Flat Tax anyone?

I've been reading here for some time but just never seem to have much to add to most threads. It seems that I need to leave the GD forum a bit more to find the more serious discussion.
Anyways...... I may just find myself to be a bit of a Libertaire than anything else. From what I've seen on the issue, what would be wrong with the 17% flat tax that seems to have a pretty diverse fan base? Aside from the details of kid credits and whatnot, why do you think a progressive tax would be better?
It seems to me that any sort of "progressive" tax will merely stifle the desire to make more money, hence less jobs and less taxable income. If I started a bidness and faced large taxes on anything over 2.5 million or whatever per year, I'd scale my plan to make just that much money and take alot of leisure time. Why go for more?
It seems that I've seen stories of places like Russia and China, where plans like this were implemented, and revenues increased. Underground economies came more above ground in light of less repressive tax situations. It's been years since I remember reading of such things, so I can't even imagine trying to find an example.
Nonetheless, it seems to me that if I knew the % of my income that would be going to taxes, and it was 17%, I'd be pretty damn encouraged to make much more money than if I knew I was going to be capped at some certain level.

tax system and the countless millionaires...since you think it stifles, the burden is on you to prove it.

Shame on you for using facts like that. :evilfrown: Shame shame shame shame shame. :evilgrin:

Not taxing progressivly (at least in any signifigant amount) for the first 150 or so years of the US's existence is what created the intellectual, industrial, and capital base that created billions. There would probably be many many more billionaires (and in turn more millionaires and thousandaires) if the government lifted it's boot. Just because they don't press down with it all of the time (even though they are more and more every day), doesn't mean that it's not there.

No!

I'm understanding that a flat tax with no loopholes would be the income tax plan. Perhaps a cut off for low income? Child credits or such, but no great write offs.
To the people who just say NO, why?

and that's what we'll all be buried in if it's ever instituted.

but what do it mean?

Surely you jest.

would surely show me the end point of where I would bother with making any more money.

why I would care if you make more money or not?

Gingrich cried that this would SURELY lead the country to economic ruination ! .....

Then ? .... we went on to enjoy eight historic years of economic success across ALL income levels ....

So much for barking at the moon about taxing the rich ....

A quote from Adam Smith: ...


"The subjects of every state ought to contribute toward the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state ....{As Henry Home (Lord Kames) has written, a goal of taxation should be to} 'remedy inequality of riches as much as possible, by relieving the poor and burdening the rich.'"
-- Adam Smith, Wealth Of Nations

HEED the conservative god of the 'Free market economy' ......

I think it was only 4 years of economic prosperity. Then again I think through most of the term things were better than the first Bush administration.

These kinds of things take awhile to have their effect on the economy.


I'm not saying that clinton caused the recession.,.. just that hte idea that it would happen the next year and not 8 years later is silly.

Same thing for bush-- he could be destroying the economy and it might not take effect for 8 years... depending.

but they never really read Adam Smith. That quote sums it up right there.

has a progressive tax, if you want some place closer to home.

On edit: Hasn't stopped anybody yet.

What an interesting post. I can almost see the cute little girl under your arm on the verge of tears. Violins in the background. With all these such heart felt "it would seem to me," to bring us all to that most thoughtful epiphany.

Too bad its still a bunch of !@#$%^, loaded with fake fluff, myths, and false hoods.

From what I've seen on the issue, what would be wrong with the 17% flat tax that seems to have a pretty diverse fan base?

Excuse me? The flat tax has a "fan base?" Is this to try and argue that we are some how out of the main stream because we argue against the flat tax?

Aside from the details of kid credits and whatnot, why do you think a progressive tax would be better?

Better than what? A regressive tax? A flat tax is by definition, a regressive tax. It hits the poor harder than it dose the wealthy. With that understanding, it doesn’t take a great deal of intelligence to see that a progressive tax is better, more equitable, and a lot more fare than a regressive tax such as the 17% flat tax.

It seems to me that any sort of "progressive" tax will merely stifle the desire to make more money, hence less jobs and less taxable income.

Opps, out comes the quotation marks. Why do you feel it "necessary" to use quotation marks with such an "ordinary" word such as "progressive?"

Oh but this sentences is so pregnant with propaganda and economic myths that its difficult to know where to start. First off, how dose the "stifling of the desire to make more money" produce less jobs? Take a look at modern business and you see exactly the opposite in place. The drive for corporations to cut costs encourages them to ship jobs over seas to exploit cheep labor. We have seen an airline cut wages to its union workers, then turn around and give themselves (the CEO's) huge bonuses. I do I have to say, Enron any one? Plus, we have seen the recent tax cuts fail to produce any jobs that they were argued to produce. If the "stifling of the desire to make more money" truly resulted in fewer jobs, this wouldn't be the case.

It also assumes that jobs are tied to some one else's wages or income. This is false. Jobs are built upon demands for goods and services, as well as over all consumer buying power, with most of the consumers being part of the lower and middle class. And their buying power is dependent on their income. When you have a regressive tax, you shrink their buying power, and hurt the jobs in that way. You want more jobs? Restore the progressive tax structure.

If I started a bidness and faced large taxes on anything over 2.5 million or whatever per year, I'd scale my plan to make just that much money and take alot of leisure time. Why go for more?

Lets flip this around and look at it from the poor's perspective. As their income drops, the percentage of that income that is taxed, goes up. One's motivation to make more money is irrelevant here because if the poor had an option, it wouldn't be dropping, would it. This results in a self perpetuating cycle as more money must be set aside for taxes, and be taken away from other necessities such as rent, transportation, and food.

It seems that I've seen stories of places like Russia and China, where plans like this were implemented, and revenues increased. Underground economies came more above ground in light of less repressive tax situations. It's been years since I remember reading of such things, so I can't even imagine trying to find an example.

What was that? Around the world in 80 days or something? I don't even see how this is relevant? Are you trying to paint a progressive tax as an oppressive tax? If so, that I might correct you that in both Russia and China, the poor are taxed extremely heavily, some times taxed even more than what they make in, while the upper classes are not taxed at all. And example of a regressive tax if I ever saw one. Am I to understand that you want America to emulate the oppressive tax codes of Russia and China?

Nonetheless, it seems to me that if I knew the % of my income that would be going to taxes, and it was 17%, I'd be pretty damn encouraged to make much more money than if I knew I was going to be capped at some certain level.

Black is white, good is evil, up is down, and greed is a virtue.

Doesn't sound like it.

"Nonetheless, it seems to me that if I knew the % of my income that would be going to taxes, and it was 17%, I'd be pretty damn encouraged to make much more money than if I knew I was going to be capped at some certain level."

If you wanna know what your tax rate is gonna be, check the tax tables. Easy enough. And since when is your income "capped"? Check those tax tables again. Does it say anywhere that your earnings--say over $4 billion per year--are taxed at 100%? Didn't think so.

Flat tax? Count me among the "anti-fan base." No thanks!

RUSSIA has been kicking our ass since they went to a flat tax...We have been losing jobs...They have been gaining. Their stock markets are up 400% of the past 2 years, since one was instituted..and the government has more cash than ever...I understand ideologically it may be hard to accept...but does it end up with greater cash for the government?...allowing us to do greater good?

If so, I think its worth a serious look.

They're not doing all that great by any method of counting, but if you are looking at growth rates, you have to look where they started from, which was at ground level. Any slight ruble increase is a major percentage increase

You also have to realilze that they are terrible at collecting taxes. It's one of those places where you pay only if you get caught.

Also known as the bribe. A Russhan citizen has to carry so many rubbles, just to bribe off the speading ticket, then another bribe at the clerce to get it to court, more bribes to the judge.

The sustem of government has zero level of funding, so the offichals, in order to do their jobs and make a living, solicit bribes from their charges. The quality of service depends upon the quality of bribe.

It works extremly well if you are in a position to solicit bribes, or have plenty of money to bribe with. Not so good for the rest of us.

If that information is accurate, then maybe supply side economics does work...perhaps it would be the best way to go. I never thought I would say that. i almost feel dirty now.

the flat tax is horribly regressive. Divide the amount of money spent by the national income and get a number. Include Social Security, Medicare, and other such current deductions from you paycheck.

Note that anyone who inherits money or has "unearned income" is out of this loop. Are they going to be taxed in some other way?

Eliminate common exemptions that lower wage workers depend upon, if it's to be a truly flat tax. Remember, though, that the median family income is under $50,000 a year, which means half the families in the country make less than that.

So, now we have a truly flat tax that those in the lower half will love, since they will now pay more than they did the old way. If we increase their exemptions, or reduce their tax liability some other way, we have to then increase the base rate to raise the required money.

No matter how you cut it, the government wants X dollars, and if the wealthier don't cover it, guess who will? Think you can reduce the government's demand for money? Fat chance!

The idea that people won't work if they are taxed is based partly on truth and partly on myth. During the 50's we had tremendous growth with enormous tax rates. So does Sweden and a few other countries now. So, this is not necessarily true in practice.

Hourly workers may notice that they can make $100 in OT and $80 of it is taxed. This obviously sucks, but could be avoided with a different type of progressive tax schedule. Entrepreneurs aren't bothered by that, since they are more interested in the growth of wealth and capital than of income, and that isn't necessarily affected by income taxes.

The flat tax was simply a scheme for Steve Forbes to pay less taxes on the money his father made, Nothing more. Nothing less.

if they want to equal the revenues under our current tax system, in additon to a 17% income tax there would have to be a 17% VAT tax (which most major flat tax plans include)

a VAT tax is EXTREMELY regressive and bad

peace
david
:hippie:

The Flat Tax is just a scheme to raise taxes on the poor (or as the Wall Street Jornal called them, "Lucky Duckies"). To make up for the revenue lost from taxing the rich at 35% we'd have to raise the taxes on everybody nto something like 20-25% (probably closer to the 25 than to the 20). The working poor can't afford a tax rate that high!. (I am basing this on an analysis I read in 2000 during the election, I'll try to find a link)



As Teddy Roosevelt said, the rich pay more because they get more, without the government protecting them they wouldn't be safe sleeping at night...

...should pay 80% of the taxes.

A flat tax, on the surface sounds fair, right? Everyone pays the same rate, no one gets cheated. Well, not really. Without even getting into the complicated politics of tax breaks and tax cuts (perhaps the most important political thing Congress can do), just think of this example:

Two workers pay all their taxes, assume a flat tax of 10% (for ease). One worker makes $20,000 a year, the other makes $200,000. So using the 10% tax, worker A pays $2,000 in taxes, worker B pays $20,000. Still seems fair, both are paying 10%. However, flip those numbers around. Worker A now has $18,000 left, while worker B has $180,000.

The relative burden on Worker A is much higher than on B. Worker A can spare relatively little of the $20,000 and still maintain a decent life, while Worker B can certainly pay the $20,000 and could probably pay a lot more with little detriment to a very good standard of living. It may seem fair on the surface, but when you think about trying to pay rent, bills, car payments and still feed yourself, it'd be much easier with the $180,000 than the $18,000. So is it fair to penalize Worker A, who is a hard worker but lacks the advantages that Worker B has? Up that percentage to 17% and you've nearly doubled Worker A's taxes and now he's trying to get by on $16,000 (not even counting state taxes).

Additionally, you'd effectively lower revenues for the federal government. If everyone in the 25% tax bracket all of the sudden starts paying 17%, the revenue loss would be huge. And certainly not made up for by raising someone up from a 12% bracket to 17%. So in a realistic sense, the flat tax is not even financially feasible for the federal government.

Hope this gives you some perspective on the issue.

trying to find out more detailed information on a flat tax (other than "it's dumb", "it's evil", etc.). In doing so, I came across an article by ol' Boortz regarding a "fair tax" proposal in congress(HR2525).

Now, I'm not a very smart man - but, even I realize that any article written by him is going to be slanted. But, it did get me wondering. What are the hidden problems with this plan? Has anyone else ever heard about it or have any opinions?

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=34039

Thanks

First off I can't believe that Boortz would advocate central planning like:

"The cost of these basic necessities is set at the federally determined poverty level for various sized families. At the beginning of every month the head of every household in America will receive a check, or an electronic credit to their bank account, in an amount equal to the sales tax they would pay on the basic necessities for their sized family"

That, friends, is socialism.

Anyways, here's my problem with this proposal. It is not fair, and it would be horribly difficult to implement. If you think that we have problems now with tax breaks for the rich/corporations, imagine the frenzy of lobbying that will go into whether or not a good is a "basic necessity". Oreos are food. Are they a basic necessity? I'll bet Nabisco would argue they are. Everyone needs a fridge right? So I'm wealthy and pay $4,000 for one, is that still a necessity when I could have one for $500?

Sales taxes are the most regressive form of tax (excluding the lottery) available. Slap this sudden 23% tax on things and imagine how difficult it becomes for a poor person to buy something. That effectively raises prices by 23%. So the poor no longer pay the 12% of federal taxes, but they now pay 23% in sales taxes. That's a loss of revenue of 11%.

And naturally anything the poor are likely to buy will be classified as a "non-necessity" and they will be stuck paying much more of their income in taxes than the rich. Hell, even if they did the "basic necessity" rulings perfectly fair and no one cheated, the poor would still pay a much larger proportion of their income in these sales taxes vis a vis the rich. I see cottage industries setting up shop in Ciudad Juarez and Windsor Ontario selling Yachts, Mercedes and other big ticket items so that the wealthy avoid the taxes.

This, friends, is not a fair tax. It is just another masked attempt by the wealthy to circumvent paying taxes. The battle over defining necessities would be sickening.

The "Fair Tax" would send everyone a check based on 23% of the federal poverty level, it wouldn't measure what anyone actually spent, so there would be no battle over necessities.

The Act would repeal federal income taxes, payroll taxes, and estate and gift taxes. The idea is that the taxation embedded in prices and interest rates would disappear, so the tax would be at least partly offset with price reductions.

As a libertarian Democrat, I find the bill appealing, but it's not going anywhere this session.

It seems to me that the worker paying $20,000 in taxes is paying a lot more for the same services as the worker paying $2,000 in taxes.

Yeah, he has $180k to live on and the other guy has $18k, but what's the point of that?

You say the burden is heavier on the lower paid guy? How so-- its exactly the same, they both pay %10.

The economic reality is that the guy making $20k a year is probably bringing in $25k of revenue a year for the company... and the guy making $200k a year is probably bringing in $250k of revenue for the company. You get paid more if you can make the company more profitable... that's all...

For some companies its even higher. This is why salesmen are often paid on commission-- they get paid exactly based on how much money they make the company.

As someone who's actually living on less than $18k a year in an expensive west coast city, I know what it takes to live on such a "small" income.. If my taxes had only be $2k, man, that sure would be nice!

So, lets get the flat tax-- it would make it a lot easier on the poor.

And lets not forget that the wealthy guy who saves $20k a year might just be the guy who hires me for $20k a year to do my job. You take that $20k a year from him, and he can't afford to hire me.

I don't think it would work. While flat taxes could do what you say they could you are REALLY going out on a limb to say that all of those things would happen as positive results. Plus a 17% flat tax would be a serious blow to the money going into the treasurey, especially in the short run.

from the studies i have seen a flat tax of about 15-17%, would have to be accompanied by a VAT tax of the same amount to insure that revenues to the federal government stay fairly stable.

that is what would make it regressive.

any income tax flat or not is progressive by definition. sales taxes are regressive because they take a larger percentage of a persons salary at lower levels.
income taxes are progressive because they take an equal or greater percent of money out as income rises


peace
david
:hippie:

Actually, it is fair. It is fairer to those who are below the poverty line, and it doesn't tax the income of all citizens. Neal does indeed promote this, as do most libertarians. Being a libertarian myself (small 'l' and big 'L' and LP member) I find this initiative quite attractive. It is not socialistic at all, btw.

Here is an excellent article that articulates very clearly the entire plan. It was written by a good friend of mine who writes a column for a local newspaper. He has given permission for it to be posted wherever deemed appropriate. Read it and feel free to comment.
______________________________

WILLIAM PENN FALLIN
EDITORIAL COLUMNIST
COFFEE COUNTY NEWS

1-27-03

NATIONAL SALES TAX UPDATE

Congressman John Linder (R) Ga. has again introduced his bill to eliminate the 16th Amendment which authorized the income tax. And with it, eliminate ALL INCOME TAXES IN EVERY PHASE OF OUR LIVES. Here is a brief synopsis of his proposal which is receiving bi-partisan support in Congress.

For full details go online to www.FairTax.org

The FairTax is a consumption tax designed to replace the entire federal income tax system, including personal, payroll, corporate, self-employment, capital gains, gift, and inheritance taxes. The FairTax allows Americans to keep 100% of their paychecks, dramatically reduce basic retail prices, and fully fund the Federal government, including Social Security and Medicare.

With the FairTax, you will take home 100% of your paycheck. No income taxes or payroll taxes will be withheld from your paycheck, pension, or Social Security check.

Did you know that hidden income taxes (corporate etc.) currently make up 20% to 30% of retail prices? It's true. According to Dr. Dale Jorgenson of Harvard, hidden income taxes are passed on to the consumer in the form of higher prices, from 20% to 30% higher than they would otherwise be for everything you buy. Therefore, when the FairTax Act abolishes the federal income tax, prices will drop 20% to 30%. The proposed FairTax rate is 23%.

Instead of paying 15.3% of your paycheck in payroll taxes, plus an average of 28% of your paycheck in federal income tax, for a total of about 43% of your paycheck going to the federal government, you pay only a 23% consumption tax each time you purchase a new product or service for your own personal consumption.

At this 23% rate, the FairTax will pay for all current government operations, including Social Security and Medicare. With the FairTax, if you choose to buy any new product or service for yourself, a consumption tax of 23% will be added to the price. If you choose to buy a used car, resale home or used anything you do not pay the FairTax. Business owners who buy something for strictly business purposes (not personal consumption), will pay no consumption tax.

Perhaps most importantly, to ensure that no American will pay tax on necessities, the FairTax plan provides a monthly rebate for every registered household to cover the 23% consumption tax spent on necessities up to the federal poverty level. This is how the FairTax completely untaxes the poor, and lowers the tax burden on everyone else.

This system partially works by eliminating legal loopholes and it collects from those "illegals" who currently OPERATE "OFF THE BOOKS." When tax cheats, thugs, gangsters and common thieves use any of their ill gotten gains and buy anything new they will pay 23% taxes like everyone else. Income tax cheating will be a relic of the past. Everyone will pay the 23% tax whenever they buy anything new. Like current state sales taxes it's extremely difficult to beat. That factor alone will produce tens of billions in new revenues now being lost.

prices aren't reduced for the poor. They should pay far less then the rich, because they need almost every cent of their money. The rich don't.

The "turd" has got his tumbstone.

We alrady have a flat tax. The federal tax burden (which has to include the payroll taxes) is pretty much shared proportionaly with income. Yes, the top endlessly complains that they pay most of the tax, they never mention that they make most of the income. The relationship isn't perfect. There is actually a closer realationship betwee assets and the tax burdern. Which is as it should be.

All the flat tax proposals are specifically designed to make taxes less flat, ie. ment to lower the taxes of those holding the majority of the nations assets. The distrubution of which is even more skewed upwards than income. The top decile now own over 75% of all assets. They want 95%, and they are going to have it. Flat tax or no.

a few other issues:
1. ALL income should receive equal treatment,i.e., NO preferential treatment for capital gains, dividend, etc. Differing treatment of income streams is a fairness issue which skews all of the flat tax proposals in favor of the wealthy. And, one should not in my opinion pay a higher tax rate on money earned from the sweat of one's brow than that earned from ownership.
2. All income (no exemptions, deductions or caps) should pay a "future" tax equal to the current FICA-Medicare rate, I think 15.4% . (As is now, income above $88,000 is not subject to SS-Medicare witholding and results in a markedly regressive feature. And, this tax should be applied to low incomes, because people in this category will receive sS-Medicare when elegible.) Proceeds from the first $88,000 of each return would go to a SS-Medicare lock-box, and proceeds from income ABOVE $88,000 would revert to the general fund. This would equalize the tax treatment of all income in this respect.
3. After deducting the "future" tax, the personal exemption should be set as equal to the official poverty rate, currently around $18,000 for a family of 4. Considering the above applied future tax, this means no INCOME tax until about $21,000. The justification is that all people have to satisfy the survival minima before paying taxes.
If these conditions are agreed, I'm ready to talk "flat", "fair", or "progressive" taxes!

:-(

How can we, as a Democratic Party, get this point across? Don't you think it is time for the Party to shed its image as a loose coalition of fringe, dis-enfranchised elements: black, white, gay, atheist, whatever. and hammer home the concept that those things are not the point. Niether is the point class warfare. I have no problem with the concept of "rich". I aspire to be rich myself. The problem is the unlevel playing field. And it must be dismantled from the top.
Who is going to do it?

Well said, and welcome to the DU. :hi:

I am wary of calling you on details. But in this case, I must. The current us tax code in its totality, is not flat at all, but regressive. So much so that it is pushing the boundaries of even being a regressive tax, and becoming something far worse, and "oppressive tax."

There are four broad categories of taxation. Progressive, equilibrium, regressive, and oppressive

An equilibrium tax is defined as any tax that is directly proportional to your principle. Sales tax and most property taxes are equilibrium tax. So to are "tax fees for services" such as filing fees or notary fees. If you were to chart out this tax on a graph, it would represent a strait line under your principle. That "flat tax" is meant to try and redefine the income tax from a "progressive" (which it hasn't been for some time, but is still said to be one within the tax code.) to an equilibrium tax.

It should also be noted that sales taxes are considered to be regressive, only AFTER spending behavior is taken into account. For example, Joe Ordinary and Jack Fastow are going to eat about the same amount of food. So the grocery bill is going to eat up more of Joe's budget than Jack's. So Jack can save up the rest and not spend the money, and thus, not taxed for sales that does not take place.

But there is a catch here. At the high end of the tax bracket, changing from a regressive tax, to an equilibrium tax would have to result with tax increases some where up the line. The only way NOT to do this is to set the flat tax vary low. At least 32% (the current top tax bracket.) of Fastow's income. But for the rest of us already on lower brackets, we would still see an increase in our taxes, regardless of how low they set it for Fastow. So something is still extremely fishily with the flat tax proposals.

Progressive is defined as any income scale where taxation rises faster than your principle. (The principle is the eliminate to be taxed, such as income, wages.) An example of this would have been the income tax established by the new deal. Where low income was not taxes at all, and excessive income was taxed excessively. If you were to chart this out on a graph, it would look like a line curving upward, away from any equilibrium line. But to my knowledge, ever senses Ronald Ragan, no examples of a progressive tax remain in the current US tax code.

The Regressive tax is found throughout the US tax code. This is defined as any tax where taxation rises slower than your principle. So the more your principle is, the less percentage of your principle you pay to your taxes. The income tax IS regressive by definition as it is "capped" at 32%. If you were to chart this out, you would see a curve flattening out, or curving below the equilibrium line.

Oppressive taxation however has not been disguised much. Where you chart out a regressive tax, as income rises, the tax doesn't ever actually get any smaller. Not so with the oppressive tax, where at your principle continues to clime, at some point, your taxation begins to reduce back down to zero. If you were to plot this out, you would see a hump as eventually, the tax rate would go back down to zero. The US tax code is not suppose to have any oppressive taxes. But I would almost bet you there are some in there to be found.

From there, we can work with the shape of these curves by adding some other "types."

Graduated means that the curve is flattened out, and looks more like a set of steps, rather than one curve. Our income tax is currently graduated between four brackets, 18%, 23% 28%, and 32% if I recall my numbers corectly.

There is the tax "cap" currently placed on the FICA pay role deductions. Once you reach a certain point, the tax is capped, and can not rise any more. By definition, an equilibrium tax with a cap on it is regressive.

But the point I want to challenge you on is that if the income tax is regressive, and the pay role deductions are also regressive, than how can the US tax code (in sum) be flat?

He disrupted... poorly.

As long as they read our posts and don't rant blatenly stupid stuff there's no reason why we shouldn't take time to help out those unfortunate ones that have been feed a bunch of BS.

Don't kick em unless they're being annoying.

Progressive taxes wouldent be needed if people weren't so greedy. Not to insult any one, but I think Libertarins are in a fantasy world. :hippie:

I am not impresed with the libertian's anarkey thinking.

This is just a talking point by the GOP.

They do not want to replace our 2 income taxes - the Social Security payroll tax and the FIT - with a flat tax. They want to keep the SS wage capped tax that screws the little guy to protect the rich - but to flat tax only FIT.

A "true Democratic Party type flat tax" that replaced both income taxes and which had a standard deduction of 10000 per adult person, 5000 per child, with up to 10,000 of home interest deductible would run a tax rate of the high 30's to low 40's - and the rich would be paying 1/3 more than they do now with our "progressive rate FIT tax".

By not opportioning brudens fairly with benefits, you'd see low income flat taxed people have a increasingly more difficult time, while the wealthy flat taxed people would have an increasingly easier time of things. That would concentrate increasing amounts of wealth and power at the top end, and people who were rich from unearned income would fair the best. This, in turn, would discourage working for a living, wo we'd thien get a stagnating economy. The pie would shrink, there'd be a few very wealthy, powerful people. Europe would buy up every asset in Aeerica, and it would be the same as when the US took over the world because it was competing with a crappy political-economic system called 'royalty', except it'd be reversed. The US would get the shitty end of the stick this time.

tax at the low end - most pay zero - and a modestly progressive tax at the high end.

You can compute your taxes using either the list of deductibles, and it's a long list. Of compute your taxes use the standard deductions. Your taxes are the lesser of the two results. That means you must have more listed in your deductibles, than your standard deductions. And THAT reality only falls to the wealthier who have money to spend things on deductibles. Things like home improvement, tools, self employment, tax free donations, martinis & golf fees (yes, these are deductible) and so forth.

For the poor, these deductions are worthless. For example, when I was a meter reader working for KG&E (Now known as Westare Energy.) I had to use my own vehicle for work. That meant my gas and maintenance could be deducted from my taxes (if I kept the receipts.) But all of that didn't even reach 1/8th of my standard deduction.

If I would have itemized my taxes (that is what it is called when you take advantage of these deductions) than I would have paid 1/3 more in my taxes, that year. Nice, huh.

We are not talking about the current code.

The proposed "flat tax" - with a 10000 per person deductible - 5000 per child - means a 4 person family pays zero tax at 30,000 income, rather than todays 15.3% payroll plus perhaps 5% FIT - or 20%.

At 1 million, the same family pays say 35% - rather than the 27% under current law that comes up as the average. The above numbers are approximate, but they show the progressive nature of "flat" tax that is designed correctly to replace both payroll and FIT.

It never ceases to amaze me how some think they can flim flam with basic math. As if some one else is too stupid to pick up pen and paper and figure it out by them selves.

Your examination of a family at 30,000 is bogus, and nothing more than an attempt to hid the true implications through focusing on extremes. How about we look at a family of 2 at 30,000. According to your figures, they would only get 20,000 deduction, that leaves 10,000 in wages that need to be paid at same 35%, that the 35% that the family at 1 million will be paying on their wages. That comes out to $3,500, a good hefty sum when you are only making $30,000 a year.

But the real joke is that the family at 1 mill will not be paying squat in taxes, because capital gains and inheritances incomes will be exempt from taxation. Happy day for the wealthy.

You want to try that again?

SS payroll tax is 15.3% (any economist will note that while 50% of that is deducted at work - and the other 50% paid directly by the employer - the effect on your wage is the same as it would be if you paid the full 15.3% directly - the employer simply reduces your "gross" pay so that he can afford the overhead of his contribution to the payroll tax).

At 30,000 that works out to about $4,500.

The 4 person family of 4 FIT tax is about $ 1,000.
http://www.fredbien.com/cgi-bin/canat113a.html is an excellent calculator.

So we compare $5,500 to 35% of of zero - and we are better off.

Now we do the family of two - same Social Security, and this time FIT is about 1,800, for a total of $6,300.

So we compare 35% of (30,000 less 20,000) - or $3,500 - and again we are better off.

Folks do not understand how our two income taxes - FIT and Payroll tax - favor the rich and screw the middle class compared to a flat tax with deductible. But the GOP does understand - which is why the 1994 GOP Flat tax proposal now covers only FIT - SS with its wage cap is not to be changed so that we can pretend we have only 1 income tax - and we look the other way while the payroll tax surplus is taken to pay for the Defense Department - and Bush gives Bonds to SS - while Bush screams that in we have a crisis in 2018 because SS will want to cash in those bonds, causing FIT to need to increase to get the money to redeem those bonds - and the rich have no desire to repay the money being stolen to finance the Bush tax cuts. Of course one makes progressive a FIT only Flat Tax by making the deductible 20,000 per adult, 10,000 per child, so that the folks with no kids making 50,000 now is a $4800 tax currently - compared to a 3500 flat tax payment.

Indeed a flat tax can be made progressive easily - just choose a large per person deductible FIRST, and then get a rate that recovers the tax revenue needed. But do not worry - the rich will never let you have such a tax. So today the GOP pushes a National Sales tax to replace the FIT, or the rich wants a modification of the FIT that takes investment income and cap gains out of the income to be taxed - and since that type of income is 99% of the income that the rich report (you thought the rich lived off of wages?) the rich support the GOP.

And the middle class says wow - a tax free IRA, or 401k, or Meddical Savings account - what a great guy is Bush - and the rich wink - as their investment income becomes non-taxable, and the deficit gets larger - and we hit the salaried high income folks a bit - but let the really rich get away with paying less and less.

Dean wants to end the wage cap on SS - an excellent first step in taking back this country from the very rich. A second step is larger per person deductibles in the FIT code.

Indeed a flat tax can be made progressive easily - just choose a large per person deductible FIRST,

We interupt this drivel with an unanounced mesage of reality.

If its a flat tax, its not progresive. No mater how large a deductable you give.

A progresive tax BY DEFONITION, must progresivly tax higher incomes a larger percentage. At some point in the high end of the income scale, you will be taxing 100% of your income. The flat tax by defoniton, will only tax at 35%.

We will now return to our tap dancing around this fact.

I have always considered progressive to mean open to new ideas, progress etc.

Not progressivly taxing people merely because they make more money.

Sure, I'm jealous of the guy who makes a million a year, but I figure he earned it just as much as I earned my money.

So, why punish him for making more money?

Progressive taxation isn't progressive, its bigoted.

Everyone gets the same services from the government. Theoretically, you could argue that a fair tax would be one where everyone pays the same amount-- not percentage, AMOUNT.

So, I pay $2,000, you pay $2,000, etc etc.

Making people pay a percentage of the income makes the amount progress up the income leve, though people have the same burden-- its just as painful for me to pay %10 of my income as it is for the millionaire dude.

I think that shouldnt' be called a flat tax.. that's a progressive tax. What we have now is not a progressive tax, its a punishment tax!

A Flat tax would be everyone pays the same dollar ammount-- and that's fair because everyone (Should) get the same services from the government.

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the farther you go out past 1 million, the smaller the increments at which you approach your top rate of 35 percent.

The tax rate/tax burden of a person with 100 times more annual income than 1 million, might be less than 1 percent higher. Do you really think someone making 100 times more income has less than a 1 percent decrease in the marginal valuation of an additional dollar, and finds it less than 1 percent easier to make another 1000 bucks? I doubt it.

If you can run a country on a tax system which charges a million dollar earner and a 150 million dollar earner at at 35 percent marginal rate, you can afford to run it by charging the full range of earners 15, 20, 25, 30, 40, and 45 percent at reasonable brackets.

Look, like I said in the other thread, we have a flat tax on corporate income and look what it has done: it has concentrated wealth and power in the hands of a few very large corporations, and prevents small businesses from competing witht them effectively.

We should be talking about how to end the flat tax on corporate income, rather than how to extend it farther down to individual incomes so that we can recreate all the problems we have with large, rich corporations running America to super-rich individuals as well.

Current tax "scales" are so watered down by loopholes, credits,deductions, etc. that they are meaningless. Every year, books are published listing which mega-corporations paid the least in taxes. The priveledged board(s) of these companys hire lawyers and accountants not only to to take maximum advantage of these things, but to dream up knew schemes, which they lobby for and enact. Flat tax, progressive tax, blah, blah, blah. The form a tax code takes does not matter. The government will raise the money it needs. What does matter is who pays what percentage?
The concentration of wealth toward the rich in this country over the last 20-30 years is staggering! Democrats are as quilty as Republicans. The Census produces a report every few years: The Statistical Analysis of the U.S. It breaks us all up into 20th percentiles, with special groups at the top: the richest 10%, richest 5%, richest 2%, richest 1% and how much of the nations wealth each group has. Thing is this: Back in about 1985 or so, things were getting so out of whack, they quit reporting on the 500 richest. Just took there share of the pie (which naturally gets bigger every year)
out of the equation. Now they further dilute this information by only reporting on the top 20%, (less the 500 richest).
Are you following me here? Take Bill Gates billions out of the equation, take the Waltons billions out, take out the billions of the other richest 494. Just let them have that to themselves. Do not consider the the largest chunk of our nations wealth when you report on the distribution of wealth in America.
Here is what I face as a white, (used to be) middle class American trying to make a living. In the 70's, women entered the workforce as never before driving DOWN wages in the form of competion from a bigger labor pool. In the eighty's and continuing today, computers decimated mid-level management. In the 90's and continuing today, Corporations and their bought politicains sold us out with the gospel of free trade. I live in South Carolina, but it might as well be East L.A. The wave of latino immigration is mind-blowing. All the while the companies that used to be located here are going to Mexico. Now in the 2000's they have just gotten brazen about it. Enron, Worldcom, etc. "let's just TAKE the suckers money." The banking reforms of the 1990's that allowed banks to sell stock, handle investments, insurance, etc. was only a license to steal.
Expand the workforce! Lower labor cost! The race to the bottom is on folks. I could go on forever, but what's the use. Its a foregone conclusion as to what the future holds. And I am not talking Biblical prophesy here. Open your eyes. Use your common sense.

Bad attempt at spreading right wing crap in a Democratic website. Have you considered getting a life?

As I understand it, paying taxes is a way of paying for the benefits you get by being part of a particular society, protected by that society's government, etc. For example, we pay taxes in America because we derive benefit from our government and society, and taxes are our way of paying our dues. Does that sound about right?

If that's the case, and please let me know if you think otherwise, then it seems like the most morally/ethically appropriate tax modality would be some sort of a national retail sales tax. Before anyone gets too upset with that, please allow me to explain myself.

Granted my first paragraph being accurate, then:
-The justification for taxes is the benefit we derive from our
society and government.
-If we are going to expropriate someone's life (in the form of
taxation of money they have earned), it makes sense we have a
logical standard. It seems that standard should be the value of the
benefit they have obtained from living in our society.
-While we obtain money through employment (either working for a
business or corporation, being self-employed, etc.) we do not derive
any actual benefit until we spend our income. More money=more
spending power, yes, but it is only when we spend the money that we
realize a value, whether that value be in the form of food, shelter,
transportation, health care, entertainment, etc.
-If we only derive value from spending money, then we only derive as
much (objectively measurable) value from society as money we spend.
-So to be fair and equitable about taxing people in proportion to the
amount they benefit from our society (and, although the reasons
might be debatable, don't the rich actually realize more of a
benefit from our society than anyone else?), and thus, in proportion
to what they spend.
-In other words, a national sales tax seems like the most desirable
taxation system.

Okay, I know that went on for a very long time, wasn't terribly concise, etc. I will appreciate anyone's constructive criticism--I'm not trying to cause trouble, etc., it just seems to me like this is a rather logical train of argument. If I'm wrong, please tell me (politely and courteously) how, so I don't make that mistake again. Thank you!

Ypu'll love the flat tax.

A flat tax, you see, goes beyond what Bush did. and give the rich much more while putting an even more unaffordable burden on the poor.

Additionally the 17% you suggest is low to cover cossts lost by reducing the higher rates.

Don't let the rhetoric fool you. Flat taxes will destroy the economy worse than what Dubya has already accomplished.

...no matter how you slice the tax code, the government (state, federal, local, I don't care which) requires some finite number of dollars to fund itself.

Any change to the tax scheme is merely a re-apportionment of the tax burden, absent a reduction in spending by any hypothetical government.

In simple language, changing the taxation method cannot possibly bring in MORE tax dollars unless SOMEBODY is paying more taxes....

Do we really believe that moving to a 'flat tax' is going to lower the tax burden on the working poor and the wealthy SIMULTANEOUSLY? And still fund the government at it's current (deficit spending) levels?

In order to fully fund the government, the flat tax rate would have to be set effectively high enough, especially including exemptions for the poor, that the wealthy would end up paying a higher percentage than they do now. Ain't gonna happen, not in my lifetime.

As we say, with irony, in the military "it briefs well....."

...since the "flat tax" applies only to earned income, measured in salary or wages, what is to stop people or corporations from taking salary or wages as stock, dividends, or other interest bearing vehicles?

Since they are not income, per se, would they be exempt?

What about deferred income ultimately left as an inheritance? What about straight inheritances? Profit from sale of capital assets?

There are a lot of ways to make money without receiving a paycheck.....

Actually a flat tax could work. I'd take the flat tax anyday compared to the trickle down scheme that the Bush plan enacts. Cut payroll taxes, and maybe consider a national sales tax? Hmmm?

IN ARCHIVES.

WWW.CTJ.ORG ALSO.

someday in the very distant future when all medical problems have been cured, when poverty and overpopulation are no longer a problem in the world, when all people can receive a first-class education, and every individual on Earth has a role which makes life worth living.

When government is no longer needed, no longer in debt, and no longer at our throats then we could consider a flat tax...

This thread was started by a since-banned disruptor. If anyone wants to start another flat-tax thread, please do so.

FlashHarry
DU Moderator