Negative income tax

A way of building redistribution into the taxation system by taking money from people with high incomes and paying it to people with low incomes. Because it takes place automatically through the tax system, it may attach fewer stigmas to the receipt of financial help than some other forms of welfare assistance. However, it may also discourage recipients from working to increase their income (see poverty trap), which is why some countries have introduced a form of negative income tax that is available only to the working poor. In the United States, this is known as the earned income tax credit.