10% U.S. Flat Tax Accross the Board!
 

Why, or why not?




Indy

I would probably be in favor of it but doubt we will ever see it happen..

Yeah, you're right, it's probably not complicated enough.

;)

And what the hell would we do with all those unemployed IRS agents and tax accountants?

:rolleyes:




Indy

The current tax code is an abomination, no question, that could do with a thorough streamlining.

I dislike arguments for a flat tax that frame it in terms of simplifying the tax code as if it was the most important result of the change.

I believe that the "flat" tax is actually a benefit to the wealthy. Think of a person paying $2400 of their $24000 yearly salary and a person paying $24000 of their $240000 salary. Which one is more burdoned by this new "simple and fair" taxation scheme?

Tax them who can afford it.

In your example, I guess I'm failing to see when both parties pay 10% that it favors the rich?

Can someone else clue me in here?





Indy

Let me elaborate, Indy.

When you're barely getting by, every dollar counts for things like housing, food, healthcare, insurance, car, gasoline, etc.

For somebody making $24000 a year, $2400 isn't just a significant chunk of change, it's a difference in their quality of life.

For the person making $240000 a year, the $24000 is an inconvenience. Furthermore, this person could be charged even more without putting too serious a crimp on their lifestyle. Charging them $30000 not only wouldn't really put the hurt on them, but it would pay for lower taxes on several people making $24000 - people for whom paying, say, 7% instead of 10% might make a big difference.

The flat tax is the simplest, fairest proposal out there, the idea that someone should pay a higher percentage just because they make more is ludicrous.

It's the simplest plan out there, I'll give you that.

I've outlined above why I think its fairness is in doubt. Adam Smith presented the idea nicely in 1789 in The Wealth of Nations:

You can feel free to disagree with me, but I think dismissing my point as "ludicrous" is shortsighted - especially as this philosophy is the bedrock of our current tax code.

Basically what is being advocated here is Socialism, is it not?

Doesn't everyone in this country, outside of inheritence (I don't count this because I certainly won't inherit anything), start out with the same opportunities as anybody else? So, because I work harder, or the right opportunities fall my way, or I win the lottery, I'm supposed to share what I have, over-and-above a proportionate tax, to someone who might not be as motivated, or as lucky as I am? That should be my choice to do, not mandated.

Also, there are plenty of people out there who would love to make $24,000 a year, and would live a happy life if they did. I know a few of them myself. Who are you, or anyone else for that matter, to say that $24,000 a year makes a person poor compared to someone who makes $240,000 a year? People need to live within their means no matter how much they make, and if they can do that, hey, this is America, life will be good.





Indy

Actually, no. I can see why you're confused because socialism also aims to modify income for the purpose of social egality. However, I believe that what we're talking about predates socialism. It's one of the fundamental values of western civilization. As Jesus says in Luke 12:41, "From everyone to whom much has been given, much will be required; and from the one to whom much has been entrusted, even more will be demanded."

Are you saying that inherited wealth is the only benefit to growing up wealthy and that other than that, economic conditions have no impact on equality of opportunity? I'd say that's silly on face.

No. I make no aspersions as to the work ethic or luck of anyone involved. I'm saying that I think the moneyed should bear a disproportionate amount of the cost of government - that is to say holding the roof up on civilization and maintaining the system that's allowed them to become successful. It's a burden I'm sure many in a lesser position would gladly trade for.


Dude, who am I to say that a person who say that a person is poor compared to somebody who makes $240,000 a year? I CAN DO BASIC MATH!!!

Or are you talking about "poverty of the spirit" or some such pap? Take a trip to the poorest part of your town and tell me if you see them behaving with any quiet nobility compared to the ones in the McBurbs. By and large, you won't. Poverty breeds the desperation that leads men to set aside their better moral instincts.

Who am I to say? Well, I'm a guy who's never cracked $24K a year, that's for sure. But hey, as you say, this is America and I'm tryin'.

a single person earning $24,000 a year, at a flat 10%, would pay $2,400 in federal income tax. however, that same person, with the current standard deduction of $8,900, would have a taxable income of $15,100 and pay $1,510 in income tax.

under our current system, that same person earning $24,000, claiming the standard deduction, and filing as "single", now pays $1,868 in income taxes.

with the 10% flat tax, keeping the standard deduction, that person would pay less federal income tax.

10%, with no deductions, would hurt low-income people severely!

a single person earning $100,000, at a flat 10%, would pay $10,000 in federal income tax. with the current standard deduction, that person would have a taxable income of $91,100 and pay $9,110 in federal income tax.

under the current system, the 100k earner, with the standard deduction would pay $19,493 in federal income tax. so, all other things being equal, that person would be better off by far paying the flat tax.

of course, all things are not equal. the problem with our current system is that there are too many deductions! therefore the wealthy are able to "shelter" their income. that is why the richest people generally pay the least percentage-wise in taxes.

we should keep the current system, with modifications. the percentage of income tax paid should increase as income increases. what we need to do is get rid of all the "shelters".

the standard deduction needs to be raised so that people with poverty level incomes are not taxed at all, or at least very little, and there should be "excessive wealth" taxes imposed on people whose income places them above the "middle class" income level.

unfortunately, we are NOT all created equals. the income level of your parents plays a tremendous role in your ability to get ahead financially. genetics plays a very important role also. some people are just not smart enough to become doctors or lawyers, no matter how hard they work. and "the right opportunities falling your way" is pure luck. some have it, some don't.

what you are implying is that a person born to poor parents, in a poor neighborhood, who attends a low-performing school, is of average or below intelligence and appearance (also plays a tremendous role in success), and is not very fortunate otherwise, should have to pay more (or at least the same)in taxes that you do.

winning the lottery or any other such windfalls is an exception to the rule, not the rule.

try it.

no, money doesn't buy happiness, but poverty sucks.

Hey, this is simple people, why complicate it. EVERYONE pays 10% federal income tax, NO other exemptions need apply. Nothing to hide behind. Period. Simple.

This is the same problem with Washington and Politicians in general. They complicate things where there should be no complications. Let's all just keep coming up with reasons why we think something won't work, so nothing will ever get done. I guess we all just showed everybody how the two-party system works. Brilliant.




Indy

I'm doing it right now....

Now you try it and maybe you can be happy too. Oh, and guess what, $24,000 a year is NOT poverty.




Indy

I would be in favor of a flat tax but the word I hear is that 10% would not be enough. It would most likely be in the range of 14-17%

I totally agree. It is ashame that there is so much money in keeping all the loopholes in the tax code. I wonder how many the current convoluted tax code causes employment for? Anyone know?

No socialism is much different than what is being advocated here. I believe the poster is referring to a socially responsible sociaty as the people who earn more can afford to pay more and a health sociaty benefits all.


People absolutely do not have the same opportunities. Never have never will. Honest, why would you even think this is true?

I guess simple solutions satisfy simple minds.

Okay then, 15%, whatever works. Simple.




Indy

There's no need for that, if you can't argue a point without personal attacts, your credibility on this board, IMHO, will be severely compromised.

If I've learned anything over my lifetime, there is absolutely nothing wrong with simplifying things, or even oversimplifying things.

Peace!





Indy

I respectfully disagree, and I believe at that, we've reached a point where we philosophically differ and no amount of wrangling is going to make a difference to either of us.

I was surprised to see you go back and raise the "simplicity" flag again after my arguments. It suggested to me that you either didn't have a rebuttal, found the concerns I brought up irrelevant, or didn't understand my point.

Depends on where you live. In some regions of this country, that's rent---nothing else. In some areas $24k =living in your $1,200 car.

Sure, tax accountants! Never could figure out the damned 1040, never mind all the Supplements.:confused:

Anybody remember when there was a 91 percent tax bracket? I kid you not. Google it.

More often than not the simplest solution turns out to be the best one. Far too often people who think they're enlightened don't realize that you can simply pick up a hammer and drive a nail without trying to find all the ways to drive a nail.

Since the single biggest problem with our tax system is it's complexity and miriad web of loopholes etc, a flat tax is the single most effective way of eliminating it and making sure we all pay the same rate regardless of income.

The only people who wouldn't think it an ideal solution are those who have a very abstract and illogical idea of fairness.

Then move, $24K a year in a lot of places would be a very comfortable living.

I can see the comfort in trying to reduce everything to a minimum amount of complexity. It certainly makes decisions easier and lets you sleep easier at night. It may even work well as a personal strategy. I'd argue, however, that it creates a tunnel vision situation, oblivious to nuance and unintended consequence.

I think simple solutions are more often than not best suited to simple problems. The real world can sometimes be a complicated place that calls for looking at multiple versions of the truth and weighing shades of gray. I'd call keeping the blinders on as a matter of public policy dangerously misguided.

Uh oh... I'm a tax lawyer and CPA, so my view is probably a little off-center. That said, here goes:

A flat tax won't work for several reasons. The tax system performs three huge functions:

1. Raises revenue for the government.
2. Tool for economic policy.
3. Redistributes wealth.

Believe it or not, the #2 reason is the crucial one. Take the complex tax system away, and the government can't encourage things like building apartments and drilling for oil. Money would flow only to where the yield is highest, and that would leave a lot of folk without homes, and gas would be really, really expensive. In a flat tax, the rich are not encouraged to invest for the long term. Instead, day-trading pays as well as a 20-year commitment. There's no point in starting a business and re-investing for it to grow, so everyone just takes profits in cash where they can. Every time a business sells something at a gain in order to buy a bigger one, like a new plant or a big machine, the government takes its flat cut, so the business has to wait a lot longer before it can afford to grow. The government can't encourage companies to train new employees, or to provide pensions for older ones, or medical expenses. People have to pay the tax before they can afford medical expenses, making the cost of care prohibitive for all but the rich. These are just a few examples.

The flat tax won't work, and it's a long way from fair, for the reasons already stated. It sounds great until you apply the detail facts... then it really and truly sucks.

Seeking the simplest solution is by no means a sign of intellectual weakness or an attempt to avoid reality, nor is it a matter of tunnel vision so your condescending attitude doesn't lend credibility to your case friend.

Making things more complicated than they need to be is what leads to unintended consequences. One look at the bloated, ineffective pig our government has become is proof of that, it's a product of making things too complicated.


I'm more concerned about the problems caused by people who get lost in shades of grey fog. The real world is not as complicated as you want it to be, it's really fairly simple if you choose to see reality. There's no such thing as multiple truths, a thing is either right or wrong, what you describe is simply a means to deny the truth and justify the agenda of the day.

And a flat tax would put you out of a job so...:)

Actually I would argue that the only Consitutionally legitimate function of taxation is to raise revenue to allow the government to perform the duties required under the consitution, the attempts to use it for other purposes are what cause the problems.

It's not the governments job to be architects of the economy, only to make sure those who engage in commerce operate lawfully and ethically. Instead they do the former and ignore the latter.

I understand your point, but i would point out that in making it all so complicated, the unintended consequences have been worse than they would be according to your argument against a flat tax.

This system, in Iowa at has resulted in a situation where the lowest 20% of wage earners pay a higher real tax rate than the top 20%.

There's only one solution to that problem, a flat tax of some form. Any attempt to correct it through alterations to the current tax code I assure you will result in even more complex rules and when it's all said and done, the situation will not have changed.

And who is the determiner of this universal right or wrong?

where? some third world country?

For over 5 years we supported a family of 6 on 17K a year. 24 grand would have been us living large.

Running through this thread and others is the usual 'government is inefficient' mythology, you want inefficiency I give you Constipation Energy, our local power company.

First off the put in an investment banker as CEO, not an engineer. He used all the revenues investing in non-power related stuff and let the infrastructure rot.

Where I came from there were two utilities that I dealt with, Hydro Quebec and Ontario Hydro. Both were goverment owned and both are profitable and have ample power reserves for the future. Their rates are less than half what Constipation charges (and Constipation wants to raise them again after getting a 72% raise last year). They say we may see brownouts in a few years because they want the taxpayers to build their new plants.

BTW if the two Canadian utilities did not produce so much power half the northeast states would be freezing in the dark.

Please don't ever run for office.

That doesn't mean everyone can do it everywhere. I live in a part of Massachusetts that has been economically depressed for 30+ years, and a 3 bedroom apartment is going to cost you $900+ utilities; houses start around $180k. Could you do that on 17k? If it was $17k after taxes and you didn't own a car (but you have to around here) Maybe.

It was 17 before taxes. The only income we had was my wife delivering pizzas for Domino's. I was paying 980 for my mortgage at the time. I know there are other areas more depressed then the greater Detroit area but not by much.

And no I am not saying my family is better then anyone else. Just saying we were hurting big time and all most lost our house several times but you do what you have to in tough times.

Got it.

Back to the flat tax topic, it seems to me on its face to be a good idea. I think simplest solutions are always the best but no matter what the challenge, solutions have to work.

The only exception to the flat tax that I could see advocating for would be for those who giving up 10% of their income would mean going without basic human necessities such as food, clothing, and medical care.

I am of the opinion that people need to take care of each other to some degree. No one is truly on their own. For all its glaring imperfections and excesses, government is one of the ways in which we do take care of each other. I'd like to see a government that uses some wisdom and discretion when helping those at the bottom.

Working with the 10% figure that's been floated, I'd happily pay 11% so that some -those truly in need- would not have to pay any.

Brilliant counter, absolutely brilliant. I applaud you for bringing a new level of sophistication to the field of trolling.