Your First $30,000 Tax-Free - With A Catch

[BPSCG]

Maybe the U.S. should look at what's being proposed in New Zealand.

Act MP Sir Roger Douglas is proposing a new low-tax option for taxpayers in which the first $30,000 of income would be tax-free - but only if they pay for their own retirement, health care and welfare insurance or costs.

Income over the $30,000 tax-free threshold would be at a flat tax rate - 15 per cent - to be phased in over 15 years.

The Douglas plan would cut corporate tax rates to the same 15 per cent.

 

[geni]

And what do you do when they don't pay for their retirement, health care and welfare insurance? The idea was kinda popular before the credit crunch and resulting issues. Rather less so now.

 

[slingblade]

What if you don't make as much as $30,000? Does the proposition mean a person earning $10,000 will be held to the same self-retirement standard as someone making three times that?

 

[NewtonTrino]

People who make 30k don't pay a whole lot in actual tax in the US already. Especially if they have kids or a house payment. If they offered this deal on social security tax the system would immediately go bankrupt.

 

[BPSCG]

And what do you do when they don't pay for their retirement, health care and welfare insurance?

See the article. They pay the higher tax rate.

What if you don't make as much as $30,000? Does the proposition mean a person earning $10,000 will be held to the same self-retirement standard as someone making three times that?

See the article. Tax credits.

 

[rwguinn]

People who make 30k don't pay a whole lot in actual tax in the US already. Especially if they have kids or a house payment. If they offered this deal on social security tax the system would immediately go bankrupt.

When did we get a parlament and move to New Zealand?

Maybe the U.S. should look at what's being proposed in New Zealand.

Reading is Essential

 

[geni]

See the article. They pay the higher tax rate.

The article doesn't contian a coherent description of the plan. What if a persons says they will pay for their retirement, health care and welfare insurance but doesn't.

 

[BPSCG]

The article doesn't contian a coherent description of the plan. What if a persons says they will pay for their retirement, health care and welfare insurance but doesn't.

Hey, I just put up the thread and the link. If you have more questions, you need to ask the MP.

 

[geni]

Hey, I just put up the thread and the link. If you have more questions, you need to ask the MP.

Okey then why do you think the US should look into the proposal? It's not as if there has been a shortage of roughly equiv US based ones so whats special about this one?

 

[BPSCG]

Okey then why do you think the US should look into the proposal? It's not as if there has been a shortage of roughly equiv US based ones so whats special about this one?

For starts, our Social Security system is going broke. Bush wanted to get fundamental reform of the system t the beginning of his second term, but the Democrats stalled it, and then the Iraq war started getting out of hand, effectively killing it.

But the system is definitely going broke. Maybe this could be a starting point for discussion how to fix it.

(This is where various maroons come in and claim everything is fine, it's not going broke, blah blah blah. A lot of them are the same people in Congress who were telling us that Fannie Mae and Freddie Mac were completely healthy and it was them mean old Republicans who wanted to kill them...)

 

[geni]

For starts, our Social Security system is going broke. Bush wanted to get fundamental reform of the system t the beginning of his second term, but the Democrats stalled it, and then the Iraq war started getting out of hand, effectively killing it.

But the system is definitely going broke. Maybe this could be a starting point for discussion how to fix it.

And how do you think this proposal will fix it?

 

[slingblade]

See the article. Tax credits.

Sorry. I don't understand how that would help in funding my retirement.
A tax credit would do what?

I make $10,000 in one year. I get tax credits, because I didn't earn $30,000.
What am I getting, exactly? A pass on paying taxes I didn't owe anyway? Or something else?

Not intending any sarcasm. I just don't understand.

 

[BPSCG]

Sorry. I don't understand how that would help in funding my retirement.
A tax credit would do what?

I make $10,000 in one year. I get tax credits, because I didn't earn $30,000.
What am I getting, exactly? A pass on paying taxes I didn't owe anyway? Or something else?

Not intending any sarcasm. I just don't understand.

I believe he's talking about a negative income tax.

In economics, a negative income tax (abbreviated NIT) is a progressive income tax system where people earning below a certain amount receive supplemental pay from the government instead of paying taxes to the government. Such a system has been discussed by economists but never fully implemented. It was developed by Juliet Rhys-Williams in the 1940s and later by United States economist Milton Friedman in 1962 in Capitalism and Freedom. Negative income taxes can implement a basic income or supplement a guaranteed minimum income system.


In a negative income tax system, people earning a certain income level would owe no taxes; those earning more than that would pay a proportion of their income above that level; and those below that level would receive a payment of a proportion of their shortfall, which is the amount their income falls below that level.


Typically, this is proposed to be implemented as a flat tax combined with a fixed government payment. For example, if the flat tax rate is 25% and a government payment of $10,000, then:

• A person earning $40,000 per year would be at the break-even point. They pay no taxes, because their tax payment equals their government payment.
• A person earning $1,000,000 would pay close to the full 25% tax, as the government payment would be negligible compared to the $250,000 in tax payments.
• A person earning only $4000 per year would pay $1000 in taxes but receive $10,000 in payment, for a net income of $13,000, or $9,000 in net government payments. The net payment is 25% of the difference between their income and the break-even income.

Link.

 

[slingblade]

Oh! Okay, not sure I agree with such a program or proposal, but it makes more sense to me now. Thanks, Beeps.