.)

To make this work practically, we should do away with annual income tax forms and replace them with monthly payments subject to correction when necessary. This is how most people pay utilities and child support.

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OTOH, I am opposed to a negative income tax for two reasons.

First, I think in the future governments should rely primarily on "environmental" taxes (carbon tax, road fees, deposits, disposal fees, land usage etc.) and on VAT (or GST). Income taxes are simply not a good way to raise revenue and in the long run, I'm sure they won't exist.

Second, many poor people want nothing to do with the "system". They hate filling out forms or they are so disorganized, they can't. A negative income tax is very bureaucratic and it wouldn't help such people.

Incidentally, Milton Friedman invented and promoted the idea of a negative income tax.

[geoffrey]

I don't like paying for other people's choices. Take a second job or something. If we were in Zambia or something, I could see your point, but not in a country with low unemployment (or Alberta where we don't have enough people to work).

People can make ends meet if they want to. No reason to encourage or subsidize those that chose lesser paying jobs.

Equality never was the original goal of taxation... nor is it morally justified.

[Knoss]

I don't like paying for other people's choices. Take a second job or something. If we were in Zambia or something, I could see your point, but not in a country with low unemployment (or Alberta where we don't have enough people to work).

People can make ends meet if they want to. No reason to encourage or subsidize those that chose lesser paying jobs.

Certain people require welfare and this would as current social programs could be eliminated.

To make this work practically, we should do away with annual income tax forms and replace them with monthly payments subject to correction when necessary. This is how most people pay utilities and child support.

Worth considering however some people earn all of their income at one time so they would be in a negative position for most months and an earning for one it would be better to use annual income. Cuts to bueurocray and use of flat tax would refect tax cuts. I agree that income tax should not be used for income distirbution and have considered capping taxes for those above a certain income level.

First, I think in the future governments should rely primarily on "environmental" taxes (carbon tax, road fees, deposits, disposal fees, land usage etc.) and on VAT (or GST). Income taxes are simply not a good way to raise revenue and in the long run, I'm sure they won't exist

I think the GST is important and should be raised to reduce income tax, I do think we should be relying on environmental taxes as I do not think they are good economic or environmental policy.