So how does that differ from NIT, apart from not giving everyone the same level of minimum benefit?
Well you don't necessarily have the flat structure afterwards in terms of taxation. Also, don't you appreciate that the effective marginal rate of taxation is different to promote people to work. You are raising their after tax/benefit wage rate compared to the NIT scheme so that they work (in order to work) in the phase-in period.
NIT is the basic benefits reform. Before there were scenarios where you would have a 100% marginal rate of taxation.
NIT solves this but results in as little differentiating between people as possible. NIT I feel is going backwards, and a more crude form of redistribution.
EITC in the states was initially targeted at people like single mums where it was found to be very good. As it was expanded to include more and more people, whilst there were benefits, it became less and less efficient. Again, what level of efficiency is ideal?
The UK benefits system is retarded, that's one of the things that needs to be addressed.
Again its difficult to address. I don't think the, "lets just pull out of it" course of action is necessarily the best.
I've also realised the worked example is gone from the NIT wiki page, I'll see if I can dig out an alternative.
It's okay, I drew the worked example.