An Experimental Study of the Negative Income Tax
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Key Findings
Key Findings:
Lays out key issues for the experiment to examine, including:
- Does a negative tax, because its financial assistance is available to families before they break up, have a positive impact on family stability?
- How does a negative income tax affect earnings? What levels of assistance provide the greatest assistance while avoiding work disincentive effects?
- What are the administrative costs of the program?
- What are people’s spending and saving patterns? Mobility patterns?
This paper describes the plan for a pilot project to test negative income tax ideas. Experimental variables include the amount of income families are guaranteed if they have no other income, and the rate this amount is reduced as other income rises. The key question is how these variants of the negative income tax affect earnings.
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