I’m not all that educated on negative tax rate - what’s to prevent companies from just setting wages to obscenely low, knowing the government will just pick up the bill and pay out the difference?
Negative income tax is not a negative tax rate (it's a credit plus a progressive, always positive, rate.)
(EITC has a negative rate in the lower portion of it's range, but EITC is a weird thing.)
> what’s to prevent companies from just setting wages to obscenely low, knowing the government will just pick up the bill and pay out the difference?
People's lack of willingness to work for low wages, which increases when there is reduced economic coercion to take whatever minimal scraps are thrown at you because of the income floor provided by UBI or negative income tax (different names for the same thing.)
The transfer payment is taken from the entire economy through a tax. A slice off the top.
If a business has higher profits it would also pay larger portion of that transfer to low income persons.
A key feature is indexing the maximum amount i.e. what a person with 0 income would receive to typical cost of living at state or country level. This way it auto adjusts. Then it is in the interest of everyone paying taxes to figure out ways to reduce costs of living.
If you pick a value too low it does not actually keep someone alive, fed, and housed.
If you pay enough to live half the shitty jobs everyone hates become not worth doing.
It’s like taking the worst part of “tipping in the US” and running with just that’s.
The amount of tips isnt guaranteed,and you don't get access to them independently of whether you also choose the low-paying job, so I don't see how it's at all similar to UBI/NIT.
If people got the average rate of tips for a tipped job without doing the job, you think they'd take the job on top for the tipped minimum wage ($2.13/hr federally)? I don't think so.
You take X% off the top of the economy and distribute it to everyone who needs it on a sliding scale basically below a certain income level Y.