Many of us will get a tax refund this year, regardless of our income. However, a negative income tax system means those who file a return reporting income below a certain level receive extra money from the government to help them out.
Negative Income Tax (NIT) Definition
In an effort to reduce poverty and provide support to those living on the lowest incomes, negative income tax is government financial aid provided to taxpayers who report incomes low enough to qualify to receive it.
Negative income tax is something that has been considered in the U.S., but never fully implemented. The idea is thought to have originated in 1962 with economist Milton Friedman because he supported it in his book, Capitalism and Freedom.