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Implementing a Negative Income Tax. Net Cost, Poverty and Inequality Effects

Rafael Granell and Amadeo Fuenmayor ()

Hacienda Pública Española / Review of Public Economics, 2019, vol. 228, issue 1, 83-108

Abstract: The main aim of this paper is to propose a financially viable alternative to the current Spanish system of social protection: A Negative Income Tax (NIT) unifying in a single mechanism the system of pub¬lic benefits and income tax. We analyse the main characteristics of the NIT and simulate several NIT proposals for Spain, using the Living Conditions Survey. These proposals are distinct in that they do not suppose an additional cost in the tax-benefit system. The results of our simulations indicate a radi¬cal improvement in the indicators of poverty and inequality, especially extreme poverty, and also a redistribution of income from the elderly to families with children

Keywords: Basic Income; Negative Income Tax; Poverty; Inequality; Microsimulation. (search for similar items in EconPapers)
JEL-codes: C8 H24 I38 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:hpe:journl:y:2019:v:228:i:1:p:83-108