Abstract: China could consider implementing negative individual income tax (IIT) to boost consumption and employment. It means that the government provides taxpayers with a certain amount of subsidy when the level of working income is lower than a given threshold. This article proposes a two-pronged policy scheme consisting of rewards and subsidies for businesses adding new jobs on one hand, and negative IIT on the other hand, which could drive spending and employment without causing excessive fiscal expenditure burdens.
Keywords: negative individual income tax, employment, consumption
