A Basic Income using Negative Income Tax for the USA

Now that I have shown how to implement a Basic Income using  a perfectly balanced redistributive Income Tax system in France and the UK, I thought I would see how the same idea could work in the USA.

I took figures for the Income distribution that I found here (a bit tedious, because I had to extract the numbers by hand), and that allowed me to generate a Google Sheet file that you can consult here.

The following graph shows one of the many options for a balanced system.

In this one, we give all US citizens a Unconditional Basic Income of $15000 a year, but tax any additional income at a flat rate of  27.8%. This means that the 66% of Americans who earn less that $53,600 a year, will pay no tax at all - it's the point where the tax at 27.8% cancels out the $15000 payment.

Anyone earning more than the magic $53,600 will effectively pay tax at 27.8% on any additional income, but of course this only ramps up very slowly - as shown in the following plot - and even people in the top 1% of earners woud still be paying less than 25% (red line)

The graph also shows two other combinations or Basic Income and Tax that work well. You could give everyone a Basic Income of $10,000 a year if you had a flat rate Income Tax at 18.5% on all other income (blue line), or you could choose to give everyone $20,000 if you applied the universal income tax at 37.1%.

As with the other examples for France and the UK, I think it is only fair to point out that income tax done this way does not raise any revenue for the Government - it's purely redistributive. But in the USA, where tax payers (particularly those at the top end) are endlessly moaning about their money going to the government. In this case, NONE of the money goes to the Government - it all goes to other US citizens. You'd have to be extremely selfish to say that you would prefer to see people starving to death, or living in the street, that pay less than 30% of your income in tax.

In such a system, 2/3 of the population actually get money from the tax system. And the other third can look themselves in the mirror and say - I'm doing something good for my fellow citizens.

Donald Trump - are you listening?