Negative Income Tax: An Answer to Public Sector Inefficiency in Developing Countries

Authors

Daniel Kovan, Binghamton University--SUNY

Publication Date

2024

Document Type

Book

Description

Public assistance programs are increasingly prevalent in developing countries, though some are not as impactful as they might be due to program inefficiencies. These inefficiencies often stem from the high administrative costs of bureaucratic government institutions as well as from high targeting errors in directing benefits to eligible recipients. This research considers a negative income tax (NIT)––which reverses the tax flow to pay filers below a certain income threshold––as a solution to these inefficiencies that would allow governments to allocate valuable resources to those who need them most. This analysis delves into the causes of public sector inefficiency in developing countries, using Argentina as a case study. Based on Argentinian government budget data, this research estimates the funds that could be saved by transforming various in-kind public benefits into an NIT and discusses the considerable benefits, and several drawbacks, of this possible reform.

Files

Recommended Citation

Kovan, Daniel, "Negative Income Tax: An Answer to Public Sector Inefficiency in Developing Countries" (2024). Research Days Posters 2024. 79.
https://orb.binghamton.edu/research_days_posters_2024/79