Nothing gets folks more riled up than a discussion of taxes, but what alternatives are there to the present system? The negative income tax is one such possibility.
Tax Alternatives: The Negative Income Tax
This tax system in the United States is an unmitigated disaster. No one really denies this reality, one among the few problems that appear to unite republicans and democrats in our country. The tax code is so big, no one incorporates a grasp of it and that features the IRS. While you and I may groan annual when it is time to file our personal tax returns, larger corporations do not have it abundant better. One well-known corporation reported that they file the equivalent of one tax document with the IRS every 3 minutes! Whereas the might or could not pay their share, the pure burden of filing taxes for them and us is crazy.
Given the nature of the mess, one would think we would do something. The age old question , but, has been what practical different is there to this mess? One proposal that has been around for some time is the negative income tax method.
The negative income tax was originally proposed within the Nineteen Sixties by Milton Friedman, a reasonably famous economist. His plan was not to simply address the collection of taxes, but to form a system that would cast off welfare, food stamps and all types of presidency entitlement programs.
The essential idea at the core of the negative income tax rate system was a flat tax with a twist. The twist gets a bit difficult, however it involves tax deductions and negative income. A flat tax rate of say twenty five percent would be established on all income earned. You'd then be in a position to require sure deductions against the tax for things like dependents [kids]. If your deductions totaled more than the overall income you earned during the year, the govt would then owe you all the taxes you paid in during the year and a proportion of your "negative income". At now, an example can probably help.
To form things simple, let's assume we have a tendency to have a family of 5 with total earnings being $thirty,000. Additional assume the overall deductions which will be claimed equate to $forty,000. The top of household has negative $10,000 underneath our system. The government would then owe the family all the cash they paid in during the year in taxes from paychecks and a percentage of the $ten,000 of negative income. Not bad, eh?
The negative income tax rate approach never really caught on with advocates. The system is ripe for attack as a result of taxpayers have a significant temptation to tweak their money numbers to show negative income. Frankly, the criticisms were most likely justified, but that should not distract us from the concept that this tax mess can be dealt with. There is a solution to the mess, but it will need thinking outside of the box as Milton Friedman tried to do.
Author Resource:
Riley Jones has been writing articles online for nearly 2 years now. Not only does this author specialize in Taxes Income, you can also check out his latest website about:
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