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Negative Tax and Its Use case
Let's dedicate this page to understand Decentralised Finance (DeFi) and its use case.
First let's understand what the negative tax term means in the world.
Let's start with a basic definition of negative tax in our traditional world. A negative tax is a type of tax system in which people who earn below a certain threshold receive a payment from the government instead of having to pay taxes. The payment is meant to supplement their income and bring them up to the threshold where they would have to start paying taxes. This is intended to provide a safety net for people with low incomes and to help reduce poverty.
Now, let's learn its use case in the traditional finance.
A negative tax could be used in our traditional financial system to provide a safety net for people with low incomes. For example, if the threshold for income is set at $20,000 per year and an individual earns $15,000 per year, they would receive a payment from the platform to bring their total income up to the threshold. This payment could help to ensure that individuals have enough income to meet their basic needs. The negative tax could also help further by providing a financial cushion for them. In this way, the negative tax could play a valuable role in promoting financial stability and security for individuals.
Now, let's go over how it's implemented in Reward Tax platform.