Dr. Milton Friedman

[SuperMegatron]

I had to read on this guy for an old project on capitalism. He is a conservative economist who came up with something called a negative income tax. Its actually a very interesting concept. At the time of his writings on this he wanted all americans to start with a $6000 payment from the IRS. As you worked you reduced this payment by .50 per dollar. Thus providing an incentive to work. This program would replace most social programs out there, and while providing amount of aid it would reduce spending by having less government management and it would ad an incentive to work.

[Ex-Cyber]

The whole idea that someone needs to create an incentive to work is deeply perverse.

[Jeeba Jabba]

The whole idea that someone needs to create an incentive to work is deeply perverse.

More perverse than creating ways to keep others from working?

[mankrip]

Yes.

[Specially Cork]

Make unemployment a crime and give all criminals jobs as prison guards for the other people in their cell.

[melancholy]

Um, wait, so you are saying that everyone starts the year by owing $6000 to the government, and by working you eliminate this debt? So in turn, the only people that collect a debt are the ones that have no money to pay the debt? Yeah, that sounds like a great plan. I mean, it's been working so great for the banks with the mortgage crisis that follows a similar system...

[SuperMegatron]

Um, wait, so you are saying that everyone starts the year by owing $6000 to the government, and by working you eliminate this debt? So in turn, the only people that collect a debt are the ones that have no money to pay the debt? Yeah, that sounds like a great plan. I mean, it's been working so great for the banks with the mortgage crisis that follows a similar system...

The point of his idea was to stop the disincentive to work if you are living on public assistance. If you do nothing in america you get food stamps, rent subsides, medicaid, and a host of other safety net programs. If you then attempt to work, the government pulls all of them back. You can't ahead fast enough to break free from the programs. This negative tax replaces all other social safety nets.

[SuperMegatron]

Negative income tax
Main article: Negative income tax
The negative income tax (NIT), which Milton Friedman proposed in his 1962 book Capitalism and Freedom, is a type of flat tax. The basic idea is the same as a flat tax with personal deductions, except that when deductions exceed income, the taxable income is allowed to become negative rather than being set to zero. The flat tax rate is then applied to the resulting "negative income," resulting in a "negative income tax" the government owes the household, unlike the usual "positive" income tax, which the household owes the government.
For example, let the flat rate be 20%, and let the deductions be $20,000 per adult and $7,000 per dependent. Under such a system, a family of four making $54,000 a year would owe no tax. A family of four making $74,000 a year would owe tax amounting to 0.20 × (74,000 − 54,000) = $4,000, as under a flat tax with deductions. But families of four earning less than $54,000 per year would owe a "negative" amount of tax (that is, it would receive money from the government). For example, if it earned $34,000 a year, it would receive a check for $4,000.
The NIT is intended to replace not just the USA's income tax, but also many benefits low income American households receive, such as food stamps and Medicaid. The NIT is designed to avoid the welfare trap—effective high marginal tax rates arising from the rules reducing benefits as market income rises. An objection to the NIT is that it is welfare without a work requirement. Those who would owe negative tax would be receiving a form of welfare without having to make an effort to obtain employment. Another objection is that the NIT subsidizes industries employing low cost labor, but this objection can also be made against current systems of benefits for the working poor.

[melancholy]

Okay, I read that backwards then. So the government gives each person $6000 a year, but as you earn more, it gets taken away until it's 0, and then anyone over that pays the positive. It's an interesting concept, but it's also designed to tax the rich like crazy while giving the poor barely anything. That kind of deal would never, ever pass in congress as both sides would be against it.

[Specially Cork]

American income tax confuses the shit out of me.

In the UK you have a job, you get paid, and every month a percentage is automatically deducted for income tax. If they fuck up you get a refund. Unless you're a business owner/director or a few other exceptions that's it. Finished.

[Jeeba Jabba]

American income tax confuses the shit out of me.

In the UK you have a job, you get paid, and every month a percentage is automatically deducted for income tax. If they fuck up you get a refund. Unless you're a business owner/director or a few other exceptions that's it. Finished.

Same here, except we get a refund every year. I make usually around $45k a year and roughly 5,000 of that goes to income tax. I get about half of that back in the spring, on average.

[Specially Cork]

American income tax confuses the shit out of me.

In the UK you have a job, you get paid, and every month a percentage is automatically deducted for income tax. If they fuck up you get a refund. Unless you're a business owner/director or a few other exceptions that's it. Finished.

Same here, except we get a refund every year. I make usually around $45k a year and roughly 5,000 of that goes to income tax. I get about half of that back in the spring, on average.

Really? I was under the impression that everyone had to file a tax return, and you need to declare pretty much every cent that went through your household...of course this all just comes from one 20-year-old Simpsons episode.

[melancholy]

American income tax confuses the shit out of me.

In the UK you have a job, you get paid, and every month a percentage is automatically deducted for income tax. If they fuck up you get a refund. Unless you're a business owner/director or a few other exceptions that's it. Finished.

Same here, except we get a refund every year. I make usually around $45k a year and roughly 5,000 of that goes to income tax. I get about half of that back in the spring, on average.

Really? I was under the impression that everyone had to file a tax return, and you need to declare pretty much every cent that went through your household...of course this all just comes from one 20-year-old Simpsons episode.

All I ever need is how much I made in a year, how much stock I have, and how much interest I paid on all my loans. And all that information is mailed to me by the individual companies 3 months before the tax filing is due. If you own a business, then it gets more complicated, but for most people, it's just a matter of not throwing away tax papers that are mailed to you and inputing all that info into little boxes on a tax form.