negative income tax

A plan to raise the income of the poor by direct cash subsidies. Instead of paying an income tax, the poor would receive a cash payment from the government.

Negative Income Tax

A taxation system where income subsidies are given to persons or families that are below the poverty line.

Investopedia Commentary

The government will send financial aid to a person who files an income tax return reporting an income below a certain level.

See also: 1040 Form, Ability to Pay, Exemption, Formal Tax Legislation, Horizontal Equity, Income Tax, Refund, Write-Off