Definitely an interesting topic, and I can see benefits to both a flat tax rate and a progressive rate (and to other types of taxes altogether).
First, we need to accept the fact that basic survivability will create a lower limit to what a family or person can survive on. So, based on that it makes it much more difficult for a lower income person to pay the same tax rate as a higher income person because they are much close to that limit. So from that standpoint, it makes sense that you'd tax low income people very little, and higher income people more heavily (since they can theoretically more easily absorb the cost).
Second, we have a situation where the tax laws are very complex, and people who make lots of money can "invest" in tax and finance advisors so they end up paying very little in taxes because they are able to report very little taxable income (I guess the more cynical among us could liken it to money laundering, but really it's just a good investment if you can afford to do that, and have enough wealth to invest in those areas).
I guess we all know that taxes are how the government redistributes the wealth, which in some ways is good and other ways not so good. Maybe charities would be more efficient, but I can guarantee that there would be far less overall money available if people had the "option" of paying taxes. I sure wouldn't be donating over 25% of my income if I didn't have to. I have my own bills to pay!
I think I could support a progressive tax rate that topped out @ 15-20%, but then much higher taxes on luxury items that the wealthy typically use. Also, I'd want to get rid of all the tax free investment crap that people can hide behind. But to help mitigate that I would get rid of Capital Gains taxes (to make it easier to save without needing to have a financial advisor, two tax lawers, and one criminal lawer to oversee the rest of them). The luxury tax would generate income when people actually use their money (instead of when they are struggling to save) and would prevent a regressive tax on everyday items that poor folks need. The elimination of capital gains would make it much easier for people to accumulate wealth, even if they were not able to add to their invenstments, and the flatter tax rate would help out those in the upper middle class and those who live in expensive areas and therefore have high incomes but don't have much left to save (as a Californian, this is something that would help me...maybe).
Of course I'd also cut way back on certain government expenditures.
First, the WAR ON DRUGS would reach a truce. Pot would be leagalized and regulated just as cigarettes and alcohol. I'm not sure about the more addictive drugs, but they would probably be regulated more like prescription drugs or maybe stay illegal. The goal behind this action would be to reduce the prison populations, free up law enforcement to focus on violent crimes, and reduce the incentive for drug related violent crimes in the first place (less expensive drugs means that users will be less likely to steal for drug money, and less profits will make dealing drugs less attractive and will reduce associated gang problems.)
I'm sure there are many more ways to make things more efficient, but one things is certain, and that is that in addition to their being much wasted tax money, there are also many good things that come from tax money (public schools, university systems, roads, etc.). Unfortunately, I think most politicians like to cut the most useful programs first just to punish all us citizens for wanting lower taxes.
-D'oh!
Facebook
Twitter