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I was wondering how this was different from regular income tax that we pay now and found that it's unclear because there are different models proposed by Friedm
by vivekd 9y ago
I was wondering how this was different from regular income tax that we pay now and found that it's unclear because there are different models proposed by Friedman . However, the idea seems to have a
1. A base tax rate,
2. An income cutoff - with those above paying and those below paying)
3. A subsidy rate (the % at which those above the cutoff pay on the income above the cutoff and the % at which those below receive to the extent that their income falls below the cutoff)
I found this really helpful example on wikipedia:
The income tax rate is 50%.
The tax exemption is $30,000.
The subsidy rate is 50% and equal to the income tax rate.
Under this scheme:
A person earning $0 would receive $15,000 from the government.
A person earning $25,000 would receive $2,500 from the government.
A person earning $30,000 would neither receive any money nor pay any tax.
A person earning $50,000 would pay a tax of $10,000.
A person earning $100,000 would pay a tax of $35,000.
So it is sort of a basic income scheme, but it seems more workable than the ones commonly proposed. Although it seems like it would be very difficult to get governments on board this scheme because Friedman advocated this as an alternative to all welfare programs of any sort. This sort of basic distribution without the vast bureaucracy seems like something governments would perceive as a threat.