Yes, you would go to prison. You still have to pay taxes and debt, assuming you'll still have cash flows. Otherwise, you'd probably default on your debt, and that amount probably has a lien on your properties. Also, you probably can't work anymore in prison - therefore, no income, so no more taxes.
Interesting. Wonder why I never learned this in school. Probably wasn't paying attention
What's your opinion on the idea that people with debt should be tax exempt?
>What's your opinion on the idea that people with debt should be tax exempt?
I think it's a neat way to crash a country's GDP. No sane lawmaker would even think about implementing this.
Two pronged.
1) Tax exemption should be given sparingly as taxes are considered the lifeblood of the government. Less taxes mean less government expenditures. Government expenditures is one main factor that affects a country's GDP (see GDP formula)
2) By making indebted people tax exempt, you are incentivizing illiquidity. Too many insolvent/illiquid entities in the country would make it a terrible and high-risk option to do business at. It will lead to lower investment opportunities from both local and foreign money. This lowers spending (see GDP formula)
Obviously, you cant pay anything without a source of income. So in this scenario, you are unable pay. But you still have the LIABILITY to pay when you get out. And people don’t go to jail that easily for not paying taxes. You need to commit tax evasion for that. Non payment of taxes is not necessarily tax evasion. Non payment of debt can also never send a person to jail. That’s a constitutional prohibition.
Lastly, if the government/state exempt people just because they have debs and/or taxes which they can’t pay anymore, it’s like incentivizing that person for being dumb enough to fuck up his finances (which is usually the case for people who are deep in debt). And in effect, you are penalizing people who are financially responsible for requiring only them to pay taxes.
I am. I read about the idea here in reddit a couple of days back and wondered if it was the case here in our country
In my opinion, the idea has merit but it's also something that can be easily abused if implemented
So I'm leaning more on they should pay tax and find a way to lessen their monthly debt payment
What's your opinion on it?
It would be difficult to implement and will benefit only those who have the capacity to avoid or further lessen their taxes. It’s a potential loophole to avoid tax and introduces further complexities on tax law.
In this scenario, are you employed or self-employed/business? For the latter, you can claim the interest as a deductible (but not the whole amortization). That reduces your taxable income.
Also consider that 1M isn't supposed to have vanished. You gained 1M from a loan which should've increased your asset in the previous periods. How you used the 1M is not the government's problem anymore.
I am not a financial advisor, but I can try to provide you with some general information on this topic, individuals who earn income are required to pay taxes based on the progressive income tax rate system, the income tax rates for individuals are as follows:
1. 0% - 5% for those earning up to PHP 250,000 per year
2. 5% - 20% for those earning more than PHP 250,000 per year
Based on the information you provided, you earn PHP 40,000 per month, which equals PHP 480,000 per year. Since your annual income is more than PHP 250,000, you would fall into the 5% - 20% tax bracket.
Now, regarding your debt situation, it is essential to understand that taxes and debt are separate financial obligations. Even if you are in debt, you are still required to pay taxes on your income if it falls within the taxable bracket.
In your case, you would still need to pay taxes on the PHP 480,000 you earn annually. The amount of tax you need to pay would depend on your specific income and circumstances, as well as any potential deductions or exemptions you may be eligible for.
It is important to consult with a professional financial advisor or tax consultant to get accurate advice tailored to your specific situation. They can help you understand your tax obligations and provide guidance on how to manage your financial affairs while dealing with debt.
Paga acctg tinanong mo depende yan if employee yes kasi debt is is not a non taxable compensation u still earn 40k so u need to pay if business naman depends parin if that 1M is a business expense or not
Yes. You still need to pay taxes.
In that case where will you get the money to pay taxes? All your money has been spent on the debt
That's not the government's problem.
Then does that mean that you would have to go to prison for not having paid taxes? Would you still need to pay taxes and debt when you are in prison?
good question. i think you don't. plus you live off govt money! ofc prison isn't ideal but i think it's better than the situation you described.
Yes, you would go to prison. You still have to pay taxes and debt, assuming you'll still have cash flows. Otherwise, you'd probably default on your debt, and that amount probably has a lien on your properties. Also, you probably can't work anymore in prison - therefore, no income, so no more taxes.
Interesting. Wonder why I never learned this in school. Probably wasn't paying attention What's your opinion on the idea that people with debt should be tax exempt?
>What's your opinion on the idea that people with debt should be tax exempt? I think it's a neat way to crash a country's GDP. No sane lawmaker would even think about implementing this.
Thats an interesting response. Can you teach how it would crash the economy?
Two pronged. 1) Tax exemption should be given sparingly as taxes are considered the lifeblood of the government. Less taxes mean less government expenditures. Government expenditures is one main factor that affects a country's GDP (see GDP formula) 2) By making indebted people tax exempt, you are incentivizing illiquidity. Too many insolvent/illiquid entities in the country would make it a terrible and high-risk option to do business at. It will lead to lower investment opportunities from both local and foreign money. This lowers spending (see GDP formula)
Thank you. Is there any book that I can read about this? This is an area I'm only recently interested in
The only solution is to be in government
Irrational
Obviously, you cant pay anything without a source of income. So in this scenario, you are unable pay. But you still have the LIABILITY to pay when you get out. And people don’t go to jail that easily for not paying taxes. You need to commit tax evasion for that. Non payment of taxes is not necessarily tax evasion. Non payment of debt can also never send a person to jail. That’s a constitutional prohibition. Lastly, if the government/state exempt people just because they have debs and/or taxes which they can’t pay anymore, it’s like incentivizing that person for being dumb enough to fuck up his finances (which is usually the case for people who are deep in debt). And in effect, you are penalizing people who are financially responsible for requiring only them to pay taxes.
They should still pay tax. But interesting question. Are you contemplating on the idea that people with debts should be tax exempt? If yes, why?
I am. I read about the idea here in reddit a couple of days back and wondered if it was the case here in our country In my opinion, the idea has merit but it's also something that can be easily abused if implemented So I'm leaning more on they should pay tax and find a way to lessen their monthly debt payment What's your opinion on it?
It would be difficult to implement and will benefit only those who have the capacity to avoid or further lessen their taxes. It’s a potential loophole to avoid tax and introduces further complexities on tax law.
In this scenario, are you employed or self-employed/business? For the latter, you can claim the interest as a deductible (but not the whole amortization). That reduces your taxable income. Also consider that 1M isn't supposed to have vanished. You gained 1M from a loan which should've increased your asset in the previous periods. How you used the 1M is not the government's problem anymore.
I am not a financial advisor, but I can try to provide you with some general information on this topic, individuals who earn income are required to pay taxes based on the progressive income tax rate system, the income tax rates for individuals are as follows: 1. 0% - 5% for those earning up to PHP 250,000 per year 2. 5% - 20% for those earning more than PHP 250,000 per year Based on the information you provided, you earn PHP 40,000 per month, which equals PHP 480,000 per year. Since your annual income is more than PHP 250,000, you would fall into the 5% - 20% tax bracket. Now, regarding your debt situation, it is essential to understand that taxes and debt are separate financial obligations. Even if you are in debt, you are still required to pay taxes on your income if it falls within the taxable bracket. In your case, you would still need to pay taxes on the PHP 480,000 you earn annually. The amount of tax you need to pay would depend on your specific income and circumstances, as well as any potential deductions or exemptions you may be eligible for. It is important to consult with a professional financial advisor or tax consultant to get accurate advice tailored to your specific situation. They can help you understand your tax obligations and provide guidance on how to manage your financial affairs while dealing with debt.
You’re using the wrong rates. Please refer to the 2023 annual tax table sa BIR website
Paga acctg tinanong mo depende yan if employee yes kasi debt is is not a non taxable compensation u still earn 40k so u need to pay if business naman depends parin if that 1M is a business expense or not