Let’s be honest, if the US did something like this, the ultra wealthy who are already not paying taxes would find ways to game more money out of the system.
But it could still help a lot of people.
Please edit the title of your You Should Know post to begin with “YSK”. It’s Rule 1 of the community. Thank you.
Wouldn’t it make more sense to, like, have the first 12k dollars tax free and then increase the percentage for everything exceeding this threshold? The more money you earn, the more taxes you can afford to pay. Especially when you earn only little money this is important for you to survive, while $100k/yr managers could easily afford to pay 50k of those in taxes
Living on $50k/year is not easy. The federal poverty line for a family of 4 is $31,200, and many consider those numbers to be much too low.
There’s absolutely no need to target normal American households with more taxes. Billionaires already don’t pay their (too low) taxes and have far, far more than they need that they’ve taken from the labor of others. Actually taxing them appropriately would cover everything we could possibly need and then some.
We should be raising substantially the minimum income needed before you have to pay taxes. It’s fucking stupid to be levying a bunch of tax on people who are struggling to make ends meet.
What? $50k is even in the richest European countries about as much as 2 people earn per year. €25k/year is the median, give or take 2k. Subtracted are about 5k in taxes.
Crazy how expensive the US is…
Yeah, European salaries across the board are generally lower than the US by quite a bit, but we also typically pay for a lot more services than Europeans do as generally a lot more is privatized (healthcare, etc.). $100k is typically what most middle class Americans are striving for in order to have a relatively “comfortable” life, buy a house, etc. (though honestly, the housing market today is so fucking insane that even that isn’t really enough to buy a house in many places now). The median household income in 2023 was $80,610, for reference.
A negative income that is better than that. It says, if you’re working, but only making $12k, the state will give you money so you now have $20k. (Not real numbers.)
The idea is that it incentivizes participation in the work force, with hopes that the extra money helps you get stable and move up the payscale where you may stop needing the external support.
How does that incentivizes workforce participation? You’re giving them money to not work, I think graduated taxes should just not have the NIT portion.
No. If you reported $0 in income on your taxes, you get nothing. There’s a minimum income to get anything back. So if you don’t work, you get nothing, so you are incentivized to find a job of some kind.
But that minimum should be quite low and attainable.
This gets proposed as a way to implement basic income (UBI). It is only equivalent when the lowest tax bracket is equal to the NIT.
ex: if NIT of 25% up to $40k, and 25% income tax rate up to $50k, then at $40k income, you would pay 0 net income tax. At 0 income, you would receive $10k, and at $50k income, you’d pay $2500. Every $10k of income results in $2500 extra taxes or less of a refund.
Milton Friedman’s version of NIT was at 50% for low income ($20k), and then fairly low tax bracket rates (20%) above that. This means that the poorest people are taxed very high on income, and middle to high incomes pay a lower rate. Welfare and unemployment systems often use such a 50% clawback. It is a significant disincentive to work, unless you will make a lot during a year.
Refundable tax credits is a similar system of permitting net refunds to people even if they pay no income taxes.
Also, in “things that will never happen in the US” we have universal healthcare
but what about -~- LOOPHOLE WHACKAMOLE -~- its not technically free for billionaires since they have to pay so much to lawyers
What are the upside of that vs plain minimum wage?
It reduces the onus on businesses and places it on the government (and this indirectly, taxpayers).
Better for small businesses to hire and thrive.
“But I don’t want my taxes to go up!”
Maybe you just need more tax brackets. Where I live, for some reason, a specialized doctor making $250,000/yr is in the same tax bracket as some C-suit making $900,000.
I definitely need more tax brackets where I live.
Never understood the idea of tax brackets. Why isn’t it just continuous? Computers are calculating the tax now anyway, not like it would be infeasible.
Could totally do a sigmoid function and just integrate over the income. But the brackets are just discrete approximation of that.
You still have brackets, but they’re at every $0.01
Sounds like a nightmare to try to explain to someone. Technically it should work, but practically it might be difficult.
Why? To me it’d be much more intuitive. I find brackets quite confusing
How would an infinitely adjusting tax percentage be intuitive? Brackets are simple. You pay x% on your income in some bracket and y% on your income in a different bracket. You only need simple multiplication and addition to figure out what you would owe.
A continuous bracket could be defined by a single equation. You’d plug in your income and you’d get out your taxation. No need to look up what bracket you are in.
