Talk:Negative income tax

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Distinction between UBI and NIT

I made 3 comments here a couple of days ago, and I think they were all based on a misunderstanding of the relation between UBI and NIT. It seems to me that there are two fundamental concepts, namely a universal payout and a limited payout to wage-earners through the tax system; and there are two names, UBI and NIT, so I assumed that the two names corresponded to the two concepts in the natural way. However this seems to be mistaken: both names refer to the first concept and the second concept has no name.

I was led astray by the List of basic income models which describes NIT as an ‘alternate’ to an unconditional payout which is ‘dependent on work income’, which I understood as meaning that elibility was dependent on work status. Maybe it means that the size of the payout depends on income level. This is what the first para of the UBI article implies when it characterises NIT through its property that ‘the government stipend is gradually reduced with higher labor income’. This is a distinction without a difference. The government gives a stipend with one hand and takes a tax with the other: it makes no difference whether the stipend is constant and the tax increases according to a certain formula, or the stipend decreases and the tax increases under a different formula.

Tony Atkinson in his book ‘Inequality’ (2015, p207) says that:

Such a cash credit is a basic income, and it was proposed in the United States under the title of a “negative income tax”...

Now the second of the two concepts I mentioned above is not without interest. It was proposed by Pigou in 1933 and again by Atkinson in his book (under the name ‘Participation income’). It might even merit a mention on Wikipedia. But at present it seems to me that the terminology is hopelessly confusing. If UBI and NIT are two names for the same thing, the articles should be merged and NIT redirect to UBI. If they are different, both articles should make clear what the fundamental distinction is. (I may delete my 3 earlier comments in a while since I don’t think they help anyone.) Colin.champion (talk) 07:56, 22 June 2020 (UTC)

Take note that the term "partial basic income" appears on [1], and the existence of the term implies "basic income" means something more than just a payment. Basic income is understood to mean an income that pays for a minimum standard of living; NIT, GMI, and other demogrants don't necessarily need to do that. John Moser (talk) 21:37, 11 December 2020 (UTC)

@Bluefoxicy: John – I take your point that Basic income is necessarily sufficient to fund a minimum standard of living and that other demogrants don’t necessarily need to do so – but on what grounds do you include NIT amongst them? Friedman ‘supported negative income tax as a substitute for present welfare programs’ (‘View from the right’), implying that people protected from poverty by ‘the present rag bag of measures’ would be likewise protected by NIT. Later he rejects an associated marginal tax rate on the grounds that it would ‘produce guaranteed minimum incomes so low compared to our present standards of indigence that the negative income tax could not be regarded as a satisfactory alternative to present programs’. Personally I suspect that Friedman would have liked to depress the minimum standard of living considered as acceptable, but would have claimed to be supporting a minimum standard of living at some level.

Of course by NIT you may not mean Friedman’s NIT – but what other version is there? Colin.champion (talk) 11:43, 13 December 2020 (UTC)

Friedman's NIT is one conception, yes. The tax rates under the EITC are also negative, but it's poorly constructed (it was derived from the NIT after Russell Long spent years battling against "paying people to not work"). I also designed a negative income tax policy which fits the definition—it's a universal tax credit, although I did some fancy things in calculating, refunding, and administering it. NIT is not defined as substituting for welfare; it's a tax system tool. John Moser (talk) 02:40, 9 February 2021 (UTC)

John – I’m not sure what point you’re trying to make. If you’re saying that EITC is a negative income tax, then it’s a good job I extended the NIT article to include generic negative income taxes as well as Friedman’s specific version, because before I did so there was no way such systems could be recognised as negative income tax at all. If you’re saying that there’s a significant distinction between NIT and UBI as understood by some class of people, and that it lies in the purpose of the payment – welfare or tax adjustment – then it’s a new one on me. Economic measures are normally defined by what they do, not by their intentions. If you’re regretting the disappearance of UCD from the NIT page, then I moved it (in shortened form) to UBI because I couldn’t see why NIT was a better place for it. See https://wiki.riteme.site/w/index.php?title=Universal_basic_income&oldid=984487365#Universal_Citizens_Dividend. However the page has received a lot of changes since I left it and I haven’t been receiving notifications so I haven’t kept an eye on them. I don’t know why this happens (me not receiving notifications) – I’ll have to look over the changes at some point to see if there’s anything I want to comment on. Colin.champion (talk) 08:00, 9 February 2021 (UTC)

I think I can see your concern. I guess that your UCD is a partial unconditional basic income, and that you think it belongs under NIT rather than UBI because UBI is biased towards full basic incomes (though it has a para on Bolsa Familiar), so you would like the scope of the NIT article to explicitly make room for partial schemes. Colin.champion (talk) 09:38, 9 February 2021 (UTC)

Proposed additions by malcolmeintre

I wonder whether @Avatar317 was too quick in rejecting @Malcolmeintre’s additions. An editor is expected to understand what he or she reads and to paraphrase it rather than copying and pasting, and this surely implies that he or she can recognise its subject matter. In the present field the terminology is so unsettled that requiring a system to be identified by any particular name is an unreliable criterion. In any case, the reference to ‘negative tax’ can hardly be understood as referring to negative VAT.

In fact malcolmeintre’s references are drawn largely from the French NIT page which has a slightly different slant from the English one.

On the other hand, as things stand I don’t think example implementations belong on the current page (though I’m reluctant to stir up the hornets’ nest of terminology). My understanding is that economists are wary of using the generic expression ‘negative income tax’, perhaps for fear of confusion with Friedman’s system; but that when they do so, they are referring to a fairly broad concept which is a large component of UBI as well has having other instantiations. The right place for lists of implementations is therefore under the articles associated with particular flavours of NIT.

The following diagram may illustrate the relationships:

	full	partial
unconditional	full basic income	partial basic income
conditional	?	wage subsidy
			tax and benefit

I understand all four cells in the top-left square as incorporating negative income tax. By this criterion I would argue that malcolmeintre’s additions, assuming that they are valid, belong on the wage subsidy page (which already mentions EITC).

However I’m not confident that the current arrangement of material is ideal. ‘Wage subsidy’ is a page I created myself at at time when ‘NIT’ sought to limit itself to Friedman’s system.

What does anyone think of the following proposal?– I add the above diagram to the NIT page, trying to turn some of the cells’ contents into links while drawing a circle round the 4 top-left cells and labelling the circle ‘negative income tax’. I then look over malcolmeintre’s additions, taking them to the wage subsidy page so far as they seem appropriate (and degallicising his English). Colin.champion (talk) 09:27, 18 April 2021 (UTC)

However my impression of the French page is that it views NIT as equivalent to UBI, but includes examples (such as EITC) which are a long way from being UBI. So references from there will need to be treated with caution. Colin.champion (talk) 12:19, 18 April 2021 (UTC)

As I can't read (or speak) French, I was concerned with malcolmeintre's additions referring the the EITC, which (maybe I'm wrong) I have NOT heard as being classified as NIT. It sounds like the terminology is much more vague in this specific subject area than others, so I'd be ok with Colin.champion's suggested changes/rearranging to try to clarify that. ---Avatar317^(talk) 21:55, 18 April 2021 (UTC)

I added Lionel Stoléru to the list of UBI advocates, since he seems to qualify to be there. The Canada Mincome example is already in ‘UBI around the world’. I couldn’t work out what had been proposed or implemented in Belgium. I added PPE and WTC to the wage subsidy page (EITC already being there). So I made some use of malcolmeintre’s edits while leaving the current page as it is. Colin.champion (talk) 16:12, 19 April 2021 (UTC)