The more money people keep, the more they have to spend. Check out the negative income tax.

Negative Income Tax:

A negative income tax would replace the current progressive income tax system used throughout most of the Western world. This would be replaced by a flat tax of, say, 25%, but each taxpayer would also be given $10,000 by the government.

Thus a person earning only $4000 per year would pay $1000 in taxes for a net income of $13,000.
$10,000 + $4000 - $1000 = $13,000 net income (Overall, they would receive a net gain of $9,000 from the government.)

A person making $40,000 would be at the break-even point, essentially paying no taxes.
$10,000 + $40,000 - $10,000 = $40,000 net income

A person making $1,000,000 per year would pay close to the full 25% tax.
$10,000 + $1,000,000 - $250,000 = $760,000 net income.

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It's a bit of a trick. These are all very small countries.

From the CIA factbook

Bermuda has about 67,000 people
Luxumburg has about 408,000 people
and Jersey has about about 91,000 people

It doesn't take much to bump up thier per capita GDP. To get the per cap. GDP to rise 1$ requires the generation of 67, 408, or 91 thousand US$, which corespondes to about 670,000 - 4,080,000 - or 910,000 US$ more investment in a year.

By contrast the US (pop ~300,000,000) would require 300 million US$ to get the same increase, or an aditional investment of 3,000,000,000 US$.

Flows of 0.5 to 5 million US$ aren't uncomon but encouraging an extra 3 billion would be very difficult.

GDP/Capita is the most rediculous method of indentifying the "average" I can think of. Surely the most obvious way to indentify an accurate average would be to find the mode, rather than the media wage. You could have bands of £500s (or $1000s) and see which band has the most people in it.

GDP/Capita, especially for a nation with a population below that of most large towns, is easily distorted, especially with an disproportionately high amount of millionaires living there.

For example:

10 people live on an Island A and 10 on Island B

On Island A, 10 people all earn £20,000/year

On Island B, 9 people earn £20,000/year and 1 person earns £200,000/year

GDP/Capita on Island A is £20,000
GDP/Capita on Island B is £38,000

I know this is a simple example, but as you can see, with just one person earning a very high wage, it gives the impression that the average wage on Island B is actually double what the "real" (mode) average wage is.

I think this is especially important to take into account when considering Bermuda's place in the rankings. With a population of 66,000 and a poverty rate of 19%, to suggest that most people in the country earn £35,000 ($70,000) is quite frankly rediculous.

quote:

Originally posted by Krypton The more money people keep, the more they have to spend. Check out the negative income tax. Negative Income Tax: A negative income tax would replace the current progressive income tax system used throughout most of the Western world. This would be replaced by a flat tax of, say, 25%, but each taxpayer would also be given $10,000 by the government. Thus a person earning only $4000 per year would pay $1000 in taxes for a net income of $13,000. $10,000 + $4000 - $1000 = $13,000 net income (Overall, they would receive a net gain of $9,000 from the government.) A person making $40,000 would be at the break-even point, essentially paying no taxes. $10,000 + $40,000 - $10,000 = $40,000 net income A person making $1,000,000 per year would pay close to the full 25% tax. $10,000 + $1,000,000 - $250,000 = $760,000 net income.

what kind of economic shortfall would that give, say, the US government(s)? is that in addition to consumption taxes as well?

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quote:

Originally posted by pkcRAISTLIN what kind of economic shortfall would that give, say, the US government(s)? is that in addition to consumption taxes as well?

It would force the government to cut back on spending. The more over budget the government is (now 9 trillion $ most of it Bush), the less valuable the dollar becomes.

Consumption taxes? Like cigarette and alcohol tax? Probably still keep them.

I still like the fair tax better...

The FAIRTAX (H.R.25/S.1025) is a bill in the United States Congress for changing tax laws to replace the Internal Revenue Service (IRS) and all federal income taxes (including Alternative Minimum Tax), payroll taxes (including Social Security and Medicare taxes), corporate taxes, capital gains taxes, gift taxes, and estate taxes with a national retail sales tax, to be levied once at the point of purchase on all new goods and services. The proposal also calls for a monthly payment to households of citizens and legal resident aliens (based on family size) as an advance rebate of tax on purchases up to the poverty level.[1][2] The sales tax rate, as defined in the legislation, is 23% of the total register price (23¢ of every $1—calculated the same way as income taxes), which is comparable to a 30% traditional state sales tax (30¢ on top of every $1).[3] Because the U.S. tax system has a hidden effect on prices,[4] it is expected that moving to the FairTax would decrease production costs from the removal of business taxes and compliance costs, which is predicted to offset a portion of the FairTax effect on prices.

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quote:

Originally posted by Krypton The more money people keep, the more they have to spend. Check out the negative income tax. Negative Income Tax: A negative income tax would replace the current progressive income tax system used throughout most of the Western world. This would be replaced by a flat tax of, say, 25%, but each taxpayer would also be given $10,000 by the government. Thus a person earning only $4000 per year would pay $1000 in taxes for a net income of $13,000. $10,000 + $4000 - $1000 = $13,000 net income (Overall, they would receive a net gain of $9,000 from the government.) A person making $40,000 would be at the break-even point, essentially paying no taxes. $10,000 + $40,000 - $10,000 = $40,000 net income A person making $1,000,000 per year would pay close to the full 25% tax. $10,000 + $1,000,000 - $250,000 = $760,000 net income.

I could sit on my fat lazy ass and collect $10,000 while working maybe a part-time job just to keep employed status?

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quote:

Originally posted by pkcRAISTLIN dont argue with the yanks nutter, they know best!

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Originally posted by eROs.au I could sit on my fat lazy ass and collect $10,000 while working maybe a part-time job just to keep employed status?

There might be some requirements, like being student, or having employment. That way, productivity stays up, employment stays up. I know plenty of people who could sit on their ass and live off 10,000. Plenty more where that came from....

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