Auggie wrote on Apr 19
th, 2017 at 7:04pm:
freediver wrote on Apr 19
th, 2017 at 6:45pm:
It depends on the details of your suggestion, which was pretty short on details.
I am saying that some people currently have little incentive to get off welfare.
The point is that this system would be cheaper and more efficient to administer, in my opinion, as opposed to the burdensome regulations of welfare currently.
We would still need all the exceptions. I also doubt it would come out at the nice straight line you imagine. It is a simple way of conceptualising the transition from welfare to full employment.
I suggest a way to take this even further, by replacing fixed, stepped changes in the marginal tax rate with a variable rate.
I originally imagined it as this (numbers used as an example only) for incomes below $30k pa, you pay no income tax. From $30k to 100k the marginal rate varies linearly from 10% to the maximum, eg 45%. Then flat at 45%.
However I see now it could be combined with your idea so it is a straight line that continues to go negative below $30k. That is, the marginal tax rate is a flat line from $0 pa annual income to $100k annual income.
The only adjustment I would make is to have a flat line where it crosses zero, so you don't have to do all the paperwork for plus or minus $50 worth of tax.
One of my reasons for this is that it is a bit of a psychological barrier to work hard to get a raise when you are about to get a big increase in your marginal tax rate.
Not sure if it would be possible to have a straight line or whether that would take away too much welfare.
Quote:The idea is that the measure would be implemented alongside current welfare policies, with the aim of phasing out the latter slowly.
It should be phased out immediately to the point that it offsets the change, so that you minimise the immediate change in people's income. Any change beyond that is a different question for another time. It is enough of a battle overcoming people's instinctive opposition to change without adding real changes to people's take-home pay.