Flat tax

And with the current tax code, you wouldn't even be able to figure out who pays what. The concept of "fairness" can't even be considered, because there are too many trap doors, exemptions, shelters, loopholes, and accounting tricks. At least with the flat tax, people would know exactly where they stand, and it could be worked with from there.

And I know there's something else about your example that doesn't add up . . . I'm working on it . . .

Yeah, but the example is "factual", example and "fact" are not mutually exclusive. For example, it's also a "message board post", which also does not preclude "fact".

There's an implied opinion (that a pure flat tax would harm the middle and lower class) but also plain "fact" there as well.

The "fact" is that there are ways a flat tax on income is not equal in terms of the tax on "spending money".

The opinion part is the whether that matters/what's better.

Note: Fact is in quotation marks because of an anti-absolutionist theme I was in earlier.

Edited to include quote since kicky posted in between.

This is one of the greatest attractions of a "Flat tax". The simplicity.

Thing is, the simplicity of concept has nothing to do with flat tax's merits.

The current graduated scale can be simplified without the flat tax idea.

In other words, simplification is not the same as "flat tax".

You've made an argument for simplicity but that doesn't mean the Flat Tax is better. Nor does it mean that it would ultimately be any simpler in practice.

Okay, then I'll just ask you "flat" out. Is the current tax code more fair then a flat tax? It seems like most of the arguments against it have the implication that the rich "deserve" to pay more, and the middle class and the poor "deserve" to pay less. That is the problem with the current tax code, I believe. It pits one class against another, so that the term "fair" has different meanings depending on which side you are on.

"Fair" is subjective, so i can only say that I am of the opinion that the current system is more fair than a flat tax would be.

But "fair" isn't the issue for me. "Flat tax" is something I consider absurd enough that viability is in question.

In a Democracy it would have a snowball's chance in hell of being realized without a lot of luck. The reasons for this are something Cecil Adams touched on:

There are more poor people than rich people (read more poor voters).

A flat tax in and of itself would raise taxes for the lower classes if the current levels of services are too be supported.

Whether that's "fair" is one question but whether the "teeming millions" would vote for it is another. I see more chance of them being fooled into thinking it wouldn't hurt them than voting for it knowingly.



This angle is actually what the proponents focus on in reverse.

In practice a flat tax would raise taxes for the poor and lower it for the rich so another way to look at is is whether the poor deserve to pay more (than now) and the rich deserve to pay less (than now).

So there's a "more than the poor"/"less than the rich" factor vs. the "more than now"/"less than now" factors.

To me, the most compelling argument agsinst it is that taxes would have to drastically be raised for the lower classes at an exponential rate (in comparison to how much it's lowered for the higher class).



Class rivalry has always existed and I am no fan of populism (read pandering to the lower class resentment of the wealthy).

Let me try to make a fair point counterpoint:

F = for flat tax
A = against flat tax


F: It can be construed as "unfair" for wealth to be "penalized" by higher taxes.

A: It can be construed as "unfair" for the poor to pay a higher percentage of "spending money" than the rich.

Within this issue is a Darwinistic vs. Socialist undertone.

F: Wealthy people deserve what they have, survival of the fittest as they say.

A: Societal structures greatly influence the ability for "pure" competition at all. Taxation can be an impediment to Darwinism as well. Because wealth is transferrable starting points are never equal. So corrective measures can be said to be promoting Darwinistic competition in a sense.

F: Survival of the fittest.

A: A balance of survival of the fittest and solidarity in means to improve collective chances.

F: The Flat tax is simple.

A: Simplicity in theory does not translate into simplicity in practice. Simplicity does not necessarily mean "better". Simplicity is a factor that is not contingient on teh taxation methods.

F: The rich do not deserve to pay more of a percentage of income than the poor.

A: The poor do not deserve to pay a higher percentage of "spending money" than the rich.

That's as fair as I can be right now to the idea of a flat tax.

Now look at the immediate implications:

To enact a flat tax means to raise the taxes for the overwhelming majority of Americans in order to lower it for the overwhelming minority. This of course sounds less fair than it is but regardless of fairness viability needs to be considered.

Attractive middle ground for "flat-heads":

A flat tax on all income above a stipulated "minimum living expenses" rate.

Sounds good right? Take income, substract the amound that is determined to be the minimum needed to survive within the society and tax the surplus equally.

Thing is, in practice this would mean the lower classes pay even less (depending on how the mimimum survival rate is calculated). ;-)

But "facts" can be skewed in a manner to back up a claim. Take statistics for instance. I've observed they can often be given in a manner that supports the "facts" by the presenter but they don't give the whole story. Your example was a somewhat simplified view of a complex matter, in my opinion.

I'm not saying I agree or disagree with a flat tax. I certainly don't agree with how taxes are done now. It would be nice if the entire system could be revamped, but that ain't gonna happen any time soon.

My post definitely simplified it. And you have a good point about exclusion of fact implying a conclusion.

It was, in fact, a point I was making. Focusing on the percent of income taxed excludes the factors I brought up.

It's impossible to avoid exclusion so I certainly did exclude things.

But I was careful not to try to imply anything that the exclusions would influence so if you think there are significant exclusions that alter anything I implied I'd love to hear them.

I'd say Craven covered this pretty well. I'd add that if you have a "cost of living" type exemption; you would still be lowering the taxes on the richest Americans while shifting the entire burden of the poorest onto the middle-class. I doubt that's what anyone really wants.It may be "unfair" to place a higher percentage burden on the higher income brackets, but economic feasibility demands it.

Personally, I'd prefer a much larger SALES TAX and NO INCOME TAXES. I'd also like to see a pretty stiff ESTATE TAX applied to estates over $500,000, to encourage people to keep the money moving. The more it moves; the better off everyone is.

Actually Bill, I think that if the cost of living were realistic (e.g. 10,000 per person) and a flat tax were levied on the surplus the rich would get an even worse deal.

Of course, I didn't run through a decent calculation and my 10,000 is a wild guess that propably is too weighted toward what our current taxes are.

But what really caught my eye was the sales tax idea.

When I was about 9 that was what I thought best, I've still held this idea since then with small revisions.

For me it'd work like this:

1) no income tax
2) sales tax (rate depending on item).

e.g. basic things like food would have a very low tax and things like huge estates, and luxury items would have a higher sales tax.

Precisely Craven. And the Estate Tax I mentioned is to prevent hoarding to avoid taxes.
It would also force people to pay tax on their illegally obtained income as well.

The allure for me is that it avoids the class angle a bit.

Taxes are the same for all items, just different for purchases.

Naturally those who purchase more pay more in way of taxes.

Now that you guys mention it, that does sound much more "fair" an idea. What could possibly be the argument against that?

I can think of a few.

Collecting income tax is much much easier than sales tax. Tax fraud would rise a LOT.

Secondly putting the tax in the sales transactions might have an effect on the money movement for psycological reasons.

People wouldn't be paying any other taxes but to do that sales tax must go up a lot. This means every purchase involves a bigger decision.

And lastly, this can cause inflation if not done right.

Those are the cons I see, but I still like the idea (at least in theory).

Of course it wouldn't be a perfect system, but I still like it a lot better than what we have now. Now which one of the presidential candidates is proposing that idea? Ha ha

Sozobe, I live on $12,000 - $15,000 a year, but I live a cheap lifestyle.
As I said before, I think 17% flat tax rate is the estimate to equal current government revenue. And they will go down once all voters care how much they are being taxed.

Cost of living should go into calculating the minimum wage.

We'd have to be careful with a huge sales tax. In a way, our society runs on the fact that everyone buys frivolous junk and consideres it valuble. If we stop spending, we will stop producing, and that means less jobs, and so on. The sales taxes would have to be so high they would be crushing, unless there were major government cutbacks (which I think we need anyway.)

Is this a general comment? Or is it a reference to the post Caprixe was talking about?

If it is a general comment that minimum wage should factor in the cost of life I'd note that cost of life is a factor in minimum wage for many countries.

If it's supposed to have any relation whatsoever with my post being referenced please explain what it is.

My post was pretty simple, and it was about how the perceived equality of equal taxation of income ends up being very different when it comes to the rate at which "spending money" is taxed.

What does minimum wage have to do with that?



I agree, and have already said this above so I'm not sure what you are disputing.

How, precisely, do you expect this to work.

People will just start putting money in the Cayman Islands.

A national sales tax (which would have to be extremely high) will bring the economy crashing to a halt.

Jarlaxle, I'm not sure if you are asking a question... or if that was just a comment? I'll be happy to try to answer any questions you have. The US would not be the first country to eliminate Income Tax in favor of Sales Tax. What do you mean by people would start putting money in the Cayman Islands? What makes you think the Economy would suffer? People would have more money with which to pay the higher cost of merchandise. Where do you see the big problem?