Nothing gets people more riled up than a discu ion of taxes, but what alternatives are there to the
Nothing gets people more riled up than a discu ion of taxes, but what alternatives are there to the current system? The negative income tax is one such po ibility.
Tax Alternatives: The Negative Income Tax
The current tax system in the United States is an unmitigated disaster. Nobody really denies this fact, one of the few i ues that seem to unite republica and democrats in our country. The tax code is so big, nobody has a gra of it and that includes the IRS. While you and I may groan once a year when it is time to file our personal tax retur , larger corporatio dont have it much better. One well known corporation reported that they file the equivalent of one tax document with the IRS every 3 minutes! While the may or may not pay their share, the pure burden of filing taxes for them and us is crazy.
Given the nature of the me , one would think we would do something. The age old question, however, has been what functional alternative is there to the current me ? One proposal that has been around for some time is the negative income tax method.
The negative income tax was originally proposed in the 1960s by Milton Friedman, a fairly famous economist. His idea was not to just addre the collection of taxes, but to create a system that would do away with welfare, food stam and all types of government entitlement programs.
The basic idea at the core of the negative income tax rate system was a flat tax with a twist. The twist gets a bit complicated, but it involves tax deductio and negative income. A flat tax rate of say twenty five percent would be established on all income earned. You would then be able to take certain deductio agai t the tax for things like dependents [kids]. If your deductio totaled more than the total income you earned during the year, the government would then owe you all the taxes you paid in during the year and a percentage of your negative income. At this point, an example will probably help.
To make things simple, lets a ume we have a family of five with total earnings being $30,000. Further a ume the total deductio that can be claimed equate to $40,000. The head of household has negative $10,000 under our system. The government would then owe the family all the money they paid in during the year in taxes from paychecks and a percentage of the $10,000 of negative income. Not bad, eh?
The negative income tax rate a roach never really caught on with advocates. The system is ripe for attack because taxpayers have a major temptation to tweak their financial numbers to show negative income. Frankly, the criticisms were probably justified, but that should not distract us from the idea that the current tax me can be dealt with. There is an a wer to the me , but it will require thinking outside of the box as Milton Friedman tried to do.
Tax Alternatives: The Negative Income Tax
The current tax system in the United States is an unmitigated disaster. Nobody really denies this fact, one of the few i ues that seem to unite republica and democrats in our country. The tax code is so big, nobody has a gra of it and that includes the IRS. While you and I may groan once a year when it is time to file our personal tax retur , larger corporatio dont have it much better. One well known corporation reported that they file the equivalent of one tax document with the IRS every 3 minutes! While the may or may not pay their share, the pure burden of filing taxes for them and us is crazy.
Given the nature of the me , one would think we would do something. The age old question, however, has been what functional alternative is there to the current me ? One proposal that has been around for some time is the negative income tax method.
The negative income tax was originally proposed in the 1960s by Milton Friedman, a fairly famous economist. His idea was not to just addre the collection of taxes, but to create a system that would do away with welfare, food stam and all types of government entitlement programs.
The basic idea at the core of the negative income tax rate system was a flat tax with a twist. The twist gets a bit complicated, but it involves tax deductio and negative income. A flat tax rate of say twenty five percent would be established on all income earned. You would then be able to take certain deductio agai t the tax for things like dependents [kids]. If your deductio totaled more than the total income you earned during the year, the government would then owe you all the taxes you paid in during the year and a percentage of your negative income. At this point, an example will probably help.
To make things simple, lets a ume we have a family of five with total earnings being $30,000. Further a ume the total deductio that can be claimed equate to $40,000. The head of household has negative $10,000 under our system. The government would then owe the family all the money they paid in during the year in taxes from paychecks and a percentage of the $10,000 of negative income. Not bad, eh?
The negative income tax rate a roach never really caught on with advocates. The system is ripe for attack because taxpayers have a major temptation to tweak their financial numbers to show negative income. Frankly, the criticisms were probably justified, but that should not distract us from the idea that the current tax me can be dealt with. There is an a wer to the me , but it will require thinking outside of the box as Milton Friedman tried to do.
