(May 14, 2014 at 9:54 pm)Heywood Wrote:(May 14, 2014 at 9:53 pm)Cthulhu Dreaming Wrote: So let's see a realistic example, as I asked for.
Such a wholesale change to tax code is going to incentivize a whole new set of behaviors and disincentivize a great many things that our current tax code incentivizes. Whether we agree on whether those incentives are positive or not, they nonetheless are what they are. Have you considered what impact your scheme ia going to have on the incomes of working families?
Under the examples of negative income tax I gave, a Husband and wife would have a minimum of $25,000 year income if neither earned any income (each gets $12500)....which is enough for a couple to comfortably live off in most of the country. They would not incur any positive tax liability until their combined income exceeded $50,000(remember each gets a $25,000 exemption). If their combine income reached $75000 their net after taxes would be $62500. The would be paying an effective tax rate of about 17%. Add a kid who gets his own exemption and their tax rate decreases even more.
17% is probably substantially more than what their tax liability is now, which is why I asked (I make quite a bit more than the 75K figure in your example, and I assure you my net federal income tax rate is below 17% by a fair margin - and further, I can assure you that a significant change in my tax rate and bottom line would result in some very hard choices).
You start screwing around in a major way with household take-home income, and people are likely to be fucked in a very major way. That's why I asked for specifics of how such a plan might be implemented - and without same, I could not say whether it's a boneheaded idea, or brilliant. The actual numbers matter - the devil is entirely in the details.
It sounded like an ad hoc proposal at first, and nothing you've said has convinced me that it's not something that's been pulled out of your ass.
Would people be better off? Maybe. But your example is admittedly overly simplistic and not representative of what the implementation would be like in actuality - so I personally can't consider it anything more than a curious idea at this juncture.
Oh, and I said at the beginning I would for the moment ignore one absolutely salient point - it's a complete political non-starter with about a zero chance of actually being passed by Congress any time soon.
