The welfare and progressive tax systems are less preferable than...

....the following flat negative income tax system: (The resolution has a character limit. Please include the end in the resolution). "The following negative income tax system": =There is a fixed income line =For every dollar an individual makes above the line, that individual pays a certain percentage =For every dollar an individual makes below the line, that individual receives a certain percentage *Example* Baseline: $50,000 per year Percentage: 25% -An individual making $50,000 will pay no taxes -An individual making $250,000 will pay $50,000 in taxes -An individual making $10,000 will receive $10,000 on tax day *Example* Baseline: $30,000 Percentage: 50% -An individual making $30,000 will pay no taxes -An individual making $130,000 will pay $50,000 in taxes -An individual making $10,000 will receive $10,000 on tax day On the contrary, with a progressive tax system and a welfare system, an individual is put into an income bracket, in which he/she pays a percentage of their whole income. An individual may qualify for welfare if he/she does not make above a certain amount. *Example* Tax brackets: $0 - $35,000: 0% $35,001 - $65,000: 25% $65,001 - $150,000: 35% $150,001 - $250,000: 40% $250,001 - (up): $50% Welfare brackets: $0 - $15,000: $15,000 $15,001 - $30,000: $5,000 -A person making $14,000 will pay $0 in taxes and then receive $15,000 in welfare -A person making $300,000 will pay $150,000 in taxes and then receive $0 in welfare *Example* Tax Brackets: $0 - $45,000: 0% $45,001 - $75,000: 15% $75,001 - $150,000: 40% $150,001 - $250,000: 60% $250,001 - (up): 70% Welfare Brackets: $0 - $25,000: $10,000 $25,001 - $35,000: $5,000 -A person making $20,000 will pay $0 in taxes and receive $15,000 in welfare -A person making $250,000 will pay $150,000 in taxes and receive $0 in welfare. ---------------------------------------------------------------------------------------------------- So, it is easy to see that there is a "before" amount and an "after" amount of money. I have done my best to construct a table displaying such tendencies: __________Neg. 1____Neg. 2____Prog. 1____Prog. 2 $00,000___$12,500___$15,000___$15,000___$10,000 $10,000___$20,000___$20,000___$25,000___$20,000 $20,000___$27,500___$25,000___$25,000___$30,000 $30,000___$35,000___$30,000___$35,000___$35,000 $40,000___$42,500___$35,000___$30,000___$40,000 $50,000___$50,000___$40,000___$37,500___$42,500 $60,000___$57,500___$45,000___$45,000___$51,000 $70,000___$65,000___$50,000___$45,500___$59,500 $80,000___$72,500___$55,000___$52,000___$48,000 $90,000___$80,000___$60,000___$58,500___$54,000 $100,000__$87,500___$65,000___$65,000___$60,000 $150,000__$125,000__$90,000___$97,500___$90,000 $160,000__$132,500__$95,000___$96,000___$60,000 $250,000__$200,000__$140,000__$150,000__$100,000 $260,000__$207,500__$145,000__$130,000__$78,000 $1,000,000_$762,500__$515,000__$500,000__$300,000 Forgive the underscores, but the website would not let me put more than two spaces next to eachother. ---------------------------------------------------------------------------------------------------- It is quite obvious that having individual percentage brackets are quite silly. When someone knows, such as in the second progressive example, that they will make just as much if they make $150,000 than if they make $300,000, then they will strive to make less, as making less is easier than making more. Wage is the result of the value of one's labor. One strives to make his/her labor more valuable so that he/she can make more in wage and spend this wage on the products of the labor of others. This strive leads to many things: -Innovation -Efficiency -More work -More Production When such benefits are created in society, then the following effects are spread throughout the whole of society: -Cheaper goods -More goods -More wealth -Better goods As demonstrated in the table above, a negative income tax system has similar benefits as the combination of the progressive income tax and welfare systems. A major difference is that in all cases, there is a greater motivation to have valuable labor, as such labor does not result in an increased percentage of taxation (leading to less wealth actually ending up into an individual's hands despite that individual producing more), but to more wealth being produced for the individual worker. With more motivation to produce, the worker shall produce more efficiently, thus resulting in more revenue for the government and more wealth for society. Therefore, the negative income tax system is preferable to the progressive tax system. (Economic Source: An Inquiry into the Nature and Causes of the Wealth of Nations, by Adam Smith. Outline: http://www.econlib.org...) (Taxation Reference: http://www.acronymfinder.com...-(NIT).html)