Criticism
The main drawback is one commonly found in almost any income-based tax system: it requires considerable reporting and supervision in order to avoid fraud. The incentive to commit fraud may be increased with a NIT, since the monetary reward for fraud could be larger than a taxpayer's total tax liability. The added expense of policing fraud could offset the benefit from reducing administration costs resulting in a net increase in costs.
Another criticism is that the NIT might reduce the incentive to work, since recipients of the NIT would receive a guaranteed minimum wage equal to the government payment in the absence of employment. A series of studies in the United States beginning in 1968 attempted to test for effects on work incentives. The studies showed minimal disincentives, but were difficult to analyze as the monetary benefits were rarely as generous as those already received through the traditional welfare system. These results lead to an apparent dilemma of maintaining the benefits of existing programs through an NIT without creating significant disincentives and while restricting coverage to any manageable portion of the population.
Read more about this topic: Negative Income Tax
Famous quotes containing the word criticism:
“I consider criticism merely a preliminary excitement, a statement of things a writer has to clear up in his own head sometime or other, probably antecedent to writing; of no value unless it come to fruit in the created work later.”
—Ezra Pound (1885–1972)
“The critic lives at second hand. He writes about. The poem, the novel, or the play must be given to him; criticism exists by the grace of other men’s genius. By virtue of style, criticism can itself become literature. But usually this occurs only when the writer is acting as critic of his own work or as outrider to his own poetics, when the criticism of Coleridge is work in progress or that of T.S. Eliot propaganda.”
—George Steiner (b. 1929)
“As far as criticism is concerned, we don’t resent that unless it is absolutely biased, as it is in most cases.”
—John Vorster (1915–1983)