What Is The Problem With Flat Income Tax?

[jankren]

People say it is unfair, but in what ways?

[Nietzsche]

The argument is that the people who are least able to afford a flat tax arguably give up more economic power as a result of meager means and less disposable income.

Example of a flat tax of 15%
If I make $500 a month, my taxes are $75.
If I make $5000 a month, my taxes are $750 dollars.

Obviously, the person making only 500 is going to "feel" the loss of 75 more than one making 5000 is going to "feel" the loss of 750.

Thus the poor, who are in most need of every penny to make ends meet, feel the crush of taxes worse than those with large(r) amounts of disposable income.

[Downey]

If the poor stopped smoking, and wasting their money on pop then they wouldnt feel it as much.

[Da Skinna]

If the poor stopped smoking, and wasting their money on pop then they wouldnt feel it as much.

Sure. As soon as the rich pull their advertisements from Nascar events...

[magickyleo101]

A flat income tax is unfair because it unequally distributes the burdens of maintaining the government in favor of people with more money. The reasoning goes like this:

The vast majority of us can agree that, as much as possible, government functions should be supported by equivalent contributions from each of us. But there are (at least) three ways in which we can what it means to make "equal" contributions:

• First, two contributions can be "equal" in terms of their dollar ammount (e.g. each of us give two thousand dollars).
• Second, two contributions can be "equal" in terms of the percentage of income that they represent. (e.g. each of us pays 13% of what we make).
• Third, two contributions can be "equal" in terms of the hardships that making such a contribution imposes on the taxpayer. In this sense, 30% of your income might impose the same hardship on you that 35% of my income would impose on me.

It's the third kind of equality we really care about - the other two kinds represent mere "facial" equality without any grounding in an actual value.

Thus, when we go to design our tax system we want our tax law to impose - again, as much as possible - equivalent hardships on each tax payer. The way to accomplish this is to take into account the fact that a flat tax imposes a greater hardship on the poor than it does on the rich because a given dollar is worth more when you're poor. Only a progressive tax system evenly distributes hardship.

@ Downey:

If the poor stopped smoking, and wasting their money on pop then they wouldnt feel it as much.

How is this at all relevant? Rich people waste their money too. At what point on the income scale do you earn the "right" to waste money and still object to your tax bill?

[Phier]

A flat income tax is unfair because it unequally distributes the burdens of maintaining the government in favor of people with more money. The reasoning goes like this:

When we have a system where a majority of the voters pay no tax, well you know where that leads, we get closer every year.

[nopasties]

Question: " I understand that Congress is considering a so-called 'flat' tax system. How would this work?" Answer: "If Congress were to pass a 'flat' tax, you'd simply pay a fixed percentage of your income, and you wouldn't have to fill out any complicated forms, and there would be no loopholes for politically connected groups, and normal people would actually understand the tax laws, and giant talking broccoli stalks would come around and mow your lawn for free, because Congress is NOT going to pass a flat tax, you pathetic fool." ~Dave Barry

The rich benefit fom the status quo the most. The poor benefit from the rich's ability to pay more. I see it as a responsibility for the well off to contribute to the governmental system that maintains their good conditions. Conservatives like to pat themselves on the back but it is the efforts of the generation before that allow the opportunity for us to succeed in life. It is the responsibility again for the wealthy to ensure the American system more than the less fortunate. I say less fortunate bacause some deserve to be poor but many others do not. Life does not reward us the way our egos do.

[Desperado †]

If the poor stopped smoking, and wasting their money on pop then they wouldnt feel it as much.

Yes. Because all poor people smoke and waste their money on pop, and their poverty is 100% their own fault, so they deserve to be there. In fact, I think there should be an annual kick the poor day, to remind them it's their fault that they're poor, and that they should have worked harder. I mean, all poor people just sat around at school. Every single one. It's not like they didn't have a lower standard of education than richer children. And I mean, those one's who couldn't afford essential health care and suffered as a result, pah! I mean, if they we're children, they're parents should have worked harder. I think children should totally be blamed for the mistakes of their parents, because they deserve it, because they're poor. Sitting around, drinking pop all day and smoking. Makes me sick.

[Aetius]

Yes. Because all poor people smoke and waste their money on pop, and their poverty is 100% their own fault, so they deserve to be there. In fact, I think there should be an annual kick the poor day, to remind them it's their fault that they're poor, and that they should have worked harder. I mean, all poor people just sat around at school. Every single one. It's not like they didn't have a lower standard of education than richer children. And I mean, those one's who couldn't afford essential health care and suffered as a result, pah! I mean, if they we're children, they're parents should have worked harder. I think children should totally be blamed for the mistakes of their parents, because they deserve it, because they're poor. Sitting around, drinking pop all day and smoking. Makes me sick.

I agree with that sentiment in a non-sarcastic way if they were given equal oppurtunity then they ought to be poor. For example when I went to school there were people who never tried hard in schoolwork and failed many classes. They never thought of anything creative or tried hard to get better jobs and now have a tough life, thats not my problem, they deserve to be poor. Even if they are stupid, they deserve to be poor.

[magickyleo101]

I agree with that sentiment in a non-sarcastic way if they were given equal oppurtunity then they ought to be poor. For example when I went to school there were people who never tried hard in schoolwork and failed many classes. They never thought of anything creative or tried hard to get better jobs and now have a tough life, thats not my problem, they deserve to be poor. Even if they are stupid, they deserve to be poor.

But people aren't given equal opportunity, so how is this at all relevant? Or maybe I'm just mistaken and this is really the "talk about how you would set up the tax system in your fantasy world" thread? If so, I'll play along: I think dragons should pay all of the taxes in society since it's well known that they amass piles of gold only to sleep on them.

[Desperado †]

I agree with that sentiment in a non-sarcastic way if they were given equal oppurtunity then they ought to be poor. For example when I went to school there were people who never tried hard in schoolwork and failed many classes. They never thought of anything creative or tried hard to get better jobs and now have a tough life, thats not my problem, they deserve to be poor. Even if they are stupid, they deserve to be poor.

Yes, but it's completely impossible to create complete equality of opportunity.

And in your example - people are usually stupid because of, again, because factors beyond their control - genes and nurture. Those people who never tried hard at schoolwork - perhaps they didn't have parents who taught them the value of working, or who never encouraged them to work? Or again, it could be due to genes.

Either way, life is down to so many uncontrollable factors out of our control, you can never be certain that somebody is poor because of entirely their own fault, or mostly at their own fault (as only then would it be reasonable to blame them). Blaming everybody poor for their predicament is obviously ridiculous.

[Darth Red]

I disagree, this country is founded on equal opertunity. It is the hard work and dedication that gaps the prosperous from the poor. Furthermore for an example, I have two aplicants to fill one job. App. X is white, suburban silver spoon highly educated. App Y is from a poor backround no family structure etc.. (Both have the same credentials, schooling, test scores). In my experience I will always hire App Y because it shows me that person worked harder to get where they are and didn't (presumably) have everything handed to them. Personal Responsibility people!

READILY and, I trust, feelingly acknowledge the duty incumbent on us all . . . to provide for those who, in the mysterious order of Providence, are subject to want and to disease of body or mind; but I cannot find any authority in the Constitution for making the Federal Government the great almoner of public charity throughout the United States . . . .
- President Franklin Pierce
From a veto message in 1854

[Shi Huangdi]

What some of you seem to overlook is that the rich seldom horde their money; they spend it in ways that benefit everybody. Consider a rich corporate CEO who purchases a private jet. He's not just benefiting himself. He's funding the jobs of the people who build, repair, service, fuel, and staff the jets. He's putting money into the economy, which means means more jobs for regular people, which means more money in their pockets, which means more goods and services are being purchased. It's the free market.

[magickyleo101]

What some of you seem to overlook is that the rich seldom horde their money; they spend it in ways that benefit everybody. Consider a rich corporate CEO who purchases a private jet. He's not just benefiting himself. He's funding the jobs of the people who build, repair, service, fuel, and staff the jets. He's putting money into the economy, which means means more jobs for regular people, which means more money in their pockets, which means more goods and services are being purchased. It's the free market.

So? The same thing happens when poor people spend their money too. The money's coming out of the economy somewhere - we're only talking about who should pay. This isn't a more-taxes/less-taxes fight, so your post isn't really relevant.

[jankren]

So? The same thing happens when poor people spend their money too.

Except unlike rich people they dont have any money and the faster they realize that the better therefore they can stop throwing their checks on beers and cigarettes.

Example of a flat tax of 15%
If I make $500 a month, my taxes are $75.
If I make $5000 a month, my taxes are $750 dollars.

I fail to see the problem. In this case the poor need to learn to be thrifty and work harder to lift their social condition.

Anyway, the government doesnt need much money if they stop spending much money.

[eisenkopf]

[...]
I fail to see the problem. In this case the poor need to learn to be thrifty and work harder to lift their social condition.
[...]

You can't deny that there is a minimum amount of money one needs for a halfway decent (still low) living standard. There is only so much you can save on housing, food and clothing. If you barely have enough to pay for a small apartment, some food and the occasional replacement of old clothing, then every dollar/euro/pound taken away from this is causing you a lot of trouble and hardship. Of course, even the middle-class usually does not have much left over at the end of the month. However, they (and richer people) have reserves in their budgets/finances that they can tap on. Less frequently bought (and cheaper) clothes, less meat on the dinner plate, less recreational expenses, and finally maybe even a cheaper housing.

For this reason, taxation usually starts only after you reached a certain income threshold. I don't see the problem with a flat tax if this income threshold is high enough. The problem with the current complicated system is that while on paper it may impose similar hardships on everyone (see previous post on measuring equality), it gives affluent people many opportunities to save money through exemptions which are only open to you if have lots of money (e.g. in Germany, buying real estate).

As for the calls of "less beer/cigarettes" and "work harde/be more thrifty": Tell that to those who have three McJobs and still not enough money to meet minimum living standards. If the wages were higher, they would earn enough money to pay taxes.

EDIT: Same argument goes for an increase in the sales' tax. While nominally increasing the prices for evenryone by the same amount, it's a difference whether it means I have to actually spend more, because I only buy the most essential stuff anyway, or whether I can compensate the increase by lowering my spending on non-essential stuff (e.g. a visit to the movies less, new sunglasses next summer, another year with the old bike, etc.)

[CtrlAltDe1337]

I don't see how anyone can argue that a flat percentage (which goes up as you make more money btw) is unfair.

[magickyleo101]

When we have a system where a majority of the voters pay no tax, well you know where that leads, we get closer every year.

Source? Given that most places have a sales tax, I doubt this is true....

I don't see how anyone can argue that a flat percentage (which goes up as you make more money btw) is unfair.

I suppose that not reading the posts of other people is one way not to see.....

[Phier]

Source? Given that most places have a sales tax, I doubt this is true....

Sales tax is mostly state, I'm talking federal.

In recent years, the number and percentage of Americans who pay no federal income tax has increased. According to a 2007 report by the Statistics of Income division of the Internal Revenue Service,[4] in 2006 the Internal Revenue Service received 134,372,678 individual income tax returns, of which 90,593,081 (67.42%) showed that they paid or owed federal income tax for 2005. That is, 32.58% of those Americans who filed income tax returns did not owe any federal income tax at all for 2005.

The democrats move to continue drive that number higher, the reason should be obvious to you.

I'd also add that why should the pain of taxes be 'equal', why do taxes have to hurt to be fair? Just think of the growth of the the economy with a 15% flat tax. Who cares if some people don't feel the burn.

[magickyleo101]

Sales tax is mostly state, I'm talking federal.

In recent years, the number and percentage of Americans who pay no federal income tax has increased. According to a 2007 report by the Statistics of Income division of the Internal Revenue Service,[4] in 2006 the Internal Revenue Service received 134,372,678 individual income tax returns, of which 90,593,081 (67.42%) showed that they paid or owed federal income tax for 2005. That is, 32.58% of those Americans who filed income tax returns did not owe any federal income tax at all for 2005.

The democrats move to continue drive that number higher, the reason should be obvious to you.

I don't know how many of those people are teenagers working over the summer (my guess is that it's something like 10 or 15%. Of the remaining portion, my guess is that they're so poor that if you taxed them you'd end up paying at least as much money out in social services (due to their reduced income) as you would take in.

I'd also add that why should the pain of taxes be 'equal', why do taxes have to hurt to be fair? Just think of the growth of the the economy with a 15% flat tax. Who cares if some people don't feel the burn.

If you don't think that people should make equivalent contributions to the government, then why have a flat tax where everyone pays the same percent? Why not some people 35% and some people 8%?