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UBICenter / ubi-center

UBI Center website and tools
http://ubicenter.org
MIT License
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Clarify taxability of Yang's Freedom Dividend #80

Open MaxGhenis opened 5 years ago

MaxGhenis commented 5 years ago

Whether and how the Freedom Dividend is taxed is unclear.

Coverage of a March 2019 event said:

[Yang] said that while $12,000 per year would not be taxable, it might push one’s income into higher tax bracket.

I emailed the campaign to ask for details, and they said:

The Freedom Dividend isn't taxable, but it counts towards your total taxable income for the purposes of calculating marginal tax rates. So the first $12k is tax free, but the rest of your income starts counting at $12,001.

I responded:

Given the standard deduction is already above $12,000, would the Freedom Dividend raise the standard deduction by $12,000 per adult? image (source)

If the policy taxes the UBI but also raises the standard deduction by the amount, that's not too different from the UBI being untaxed. But it's still not clear if that's what they mean.

MaxGhenis commented 5 years ago

For completeness, adding another suggested possibility: https://twitter.com/AndrewYangQuot1/status/1193996638982983680

This effectively raises the standard deduction by $12,000 per adult, but also reduces the bracket thresholds by $12,000 adult, so that the UBI can still push people into new brackets.