Scenario 1 John Smith is retired and has no income but he does own his own house. His wife died two years ago and he is currently dating Ms. Jones and they are talking about a relationship together. She owns a condonmium. Currently, John would receive a Basic Income of $15,000 because he is registered as a family of one. As he has no additional income, he would not pay any additional taxes, except some municipal property tax on his home. When John and Ms. Jones enter into their relationship, John intends to sell his home and that sale will generate an income called Capital Gains. As his house is valued at $100,000, and he purchased it for $50,000, he will have a Capital Gain of $50,000. He will first remit $15,000 to the government making his Basic Income revenue neutral for this year and (for purposes of this example, I have used a flat tax rate of 25%) he will owe $8,750 taxes on his Capital Gains Income. They will then register their changed family status and they will now receive $15,000 each or a family income of $30,000 and they will live in Ms. Jones condominium. If John invests this $76,250 the remains from the sale of his house and it makes him $3,200 per year, he will have to pay the government the full $3,200. As part of the revenue neutral provisions on his earned income. (In fact, the first $30,000 income of the new family has to be revenue neutral.) Scenario 2 Mary is a single mother with 5 children. She is registered as a family of 6. This gives the family a Basic Income of $90,000 per year. As Mary has no other income, this becomes the family’s total income. Scenario 3 Jim and Christy are both lawyers, each working and earning $60,000 per year for a total income of $120,000. They are registered as a family of two. They receive $30,000 from their Basic Income. The $30,000 is deducted by the employer and remitted to the government, leaving $90,000 in taxable income. The flat tax is 25%, so they have to remit to the government $22,500. Their combined income after taxes is the $30,000 Basic Income payment and $67,500 after tax income for a total net income of $97,500. Scenario 4 Gus and Martha have 3 children and they live on a farm with the aging parents of Martha. They are registered as a family of 7. This gives them a Basic Income of $105,000. John’s farming activities earned him $58,000 after expenses which is totally remitted to the government because the first $105,000 has to be revenue neutral. Scenario 5 Harry is a small business owner of a factory. He is divorced, so he is registered as a family of one. He receives $15,000 from his Basic Income. His yearly income from his business is $400,000 out of which he pays the government $15,000 directly and declares an income of $385,000 which is taxable at a flat rate of 25%. He pays $96,250 in taxes.
