Criticism
The main drawback is one commonly found in almost any income-based tax system: it requires considerable reporting and supervision in order to avoid fraud. The incentive to commit fraud may be increased with a NIT, since the monetary reward for fraud could be larger than a taxpayer's total tax liability. The added expense of policing fraud could offset the benefit from reducing administration costs resulting in a net increase in costs.
Another criticism is that the NIT might reduce the incentive to work, since recipients of the NIT would receive a guaranteed minimum wage equal to the government payment in the absence of employment. A series of studies in the United States beginning in 1968 attempted to test for effects on work incentives. The studies showed minimal disincentives, but were difficult to analyze as the monetary benefits were rarely as generous as those already received through the traditional welfare system. These results lead to an apparent dilemma of maintaining the benefits of existing programs through an NIT without creating significant disincentives and while restricting coverage to any manageable portion of the population.
Read more about this topic: Negative Income Tax
Famous quotes containing the word criticism:
“I, with other Americans, have perhaps unduly resented the stream of criticism of American life ... more particularly have I resented the sneers at Main Street. For I have known that in the cottages that lay behind the street rested the strength of our national character.”
—Herbert Hoover (1874–1964)
“A friend of mine spoke of books that are dedicated like this: “To my wife, by whose helpful criticism ...” and so on. He said the dedication should really read: “To my wife. If it had not been for her continual criticism and persistent nagging doubt as to my ability, this book would have appeared in Harper’s instead of The Hardware Age.””
—Brenda Ueland (1891–1985)
“Unless criticism refuses to take itself quite so seriously or at least to permit its readers not to, it will inevitably continue to reflect the finicky canons of the genteel tradition and the depressing pieties of the Culture Religion of Modernism.”
—Leslie Fiedler (b. 1917)