NIT, UBI, Guaranteed Income et al, are ultimately functions of our tax, fiscal, and monetary systems. Whatever initialism is used the same end results will be realized. A NIT is the most appropriate way of describing how a UBI etc. will be implemented and ultimately paid for.
The Case Against UBI
The image that pops into mind with UBI is that of a monthly cheque showing up at everyone’s door whether requested or not. Such a program will not come to pass.
UBI, through the magic of the internet and social media, has come to represent for many, the tip of the government’s spear into control over the individuals daily affairs. This negative branding has lost a sizable percentage of “never will buy into the idea” citizens.
The universality of UBI, like government-paid healthcare, is a non-means-tested entitlement with the only caveat being a citizen has to want it and ask for it. In other words just because open heart surgery is “free”, most healthy individuals won’t seek it out or want it. This caveat puts an end to the notion of an unrequested cheque showing up (or worse being automatically deposited into a bank account.) Why? Taxes, clawbacks, and the associated paperwork. A great many will still want, request, and be quite happy to fill out any required slips in order to receive what they determine to be as needed additional income.
How much monthly income is too much income is up to the individual to determine. Therefore, this amount will and should vary between $0 and a maximum (universal) amount, as determined by program administrators. As with most other forms of income, a government provided income will be taxed, and at the end of the tax year, tallied.
The behemoth that is the government’s tax department is not going anywhere anytime soon. The tax avoidance programs that higher income individuals enjoy are not going anywhere anytime soon. Government income is next to impossible to not declare, but there do exist systems of deductions and tax credits that can be used in order to reduce (avoid) tax obligations.
A standard, universally-understood tax reduction device that is built into the income tax system is the basic personal tax credit (usually the first line in the tax deduction portion of a tax calculation form). This “credit” assumes that the tax filer has in essence prepaid this amount, and therefore may reduce this from his or her taxable income. The personal credit reduction is available as a whole number, not an integer, i.e. not allowed to go into the negative and therefore not refundable. Enter NIT.
By allowing the Basic Personal Tax reduction to enter into the negative, lower and zero income tax filers will find a tax refund that will reach up to the total amount of the stated tax credit. (The personal tax credit amount usually hovers around a nation’s poverty line.) These tax refunds theoretically could be returned as a lump sum, but it are more likely and preferably to be returned as a monthly installment. Here we have the basic framework of a guaranteed monthly income program, albeit based on a persons previous year’s situation.
By tweaking the regulations in the tax system, a monthly, taxable prepayment of a refund (based on a zero income for the current year assumption) can be made available to all.
Article by Ward Smith