What's with all this facination on "flat tax"?

[RollingWave]

http://reasonableviews.com/2011/10/2...ax-unfairness/

This article explains it quite well, but generall I'm perplexed by the facination American public seem to have with this whole flat tax thing, it doesn't take mroe than 1 minute to figure out how superficial it is aside from an arbitrary % point.

Here's some part that people seem to either ignor or overlook.


1.There are state taxes and federal taxes in the USA, changing the federal tax to a flat rate wouldn't do much if the State tax remains progressive / regressive. and given the consitution of the US there's no real chance of a unified tax rate.

2.There are payroll taxes that influence more than anything else, middle to lower end wage earners, the ridiculas talk of how only 51% pays income tax ignors that anyone who has a real job is still paying payroll tax. which is again, a regressive tax that effect mid to lower level earners much more than higher level onces.

3. Other taxes, like property / sales etc are obviously disporportionally distributed on different income levels. if your house is like 90% of your asset's worth than it's property tax is obviously different than if your house is only 20% of your asset's worth .


4.Almost all income tax have a basic exemption level equally for everyone, which would inheriently means that the real amount your paying is always different for any different # of wages due to that. since your real payment would be your income - your deductable x rate.


None of this is hard to figure out, so I'm intrigued as to why there's such a facisnation with "flat" tax rates in the US? now I can understand the demand for tax reform(something that both sides of the specturm seem to agree on, except they completely disagree on the directions), but the focus on the whole flat aspect is rather confusing.

[bushbush]

You are overestimating people's willingness to sit down and think, and underestimating people's willingness to look for simple answers and blame others, but not themselves, for the country's problems.

Taxation is not a simple subject. Everyone should take a course on federal income tax to see just how complex the problems of taxation are. This is not even because the current tax code is long and tedious. It is just of how many forms of income, assets and properties we can created in our economy today. What should be taxed, why should they be taxed and how much should they be taxed are very difficult policy questions. Instead, people don't want to think about those. They are willing to listen to BS like Cain's 9-9-9 and think that will solve all the problems.

[Denny Crane!]

You are overestimating people's willingness to sit down and think, and underestimating people's willingness to look for simple answers and blame others, but not themselves, for the country's problems.

Taxation is not a simple subject. Everyone should take a course on federal income tax to see just how complex the problems of taxation are. This is not even because the current tax code is long and tedious. It is just of how many forms of income, assets and properties we can created in our economy today. What should be taxed, why should they be taxed and how much should they be taxed are very difficult policy questions. Instead, people don't want to think about those. They are willing to listen to BS like Cain's 9-9-9 and think that will solve all the problems.

Or they look at somewhere like Romania and the success it had and think it is a good idea, doesn't seem like that is a bad idea in principle - look for success and examine the possibilities of replicating it.

[kesa82]

You are overestimating people's willingness to sit down and think,

--- or just bother to look up the subject in question.

What a bizarre thread.

Five pages and -- though perhaps I missed it -- not a single commentator here is apparently familiar with the rationale of a flat tax.

( Though perhaps that isn't surprising. The flat tax is yet another case where right-wing hacks have hijacked a conservative idea ---without actually hijacking the idea itself, just the vague slogan. And other people subsequently haven't bothered to inquire into its origin. )

It has to do with a concern about -- NOT taxation itself and the fairness or lack thereof --- PRIVACY.

With tax law, as with pretty much any area of law , when the law grows to thousands of pages, caveats, exceptions, sub-sections, and so on , the simple answer given to the question, " What is the law ? " by any reputable lawyer, would be, " It depends . " That is ; After your privileges have been withdrawn, your house has been padlocked, and you have been put in a cage, that will be determined .

Or, to put it another way , when the law ( like tax law ) grows to thousands of pages, caveats, exceptions, sub-sections, and so on , the concept of guilt or innocence becomes a mute point.
You are innocent until you are investigated.
Within those thousands of pages is bound to exist some point apon which to hang you . From which circumstance even having 300-dollar-an-hour lawyers and accountants on permanent retainer is only the minimum protection.

The flat tax is ---or at least was --- about privacy .

But then what was important about this concept of privacy anyway ?

To hear people talk now , you would think that some girl not wanting some creepy ( but harmless ) guy getting her phone number is somehow an issue vital to you , and me, and the commonwealth , and all mankind.

Not that the issue of privacy is about power, and that human beings, any human beings, cannot be trusted with too much of it.

And that's all I will say. Do your own homework.
Like I said, it was a bizarre thread this was.

[Condottiere 40K]

It's painful trying to pay taxes, and going through a torture session filling out the forms just adds to the agony. Simplifying the code(s) is a siren song almost no one can resist, except tax lawyers and accountants.

Having said that, flat taxes really benefit the rich far more than the middle or working classes, but it's an ideal and emotive vote catcher. Perhaps the Americans should implement it, discover how it actually works, and decide how to honour those that pushed it on them.

[saglam2000]

The whole tax code needs to be re-written along with the constitution so we can have some uniformity in our taxes. Until all of that is on the table nothing will help.

[molonthegreat]

Since it's the only fair tax out there, with everyone paying an equal amount of their salary and the rich paying more since they make more money. Progressive taxes are very unfair to the most hardworking part of the population.

[Manco]

Since it's the only fair tax out there, with everyone paying an equal amount of their salary and the rich paying more since they make more money. Progressive taxes are very unfair to the most hardworking part of the population.

A flat tax does not benefit 'the most hardworking part" unless you account for a basic cost of living that's exempt.

[Menelik_I]

A flat tax does not benefit 'the most hardworking part" unless you account for a basic cost of living that's exempt.

Somehow a CEO don't work hard ? Lets not fall for the ''working class'' rhetoric that suppose rich folks to be ''parasitic class'', everyone with a job is working.

I like the flat tax because the Rich already will pay more in absolute and the progressive tax unfairly single out high earners. For me progressive tax is a breach of equal treatment.

[GrnEyedDvl]

Somehow a CEO don't work hard ? Lets not fall for the ''working class'' rhetoric that suppose rich folks to be ''parasitic class'', everyone with a job is working.

I like the flat tax because the Rich already will pay more in absolute and the progressive tax unfairly single out high earners. For me progressive tax is a breach of equal treatment.

Exactly right.

[Mangalore]

...I like the flat tax because the Rich already will pay more in absolute and the progressive tax unfairly single out high earners. For me progressive tax is a breach of equal treatment.

taxes aren't about equal treatment but money!
Overall progressive tax mainly tries to compensate for tax exemption schemes which can usually be used to a higher degree by high earners because they have more money to reinvest.

edit: Overall the question about flat vs. progressive tax has more to do with tax efficiency and social buffers. At the end of days the government wants as much money as they can get without crashing the economy.

I think it would be a better system where everyone has a vote, but gets one extra vote for every ten thousand they pay in income taxes, and outlaw campaign contributions.

That's what Prussia had. 25 % of the population controlled 75% of the votes in parliament or a similar level. Ensured a conservative government although a large faction of the populace wanted reforms.
The thing why conservatives want to conserve is usually because their current state of affairs is so that any reform or change would threaten that while most reformists want reform because it would improve their current state of affairs.

Your idea would entrench society and prevent social mobility because the political system would be controlled by those who don't want social mobility because their most likely way would be down.

[Menelik_I]

taxes aren't about equal treatment but money!
Overall progressive tax mainly tries to compensate for tax exemption schemes which can usually be used to a higher degree by high earners because they have more money to reinvest.

edit: Overall the question about flat vs. progressive tax has more to do with tax efficiency and social buffers. At the end of days the government wants as much money as they can get without crashing the economy.

Progressive Income tax single out High earners has big targets, make welfare and class warfare much more easier. It is not just a question of efficiency.

How 'bout putting some more words in my mouth?

The simple fact is there IS a basic cost of living, for some people that already comes down to 50% of their paycheck, while for others it barely registers. Taking 20% off of the former hurts a lot more than for the latter.

Somehow you suppose that such tax cannot have exemptions for minimum cost of living ?

[Manco]

Somehow a CEO don't work hard ? Lets not fall for the ''working class'' rhetoric that suppose rich folks to be ''parasitic class'', everyone with a job is working.

How 'bout putting some more words in my mouth?

The simple fact is there IS a basic cost of living, for some people that already comes down to 50% of their paycheck, while for others it barely registers. Taking 20% off of the former hurts a lot more than for the latter.

[Alkaline Earth]

Flat Tax is simple, easy, and completely epic.

I think that for every 1,000,000 you make in income alone you should get 1 more vote. And if you drop out of high school then you shouldn't be allowed a vote until your 35...

[AqD]

Somehow a CEO don't work hard ? Lets not fall for the ''working class'' rhetoric that suppose rich folks to be ''parasitic class'', everyone with a job is working.

I like the flat tax because the Rich already will pay more in absolute and the progressive tax unfairly single out high earners. For me progressive tax is a breach of equal treatment.

Some people paying more tax than others while getting exactly the same benefits from the state is already a breach of equal treatment.

It is simply not meant to be equal. In a world where everyone is treated equally, the majority are either enslaved in factories or left to eat dust and die hopelessly, or being tricked to become so.

[Rolling Thunder]

Some people paying more tax than others while getting exactly the same benefits from the state is already a breach of equal treatment.

For even with a flat rate of taxation some people will be paying more tax than others while getting the exact same benefits. At a 10% flat tax, man earning £10,000 P.A will only pay, say, £1,000 in tax, while a man earning £30,000 P.A will pay £3,000 in tax - for the exact same services he recieves from the state. By that reasoning*, the only truly "fair" tax surely must be a fixed tax for everyone.


*I.e. disregarding the concept of diminishing marginal utility...

[chilon]

Somehow a CEO don't work hard ? Lets not fall for the ''working class'' rhetoric that suppose rich folks to be ''parasitic class'', everyone with a job is working.

In the USA, the small "leisure class" (people rich enough to live solely from unearned investment income) is not working and getting taxed at a much lower rate than anyone working for earned income.

I like the flat tax because the Rich already will pay more in absolute and the progressive tax unfairly single out high earners. For me progressive tax is a breach of equal treatment.

Exactly right.

This is only true if you assume that everyone benefits equally from the status quo configuration of society.

If some individuals derive greater benefits and usage from the current configuration of society than others then it is logical for them to pay a greater percentage to support that configuration of society no "breach of equal treatment".

And equal treatment under the law is a bit of an imperfect reality anyway. In theory there is supposed to be equal treatment but the practical reality always manifests differently. For instance, criminal defense. In theory everyone is "treated equal" but the reality is that a rich person who can hire lawyers for millions of dollars receives different (and superior) treatment under the law than a broke person relying on an overworked public defender.

Is that what happened in Romania?

No one is operating on an empirical basis. Who here has brought up any evidence about how Bolivia, Estonia, Georgie, Guernsey and Jersey, Hong Kong, Jamaica, Latvia, Lithuania, Paraguay, Romania, Russia, Slovakia and the Ukraine is doing with flat tax.

The idea that this taxes poor people more is utter bollocks and anyone claiming so is talking out of their arse and is truly ignorant of the idea because almost every single experiment has always raised the basic rate more and so lifted more poor people out of tax. A similar idea is being experimented in the UK where the Liberal Democrats want the first £10000 GBP to be entirely untaxed.

If we examine the Eastern bloc countries the introduction of a flat tax and elimination of exemptions for taxes actually led to an increase in revenue in 3 countries but a decrease in 5 others. It is difficult to draw any kind of conclusion from this though as some raised the rates above previous tax levels whilst others lowered the rate. Furthermore political and economic analysis has only seriously been done for two countries in the group.

Flat tax is very clearly progressive and not regressive. The amount paid increases with income it doesn't decrease so you do pay more if you earn more. In the case of the UK once we have finished with our plans for a basic rate a person on a low income of say £15000 a year would only end up paying 20% of £5000 which is a £1000 a year, a very small amount of tax. A person on £30000 a year the median income for the richer parts of England would pay £4000, 4 times the amount. Every flat tax country has an allowance rate set except Georgia.

The evidence on the tax rate so far is not conclusive in favour or against the system. With that in mind I can't conclusively have an opinion on it but I wouldn't be in favour of massive change without some clear idea on how it seriously benefit the country.

But the idea that it can just be dismissed out of hand or labelled as regressive, well that is bollocks. I just don't support expensive reforms for no reason.

Denny we've been down this road before.

In America a flat Federal Income tax is hardly the only type of tax that exists. Proposals in the USA by politicians only address making a flat Federal income tax. That says nothing for all the other types of taxes that exist in America from national social security taxes to state, county and city taxes. If one is to address the issue of total tax burden one cannot just look at Federal income tax rate and nothing else. You have perform all sorts of calculations that are going to vary from state to state, county to county and city to city.

You have a different system in the UK as you mentioned before. Also in eastern european countries. Unless those countries have a similarly complex federal taxation system the US has, comparing data on national income taxes is not going to be meaningful.

Even taking the exemptions you talk about into account, a flat federal income tax in the USA might be progressive to some extent all by itself but that is not taking into account total tax burden by adding in all the other types of taxes.

To me its a bit incomplete to simply argue the merits of a flat Federal income tax without taking into account the fact that that has no effect on state, county and city taxes (things like sales tax, property tax, etc as mentioned in the OP).

[Manco]

A flat tax does not benefit 'the most hardworking part" unless you account for a basic cost of living that's exempt.

Yeap

[Menelik_I]

Yeap

[Plan C]

At the most fundamental level it comes down to one's approach to social aspect of humanity (like pretty much every other topic in this forum); individualism vs collectivism. Individualists, such as yours truly, will argue that progressive taxation is unfair, and, in principle, it is. The premise of marginal utility reminds me of the attitude displayed by many a cab driver in poorer countries. Whenever I go to Greece, or Lithuania (real examples) cabbies will rip me off by default. Take me the long way round, put me on tariff 7, rip me off. Why? Because, in their eyes, I can afford it. Well, perhaps I can but is it right? No. Is it fair? Hell no. It is not up to anyone else to tell me what I need, how much of it I need and how much I deserve, I don't think. If we're all to chip in - fine. But don't presume the breadth of my shoulders and don't tell me it is universally fair that I pay more 'because I can afford it'.