author

Jessica Wiederspan

University of Michigan

A NIT set at 100% of the poverty line with a 50% phaseout rate would've cost $219 billion in 2004 (using 2007) dollars. A NIT with an income threshold at the federal poverty line and a 33% phaseout rate would cost $336 billion, and phaseout completely at 303% of the poverty line. In 2007, the U.S. spent $207 billion on means-tested welfare, and only lifted 9.7 million of the 37.3 million Americans living in poverty. Reducing welfare eligibility criteria from patchwork means-testing to solely on the basis of income as reported to the IRS should increase take-up rates, reduce stigma, and significantly cut administrative costs relative to the current safety net. Regarding non-labor income such as basic income, income effects & substitution effects countervail one another, so that the overall effect on individual working time is ambiguous. Across four US and one Canadian NIT experiments, reduced labor supply averaged between 5% - 7.9% reduction for men, 17% - 21% for married women with children, and a 7% - 13.2% reduction for single women with children.
Expanding the Discourse on Antipoverty Policy: Reconsidering a Negative Income Tax
Basic Income
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