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Implementation of a Basic Income by a Negative Income Tax

In: A Feasible Basic Income Scheme for Germany

Author

Listed:
  • Maximilian Sommer

    (Catholic University Eichstaett-Ingolstadt)

Abstract

This chapter provides evidence that the concept of a negative income tax (NIT) is well suited for implementing a minimum income from an economic point of view. A NIT-scheme does not only feature a guaranteed basic income for everyone but also increases the transparency of the tax-and-transfer system. However, by accumulating most (or all) social transfers in a new tax-and-transfer scheme, transfer payments cannot be sensitive to the individual’s specific situation anymore due to the general characteristics of the income tax.The chapter begins by clarifying the overall concept of a negative income tax. It is then shown that – from an economic perspective – a NIT-scheme is similar to the original idea of an unconditional basic income. Different types of NIT-schemes such as social-dividend-type and poverty-gap-type models are discussed and compared afterwards. The chapter ends with an overview of the few empirical studies that exist with regard to negative income tax plans.

Suggested Citation

  • Maximilian Sommer, 2016. "Implementation of a Basic Income by a Negative Income Tax," Contributions to Economics, in: A Feasible Basic Income Scheme for Germany, edition 1, chapter 0, pages 51-73, Springer.
    • Handle: RePEc:spr:conchp:978-3-319-24064-0_3
    DOI: 10.1007/978-3-319-24064-0_3
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