Kinda the same thing, but different implementation details and slightly different disincentives.
UBI is universal, meaning literally everyone would get it. So even if you make a bajillion dollars, you still get your $1K a month or whatever (which makes it economically meaningless on top of distorting incentives, but I digress), while a negative income tax is based on how much you make. Say under $50K you get 10¢ for every dollar less you make, and over $50K you pay 10¢ on every dollar you make.
The latter sounds more logically consistent, but comes with the huge problem of having to invade the privacy of literally everyone, the staggering cost of auditing and accounting for every individual which props up a bloated and wasteful industry of number crunchers from a huge swath of population that has no need for it, and the burden of filing taxes. Along with it then comes the political industry of creating exceptions, special interest, loopholes, etc. The idea that this would stay neutral and not be horrifically abused and turn right back into what we have today.
It’s the problem with all of it really. There’s an insanely strong incentive with no feedback mechanism that creates incredible pressure to complicate, bloat, and corrupt it because *thats what directly rewards the political institutions and their authority.*
It always SOUNDS great to have something simple and neutral, but that cannot exist in a political environment, because political incentives are the antithesis to simple, uninvolved neutrality. It’s a fairy tale.
Yeah, I feel like you misunderstand how a negative income tax works. There would be absolutely zero invasion of privacy, because there is no longer a requirement for eligibility. As with a UBI, everyone would get a payment (although for most people it would simply be a credit towards their income tax bill).
The main advantages of a negative income tax are:
- A flat income tax rate (I won't go into the many benefits of a flat income tax rate, but there are a lot)
- Elimination of "welfare cliffs"—where benefits are cut off once someone starts earning, discouraging work
- Reduction of government administrative costs by eliminating eligibility tests
- no retirement age - the UBI would simply continue into old age. You can choose to top it up with additional work or investment income
It's surprising how close the implementation of this mirrors the actual current situation in Australia (see chart below in AUD with an annual UBI of $19,830 - equivalent to the current social security payment - and a flat tax rate of 47% - equivalent to the current top rate of income tax). Unsure how it would look in other countries, but I suspect the figures can be tweaked to align.
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