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Negative income tax

Updated: Aug 20, 2021

A proposal to combine income tax payments and social security benefits in a single system. Under this system, all citizens would report their pre-tax incomes; they would then pay tax if their income after deducting any allowances to which they were entitled came above some cut-off level, and would receive payments if their income was below the cut-off. The advantage of such a system is that it integrates the tax and welfare systems.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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