Flat tax

Re: Flat tax

kickycan wrote:

I heard about the new tax breaks for people who get their stomach stapled, and it made me wonder, why not just have a flat tax? The current tax policy of reward and punishment only serves the politicians, in my opinion. It seems that a flat tax would be more equitable, and way less confusing.

What are the arguments against it? I'd like to hear why it wouldn't work, or why anyone would be against a flat tax.

All a flat tax would do is make the rich richer and the poor poorer. It would be a huge windfall for the wealthy and make the tax burden even more unfair to the middle and lower class !

I would simplify the tax bill but always keep progressivity in there. The corporations are undertaxed. That’s been reported repeatedly. There have been corporations in the last 20 years who make hundreds of millions of dollars, pay no taxes, or 1% tax, or 3% tax.

Or if they owe taxes on export profits, they have been deferred to have their taxes forgiven by special- interest legislation.

In the 1950s, the corporate income tax was 25% of the federal outlay; it’s now about 6% or 7%. The corporations are not contributing their fair share to the tax pool.

I suspect that if you took all the corporate welfare and then took all the corporate income taxes paid, the aggregate would be zero taxes paid. So that leaves the burden on, largely, middle-income and lower-income Americans.

SSS

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I am strongly for the flat income tax. It would end the useless games politicians play with the tax system, and would be equal under law - an exact tax burden on percentage basis of income. This means that everyone would have a stake in how high taxes were, and where they were going. It would also make unnessesary many federal government jobs, which would be bad for the tax/some economic people (who would get laid off) but save tax payers from the unnecessary expense of all the tax beuracracy. A lot of tax specialists are also against anything that would render a portion of their learning unusable - people don't like to give up thier hard-earned specializations. Contrary to popular belief, a flat tax would actually -increase- the amount of money some rich people have to pay, because they wouldn't be allowed to play games with tax law. It would be an exact percentage, fair and even and equally applied.

On the other side, one major problem is how much the tax would be. Forbes seemed to think it was 17%, but there is disagreement in the calculations. I imagine there would be a tax decrease once everyone cared how much they were being taxed. Cecil Adams, a figure I usually trust, made a hasty decision on the subject: Cecil Adams' Against Flat Tax

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Re: Flat tax

sss2333 wrote:

All a flat tax would do is make the rich richer and the poor poorer. It would be a huge windfall for the wealthy and make the tax burden even more unfair to the middle and lower class !

The flat tax isn't a flat amount, it's a flat percentage. People with more money would have to pay more. People with less money would have to pay less. Everyone would pay at an exact proportion of their incomes. How is that unfair?

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Because people who make $20,000 a year need every penny in a way people who make $2,000,000 a year don't.

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Re: Flat tax

Portal Star wrote:

The flat tax isn't a flat amount, it's a flat percentage. People with more money would have to pay more. People with less money would have to pay less. Everyone would pay at an exact proportion of their incomes. How is that unfair?

You cant be serious, but in case you are try this.

1) If the flat tax was so great we would have switched over to it by now.

2) The top rate is 38 percent, if you implement a flat tax of say 17 percent you would instantly give millionaires and billionaires a massive tax break of close to 60 percent. Yet a guy who now pays a 15 percent tax rate would get a 2 percent increase in his taxes, how is that not unfair ?

3) Most people agree that halving the top income tax rate on the rich, wiping out taxes on interest, dividends, capital gains and inheritances, and raising taxes on the vast majority of Americans--i.e., the "flat tax" is a very bad idea.

4) Dick Armey likes the flat tax, that is reason enough to reject it.

A recent Treasury analysis of House Majority Leader Richard Armey's flat-tax plan conservatively found that under Armey's proposed 20 percent tax rate (for its first two years), taxes would go up by an average of close to $1,000 a year or more for families in every income group except those earning more than $200,000. Even so, at a 20 percent rate the plan loses at least $30 billion a year in revenues--because the tax cuts in the highest income group are gargantuan.

The truth is that virtually any flat-rate tax plan that adds up must, by simple arithmetic, produce huge tax cuts for those with the highest incomes and therefore big tax increases on almost everyone else.

5) My 5th and final reason, if all the republicans support it, and all the wealthy support it, you can bet your life it is a bad deal for the average American working man.

I have many more reasons, but I think I listed enough to get you started. With all due respect unless you are a millionaire or a billionaire the flat tax would cost you more in taxes while being a massive windfall for the wealthy.

SSS

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Re: Flat tax

sss2333 wrote:

1) If the flat tax was so great we would have switched over to it by now.

This is simply an opinion based on nothng.

sss2333 wrote:

2) The top rate is 38 percent, if you implement a flat tax of say 17 percent you would instantly give millionaires and billionaires a massive tax break of close to 60 percent. Yet a guy who now pays a 15 percent tax rate would get a 2 percent increase in his taxes, how is that not unfair ?

It isn't unfair, because after that, everyone would have an equal amount percentage-wise to pay. This one-time windfall would more than even out in time. Besides, it wouldn't have to happen all at once, like you imagine it would. There could be a way to phase it in gradually.

sss2333 wrote:

3) Most people agree that halving the top income tax rate on the rich, wiping out taxes on interest, dividends, capital gains and inheritances, and raising taxes on the vast majority of Americans--i.e., the "flat tax" is a very bad idea.

How do you know that most people agree? And I don't believe in wiping out taxes on interest, dividends, and capital gains. These would be considered income in my mind.

sss2333 wrote:

4) Dick Armey likes the flat tax, that is reason enough to reject it.

A recent Treasury analysis of House Majority Leader Richard Armey's flat-tax plan conservatively found that under Armey's proposed 20 percent tax rate (for its first two years), taxes would go up by an average of close to $1,000 a year or more for families in every income group except those earning more than $200,000. Even so, at a 20 percent rate the plan loses at least $30 billion a year in revenues--because the tax cuts in the highest income group are gargantuan.

The truth is that virtually any flat-rate tax plan that adds up must, by simple arithmetic, produce huge tax cuts for those with the highest incomes and therefore big tax increases on almost everyone else.

I don't know the details of this plan, but if a 20 percent rate hurts most americans, then it isn't a flat tax. I know for a fact that most people pay more than twenty percent now. I would guess that this plan has a lot of numbers games involved, which is not what I'm talking about.

sss2333 wrote:

5) My 5th and final reason, if all the republicans support it, and all the wealthy support it, you can bet your life it is a bad deal for the average American working man.

I'm sure they favor their skewed, loophole-filled version of a flat tax. I'm talking more about something that would actually be a flat tax.

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sozobe wrote:

Because people who make $20,000 a year need every penny in a way people who make $2,000,000 a year don't.

Yes, the rich already have their basic needs covered. But if the people aren't making enough money to meet their basic needs, they'll only be taxed an incredibly small amount!

If you made $300 a year with a (here's an overly high estimate) 20% flat tax rate you would have to pay $60 in income tax.

If you made $30,000 a year with 20% flat tax rate you would have to pay $6,000 a year.

If you made 3,000,000,000 a year with a 20% flat tax rate you would have to pay $600,000,000 a year.

As you see, the more wealthy would still be paying a hell of a lot more of their money than the less wealthy. And no one would be allowed to dodge income taxes through tax games designed to favor certain voting blocks (to get votes.) Many wealthy people dodge their taxes with these tax games. With an exact percentage everyone will have an equal stake in their payment to the government.

To punish the rich for being rich is to destroy incentive (like in communism.) People work hard because they dream of amassing wealth and being able to take it easy. It is unfair to take a much higher percentage of their money away from those who are wealthy simply because they have money. They also have no say in the matter, because the majority of people in the U.S. don't have that much money and will gladly vote to raise other people's taxes (and not their own.)

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Portal Star, have you ever tried to live on $30,000 a year?

Paying $6,000 in taxes is not "only." That's a big deal.

And as sss2333 says, that will mean that tax revenues will be decimated. The multi-millionaire may be paying a lot of money, but that is still about half of what would be paid otherwise. That adds up, big time.

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sozobe wrote:

Portal Star, have you ever tried to live on $30,000 a year?

Paying $6,000 in taxes is not "only." That's a big deal.

And as sss2333 says, that will mean that tax revenues will be decimated. The multi-millionaire may be paying a lot of money, but that is still about half of what would be paid otherwise. That adds up, big time.

According to the forbes study, we would need to start with a 17% tax rate to equal government income now. I cannot find any sources agreeing on whether that estimate is too high or too low. Don't forget the tax break that laying off the tax beaurocracy will bring.

That is the point - that it will add up. Mr./Ms. 30,000 a year will care about how much the government is taxing. (In my opinion, they are taxing way too much.) They can use their votes to determine how much of their money they want to invest, and care about where it is going.

It is unfair to take so much of the multi-millionaire's money. The government taxes too much and spends wastefully too much and part of the reason is that voters don't care - it doesn't effect the majority of voters when the government keeps taking more in more money from the wealthy. In fact, many people who don't have money are (understandably) jealous of those who have it. But that doesn't make it right to apply the law unequally to to populus. The voters aren't the ones it really effects when there's a tax increase for a minority of the population. With a flat tax, it will. It will effect the school teachers, gas station attendants, doctors equally with the CEO's and celebrities. I think that is a good thing. I think it will cause taxes for everyone to be lowered because all the voters will care, and I think it will make the government more concientous of its spending.

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Sozobe, I have lived on $30k a year, and I paid over thirty percent of it in taxes. I don't understand how paying a smaller percent would end up costing me more.

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Sozobe, I have lived on $30k a year, and I paid over thirty percent of it in taxes. I don't understand how paying a smaller percent would end up costing me more.

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What you're going to come across with this is that some people think (or try to think) that income distribution is relatively equitable. I, for one, firmly believe that it is not, and so I believe in a progressive tax. I'm not violently opposed to the idea of a flat tax, but I frankly don't see any need ton institute one -- and I've lived in a number of different tax brackets, and am currently trying to work my way into a high one.

As to the notion that nearly everyone's taxes are currently too high -- well, if that were the case, we wouldn't be running a half-trillion dollar deficit.

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Quote:

To punish the rich for being rich is to destroy incentive (like in communism.)

One of Marx's most importans steps to communism, in fact, is "a steeply-graduated income tax".

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sozobe wrote:

Portal Star, have you ever tried to live on $30,000 a year?

Can't speak for Portal, But I've lived on less than that.

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All these arguments are just stretching statistics to fit with your point of view. 15% is always going to be 15%, no matter how you skew the numbers. That is fair.

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Quote:

As to the notion that nearly everyone's taxes are currently too high -- well, if that were the case, we wouldn't be running a half-trillion dollar deficit.

That isn't because taxes are too low. It's because SPENDING has been out of control for almost 70 years.

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I don't like the idea of a flat tax because then the rich wouldn't pay their fair share. Haven't you ever noticed that the people that are the most out spoken about a flat tax are people like Forbs?

I think taxes based on your income and spending habits is a logical system. You are, for the most part taxed based on how much you are worth.

Besides, they have been trying to pass a flat tax for years. It'll never happen.

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Jarlaxle wrote:

Quote:
As to the notion that nearly everyone's taxes are currently too high -- well, if that were the case, we wouldn't be running a half-trillion dollar deficit.

That isn't because taxes are too low. It's because SPENDING has been out of control for almost 70 years.

And obviously, cutting taxes does not lead to decreased spending (Reagan, Bush II). It's got to go the other way around.

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I agree with Cecil Adams (and I hate the guy).

He said:

Flat tax is "the stupidest idea to come down the pike since pet rocks."

I'll explain later but for now I'll just say that I agree with Cecil wholeheartedly on this one.

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Flat tax

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