If your point is only about negative tax: then the argument about \"$5 note can go to Canberra and come back to my own pocket as $4\" is far fetched.
Have you ever filled out a BAS form? You write: money owed to government $5; government owes me $4; attached my cheque is for $1.
Are you completing an income tax form? You write: I earnt $20; employer took out $4; actual tax owed is $5; attached my cheque is for $1.
A negative tax uses the formula, say:
Tax owing = Income x 30% - $8,000
Only if you are poor do you get an actual cheque, because you pay the full 30% on all income, but your benefit is not reduced due to work, so there\'s no poverty trap. Once in full-time work, you tell the government, the cheques are stopped and taxes are taken out of your salary PAYG using the standard formula. Most employees would not even need to fill out an annual income tax forms.
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Tax owing = Income x 30% - $8,000 Only if you are poor do you get an actual cheque, because you pay the full 30% on all income, but your benefit is not reduced due to work, so there\'s no poverty trap. Once in full-time work, you tell the government, the cheques are stopped and taxes are taken out of your salary PAYG using the standard formula. Most employees would not even need to fill out an annual income tax forms.