A Negative Income Tax for the 21st Century

A Policy Proposal

Executive Summary

This document proposes a basic income for the U.S. in the form of a negative income tax (NIT).

It proposes an income floor for all adults (18+) in the economy of $13,000 per year, indexed to the federal poverty line. This proposal leaves aside the question of how best to include minors, but no basic income is complete without either a reduced rate income floor for minors, or a child allowance passed alongside.

Under this proposal, an adult earning $0 annually receives the full $13,000. As their earnings increase, their NIT benefits are phased out with a 33% tax rate, zeroing out benefits for incomes beyond $39,400. Benefits would be provided in monthly installments.

Such an NIT is both economically and politically feasible. Within a year of passing, it could eliminate official poverty, increase the circulation of capital throughout the economy, reduce inequality, and insulate a basic degree of livelihood from potential shocks such as loss of employment, automation, pandemics, or changing life circumstances.

In the longer term, a basic income improves the conditions for social innovations to occur alongside technological ones…