Political online game and economic simulation

What are the pros and cons of the Negative Income Tax ?

I enacted it in Chanada and it was really good for me. i got these results:
-Lowers GINI (more income equality)
-Increases consumption
slight decrease in investment and capital (or at least for me it did) but it'll recover
-decreased savings ratio, but slightly
-good growth potential, best if used in a capitalistic country because of increased consumption

GENERAL RULING

I like this reform a lot. It depends what you want though. Flat income tax goes down a route of investment and big business, negative income tax promotes equality, consumption, and slightly takes a shot at big business. What worked really well for me was i implemented this and then some tasks good for businesses and they went hand in hand, with NIT giving good equality and support to the middle class and my business tasks good for industry and it went really swell, look at Chanada for a good example of negative income tax mixed with big business capitalism; I like the result immensly but it's all what you want to get out of the reform.

Pros:
It boosts consumption to varying degrees. Since it gives money to those who live under living costs they save more which they spend later. It can act as a nice lttle booster to domestic consumption. It also makes a strong dent in reducing poverty and may increase income equality. As far as I know, it also may reduce welfare costs slightly.

Cons:
It can still cost money. It may reduce productivity, and can reduce incomes. Corporations may pay some employees less if they know that the government will pay people who make les than the living cost. However you may not notice these effects and they may not even exist. I am not an expert on this reform.

It's main purpose though is boosting consumption and reducing poverty (slightly or quite a bit depends though). A nice little economic stimilus if you are willing to bear any negative effects such as potential costs.

Thanks Chad and Thepresident!

No problem! enjoy the game!

Very informative info.

Gazprom recently enacted this reform it has caused popularity to shoot up to almost 9! We have noticed a general increase in consumption, savings ratio has also increased, government income has increased 4B rubles which is the opposite of what I though would happen. Also incomes have increased. Unemployment and people starving to death have dropped by considerable points.

We recommend this reform for states with business oriented growth strategy's.

Hello.

I'd like to understand how does it really work.

"The cost of living is subtracted from one half of a citizen's income and this amount is paid as a tax by every employee, or it is paid to them if it is a negative number."

Let's say we have two guys Fred and Ben. Fred earns 3500$ and Ben earns 1500$. Living cost in their country is 1000$.

So for Ben it looks like that:
1500$ / 2 - 1000$ = -250$

For Fred:
3500$ / 2 - 1000$ = 750$

And now questions:
1. Does Ben get 250$ or 1000$ from state?
2. Does Fred pay 750$ or 1000$ of tax?

Regards,
ciech

"The cost of living is subtracted from one half of a citizen's income and this amount is paid as a tax by every employee, or it is paid to them if it is a negative number."

Ben gets 250 from the state. Fred pays 750 to the state.

Does it actually reduce joblessness by inducing less skilled to take available work?