Your tax proposal is worrying because your subsidy amount $25,000 is applied post tax.
You should start by applying your subsidy amount to pre-tax income.
Earning of $40k ($40k – $25k) = $15k taxable income.*.35 = $5,250 tax paid. Effective tax rate $13%Then if taxable income is negative, pay it out at a reduced rate.Eg. $19k income = $25k – $19k = -$6k.Then it is paid out at at the subsidy rate, we will pick 50%: $3k positive tax return on $19k income. Effective tax rate is "-13%"This way net tax is paid on all income over your subsidy amount. This […]
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