Negative Income Tax - Implementation

Implementation

While the notion has long been popular in some circles, its implementation has never been politically feasible. This is partly because of the very complex and entrenched nature of most countries' current tax laws: they would have to be rewritten under any NIT system. However, some countries have seen the introduction of refundable (or non-wastable) tax credits which can be paid even when there is no tax liability to be offset, such as the Earned Income Tax Credit in the United States and working tax credit in the UK. Under President Richard Nixon, a NIT proposal almost made it through Congress.

From 1968 to 1979, the largest negative income tax social experiment in the US was undertaken. The four experiments were in:

1. Urban areas in New Jersey and Pennsylvania, 1968–1972 (1375 families)
2. Rural areas in Iowa and North Carolina, 1969–1973 (809 families)
3. Gary, Indiana, 1971–1974 (1800 families)
4. Seattle and Denver, 1971–1982 (4800 families)

In general they found that workers would decrease labor supply (employment) by two to four weeks per year because of the guarantee of income equal to the poverty threshold.

A negative income tax has been implemented for a certain bracket of low incomes in Israel.