How exactly would a negative tax bracket work? Taken literally, this would mean that up to a certain income level, the government would pay you an amount proportional to how much you make. Presumably what it actually means is that you would be paid inversely proportional to how much you make.
At first glance it seems to me that this would have one of the same problems as the current system, which a guaranteed basic income is intended to solve - a high effective marginal tax rate at low (or no) income levels. (Unless the payment actually is positively proportional to earnings, in which case it has the obvious problem that it provides less benefit to those who need it most.)
Either way, I'm not clear on how this would be superior to a fixed guaranteed income with adjustments to the current tax rates such that the middle class end up with approximately the same after-tax total income.
Negative income tax is just an implementation detail. This idea is not in competition with GMI, it's a restatement of it, showing how it can exist on the far right as well as the far left. Per the reputable wikipedia:
"Negative income taxes can implement a basic income or supplement a guaranteed minimum income system.
In a negative income tax system, people earning a certain income level would owe no taxes; those earning more than that would pay a proportion of their income above that level; and those below that level would receive a payment of a proportion of their shortfall, which is the amount their income falls below that level."
OK, that matches what I was thinking. The trick is that to make it equivalent to basic income, the threshold level you describe would be different from the equivalent basic income level.
For example, if you take a basic income system with a $20k guaranteed minimum income - if you tried to recreate that with a negative tax bracket and a threshold of $20k, you would need to pay 100% of the shortfall. And even then, you would effectively have a 100% marginal tax rate; until you make $20k there is no financial incentive to work at all.
Instead, to get the equivalent of a $20k GBI, you would need to do something like, set a $40k threshold, with a negative tax of 50% of your shortfall. So at 0 income you get $20k. (And at 10k income you get 15k in negative tax, for a total of 25k, etc.) Of course, your marginal tax in that example is still very high at 50%. To make the marginal tax rate low, which is desirable at low income levels, you would either need to set a very high threshold, or more likely, have multiple negative tax brackets at different rates.
What I still fail to see is how this is "better" than a standard guaranteed income. It just seems like people will find it much more confusing than providing a fixed amount to everyone and having positive tax brackets as we do already (albeit different ones).
That's literally just a restatement of basic income. It's not technically a negative tax "bracket", where tax bracket is a range of incomes on which one pays a given marginal tax rate. I think cdcarter has it right.
At first glance it seems to me that this would have one of the same problems as the current system, which a guaranteed basic income is intended to solve - a high effective marginal tax rate at low (or no) income levels. (Unless the payment actually is positively proportional to earnings, in which case it has the obvious problem that it provides less benefit to those who need it most.)
Either way, I'm not clear on how this would be superior to a fixed guaranteed income with adjustments to the current tax rates such that the middle class end up with approximately the same after-tax total income.