1/10 Flat tax: how does this make sense? If you make over $100k, 15% may
not seem like a lot of money, but if you're making $25k, that 15%
could be necessary for feeding a child or paying for health insurance
that your employer's not giving you. Serious replies, please.
\_ I think even in the proposed "flat tax" scheme it's not absolutely
flat. There is still some basic exemptions and deductions that
everyone will take. After those exemptions and deductions, a flat
percentage number is applied.
\_ I see where you are coming from, but on the other hand 40% of
$x million is a buttload of money, right? It's not like that
doesn't hurt a very rich person, too.
\_ True, but it hurts in a different way. 40% of $xm still gives
you 60% of $xm free and clear, which will still support a very
generous lifestyle, whereas 15% of $25k could result in welfare.
I agree that 40% may not be fair to the very rich, but I'm not
sure a flat tax answers that.
\_ Yes, flat taxes are regressive. Yes regressive taxes are bad for
society and bad for the economy. Yes, the people calling for
flat taxes don't give a damn.
\_ Flat tax is not regressive by definition. You are an idiot.
-- ilyas
\_ Everyone knows sales tax is regressive, even though it is a
fixed percentage.
So, is a flat federal income tax regressive, progressive, or
neither?
Neither, you say. But, when a flat federal income tax is
combined with a sales tax, the overall system is regressive.
I think both of you can agree with the above.
\_ True, sales tax is regressive. Flat tax is not. I favor
a flat tax and abolition of all other taxes -- i.e. a
non-regressive, non-progressive system. -- ilyas
\_ This also includes eliminating all capital gains and
corporate taxes, right?
Finally, are you including eliminating all deductions?
\_ I would subject corporations to the same flat tax
as individuals, since corporations seem to enjoy
a legal personhood status, and can earn money just
like people. I would eliminate deductions.
I would tax all effective income at the same rate,
which would include some form of capital
gains tax. -- ilyas
\_ I agree with this. Even though my rate would
effectively go up (I have a mortgage, 2 kids, and
charitable contributions that are worth itemizing
under the current system). -emarkp
\_ What do you two think of a two-bracket
progressive system? E.g., eliminate all
deductions and sales tax, but have an income
tax of 10% for < 30,000, and a rate of 40% for
> 30,000?
\_ Nope. Any progressivism is bad IMO. And
where did you come up with 40%? And why
30K? -emarkp
\_ Currently, wealthy people and
corporations pay most of the taxes in the
U.S. Let's say they pay a 50% rate.
Let's say the non-wealthy pay at a 25%
rate. If you have one rate, the
loss in taxes from the wealthy is huge
versus the gain you get from raising
taxes on the non-wealthy. Hence, "40%"
for everyone. These are guessed
numbers, along with the 30K number, but
the basic idea is as stated above.
\_ That's the long way of saying you
pulled them out of the air. But
thanks for answering. -emarkp
\_ No. The extra information here
is that the wealthy carry most
of the tax burden in the U.S.
Since the wealthy are few, then
if you have a flat tax rate,
this rate will be closer to the
high end, assuming no efficiences
and the government stays the same
size (whereas in the rest of this
discussion, the assumption
is you gain efficiences, and
the government gets smaller).
\_ Corporations have been paying less
and less taxes year after year, now
they only contribute a sliver to
revenues. About equal shares come
from payroll and income taxes.
\_ I disagree with any non-flat tax on
principle. -- ilyas
\_ emarkp/ilyas:
If you have one bracket, this means you
increase taxes for the poor and decrease
taxes for the wealthy.
Perhaps this is the way it should always
have been.
Can either of you suggest something that
would alleviate the additional burden
on the poor?
\_ I no more believe the poor should
receive compensation for 'additional
burden' of paying their share than
I believe african americans should
receive compensation for having to
compete on equal footing for college
admissions in CA, since the time
affirmative action was struck down.
I think the effects of smaller
burden on the investors, along with
the vastly simplified tax code would
have a hugely positive, liberating
effect on the economy overall
-- ilyas
(just as I think the lack of
affirmative action
has a positive effect both on the
quality of the student body, and the
academic performance of african
americans). -- ilyas
\_ So you're saying if we move to a
purely flat tax system, the
efficiencies gained will be so
great as to not create an
additional burden for the poor?
\_ I am saying the additional
burden on the poor is something
I am willing to live with,
since it's only a burden in
comparison to the current system,
which I view as unfair. As a
completely separate comment,
I think the positive benefits
of flat tax are vastly under-
estimated. -- ilyas
\_ I understand now. The
wealthy and middle class are
are being forced to subsidize
the poor through a
progressive tax system.
Such charity should be
voluntary, not government-
enforced.
This is speaking from the
viewpoint of fairness.
Economically speaking, you
think a flat tax system will
have a hugely positive,
liberating effect overall
for the reasons you
mentioned.
\_ Yes, this is correct.
-- ilyas
\_ See, we CAN have
a reasoned discussion
on the motd!
\_ Unfortunately, it
all only works in
theory. Like all
the big libertar-
ian ideas.
\_ As if anyone
ever tried this.
I wonder if
any monarchist
nobles who
read up about
read up on
democratic
governments in
Plato wondered:
'democracy
sounds nice in
theory, but it
would never work.'
-- ilyas
\_ Oh, and I agree with
ilyas. -emarkp
\_ Okay, I've probably been trolled but I'll ask anyway. So you're
for revoking tobacco taxes? Sales taxes? Social Security (I
love how that's been renamed "payroll tax")?
\_ This is one of the things I think is funny. If we were
really in favor of reducing taxes on poor people we'd
lower tabacco taxes and eliminte the lottery.
\_ Exactly. Also, poorer people tend to die sooner, so
private SS accounts would allow them to have some
inheritance to give to their children.
\_ *All* taxes are bad for the economy. Progressive taxes, too,
if not more so. As for society, I am not sure. Lots of people
address the poor by proposing a negative income tax along
with a flat tax. I actually think a flat tax might be a
better idea, since our current 'progressive' system has so
many loopholes that companies like MSFT pay nothing. Just
have them pay 15% flat with no deductions and you might get
some money from them. Charge them more and watch them leave
the US.
\_ While MSFT pays nothing (or rather, a lot less than its size
suggests it should), in order to qualify for all of those
deductions it has to spend an inordinate amount of money on
charities, non-profits, and the public sector. While some of
that money may go to questionable causes (i.e., toward
increasing MSFT's market share), it's still money spent on
the public good; taxes are supposed to be collected for
similar reasons (although, of course, Joe Taxpayer doesn't
get to decide where his tax money actually ends up). A Flat
Tax would seem to remove the need to spend all of that money
on charities and other social programs; the money could
instead be hoarded and passed on as dynasty (cf. the repeal
of the Estate Tax).
\_ While many large companies do spend money on charities
and whatnot, most of the deductions are because of
capital depreciation, capital losses, stock options,
and so on. I don't think this money is going to
charities, since that's not a big allowed deduction
anyway.
\_ oh my, 100 million dollars worth of Windows XP donated to
schools. How generous!!! Thank you Bill Gates.
\_ would you rather they run Linux? MacOS ain't free either
\_ No, *all* taxes are not bad for the economy. If this
idiotic belief were true, then countries like The Congo
would be booming economically. Taxes are necessary for
roads, armies, police and the functioning of a safe
and sane society. Take your libertarian BS elsewhere.
\_ I didn't say taxes were unnecessary, just that they
are bad for the economy. This is not me talking, but
Nobel Prize winners in Economics who have studied
this.
\_ I understand that taxes may, on their face, be bad for
the economy, but the benefits reaped from the proper
application of collected taxes can create the
infrastructure to actually boost the economy. Cf.
Roosevelt's CCC programs and their effect on
transportation, et. al.
\_ Perhaps, but then you are saying that people
do not recognize the value of such investments.
I believe that the free market will provide
infrastructure if it really is an economic
benefit. A tall $30 million bridge serving a
remote part of Wyoming is not really a benefit,
but the Bay Bridge is. If you believe that the
free market will not provide those things truly
of benefit then, yes, you need to tax.
\_ Let's just say that I believe the current system
holds the best chance for properly allocating
funds for the greater good, insofar as it holds
within itself the means of reform. The free
market has the properties you've mentioned, but
the deficits are very difficult to overcome.
\_ Most taxes, other than income tax, are regressive. See Social
Security, sales tax, use fees, etc, so no, I think replacing
income tax with a flat tax would be unfair. If all taxes
were replaced with a single flat income tax (with a largish
deduction), that would be fine with me. It sure would put
a lot of accountants out of work. -ausman
\_ under progressive tax where the rich pay more, they will
suffer at a disproportionally rate. Imagine you making
5 million dollars a year and you get 50% tax. Now you'll
only make 2.5 million dollars. That means you'll only be
able to buy a LearJet 4 instead of LearJet 5 (plus pilot and
maintenance and storage), or you can get a LearJet 5 but
you may have to fly it yourself. Progressive tax is unfair
and flawed.
\_ Boy, you really have NO idea what you're talking about, huh...
\_ Yes, comrade. We should divide all assets equally among
the citizens.
\_ Fair or not, very high income taxes for the rich reduce their
incentives to invest money into riskier business ventures
potentially hurting the economy.
\_ Unless, of course, you offer tax deductions for investments
in certain key industries. Taxes and loopholes can be a
powerful tool to guide an economy; they can also lead to huge
abuses of power.
\_ I'm against that; I don't think the tax system is the right
place to provide such incentives. It makes the system too
complicated and seems hard to manage. Incentives for e.g.
better environment-friendly tech. can be handled under a
different umbrella, and new-industry development done
through competitive research grants and other stuff.
\_ So're Bush and most of the super-wealthy. They'd
prefer to keep the goods for themselves. Estate taxes
help ensure that their money reenters the general pool
now and then, and the current tax system makes them more
likely to do something with what they've got rather than
just building up legacies; as the adage goes, spend it
while you've got it, and you'll know where it goes. |
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