Milton Friedman was a genius in the field of economic policy. He recognized the supremacy of a free market economy with no lobbying. He also recognized the supremacy of, and therefore advocated, such perfect policies as:
- Volunteer military,
- Abolition of soldier drafting,
- Privatization of all Medical Institutions,
- Abolition of Medical licenses,
- Free-Market Healthcare,
- School Vouchers,
- School Choice,
- Freedom of Education,
- and the subject of this WordPress update: Negative Income Tax.
What is the Negative Income Tax?
The negative income tax is a flat tax system wherein people making less than a certain yearly income have the government owing and paying money to them instead of poor people owing the government money that they need for living an easier life. This beauty was and remains the perfect and only key to dodging that Friedman, among other free-market economic policy champions, knew as the “Welfare Trap”, named for an absolute fact. As in the fact that socialist policy of raising taxes on the rich and giving it to government programs actually traps the poor in a dilemma between being at the mercy of a large, therefore invasive, government, or at the mercy of mentally distorted individuals who love to disobey the Non-aggression axiom. How does this work? You ask, so please let me teach you all using sample numbers:
If the flat tax rate is 16%, and the cutoff between paying taxes [higher income] and earning extra [lower income] is $36,000, then this is the formula:
- One person making $36,000 per year would owe nothing while getting no extra, because 36,000-36,000 = 0 times 0.16 = $0.00
- One person making more than $36,000 per year would owe the government 16% of the difference of 36,000 subtracted from her actual yearly income
- One person making less than $36,000 per year would get extra from the government totaling to 16% of her income subtracted from 36,000.
Under this kind of a tax code:
- Someone without a job who makes nothing per year would get $36,000 a year
- A guy like me who makes $8,000 per year [NOT my exact amount, to be honest, exact amount shall remain top-secret] doing front-end grocery store tasks would receive an additional $4,480 per year
- My far future Paleontologist career that is estimated to currently have a $72,000 average annual salary would have me owing $5,760 per year in taxes in that far future stage of my life
- Due to me hiring a friend who understands people and socializing far better than I ever will to be my comic book writer and letterer, this tax code would have him owing $28,000 per year out of the $211,000 he can expect to make off his share of putting my fictional reality out to this reality
- As for my share of putting this fictional reality out to real life, I can expect to make $230,000 per year off my duties [artist and colorist] and therefore this NIT-based tax code would make me owe the feds $31,040 per year from the revenue of my comic ebooks.
NIT is basically the acronym for Negative Income Tax. Point being… Negative Income Tax is the tax code that no other tax code [no, not even the FairTax] can compare to. Neither one of George Bush and Barack Obama implemented the Negative Income Tax, therefore neither of them get praise from me about taxation.
It always makes me very happy to speak of these kinds of policies that one only needs basic math to figure out they will produce all the best outcomes financially for Individuals.
Thank you all for learning,