Is a Basic Income equivalent to a negative income tax?

If you can keep the full amount of your basic income, whether working or not, whether rich or poor, you are bound to be better off when working than out of work. [Fig. 2] But this aspect of the unemployment trap can be removed just as effectively, it would seem, by a means-tested scheme that would phase out the benefit less steeply as earnings rise. This is achieved through the so-called negative income tax, a uniform and refundable tax credit. The notion of a negative income tax first appears in the writings of the French economist Augustin Cournot (1838). It was briefly proposed by Milton Friedman (1962) as a way of trimming down the welfare state, and explored at more depth by James Tobin (1965, 1966, 1967, 1968) and his associates as a way of fighting poverty while preserving work incentives. On the background of an explicit tax schedule which taxes no income at 100% and which can be, but need not by definition be, linear, a negative income tax amounts to reducing the income tax liability of every household (of a given composition) by the same fixed magnitude, while paying as a cash benefit the difference between this magnitude and the tax liability whenever this difference is positive. Suppose the fixed magnitude of the tax credit is pitched at the same level as under some basic income scheme under consideration. Someone with no income, and hence no income tax liability will then receive an amount equal to the basic income. As the income rises, the benefit will shrink, as in the case of conventional means-tested schemes, but a slower rate, indeed at a rate that will keep post-and-transfer income at exactly the same level as under the corresponding basic income scheme. The NIT variant simply consists in netting out taxes and benefits. Under a basic income scheme, the revenues needed to fund the NIT’s universal tax credit are actually raised and paid back to all. Under NIT, transfers are all one-way only: positive transfers (or negative taxes) for households under the so-called break even point, negative transfers (or positive taxes) for households above.