Flat Income Tax

Orsorum

Lifer
Dec 26, 2001
27,626
3
81
Yes, this is an offshoot of an earlier thread posted by Millennium. Does anyone know of any current research on the feasibility of enacting a flat income tax instead of a graduated income tax? I know that some research had been done in the 1960's, but I haven't been able to find much using data from the last 4 or 5 years.

An Article from 1996
Interesting abstract... although I'm not willing to buy the paper.
Interesting
 

Bleep

Diamond Member
Oct 9, 1999
3,972
0
0
I suggest that you check out the last presidential campain there were candidates that had done studies on this subject.

It is stupid idea that will never go anywhere.

Bleep
 

Orsorum

Lifer
Dec 26, 2001
27,626
3
81
Originally posted by: Bleep
I suggest that you check out the last presidential campain there were candidates that had done studies on this subject.

It is stupid idea that will never go anywhere.

Bleep
Why is it stupid?
 

AvesPKS

Diamond Member
Apr 21, 2000
4,729
0
0
Originally posted by: Orsorum
Originally posted by: Bleep
I suggest that you check out the last presidential campain there were candidates that had done studies on this subject.

It is stupid idea that will never go anywhere.

Bleep
Why is it stupid?
The only arguments I've ever heard as to why a graduated tax is better than a flat tax was based on controlling spending (and inflation) through fiscal policy.

Ex: A person who makes $30,000 a year, under a flat tax of 10%, will pay $3000 in taxes...he may not be able to buy his daughter braces that year. A person who makes $300,000 a year, under the same flat tax of 10%, will pay $30,000 in taxes...and will not be able to buy his daughter a Mercedes for her birthday.
 

etech

Lifer
Oct 9, 1999
10,597
0
0
Originally posted by: AvesPKS
Originally posted by: Orsorum
Originally posted by: Bleep
I suggest that you check out the last presidential campain there were candidates that had done studies on this subject.

It is stupid idea that will never go anywhere.

Bleep
Why is it stupid?
The only arguments I've ever heard as to why a graduated tax is better than a flat tax was based on controlling spending (and inflation) through fiscal policy.

Ex: A person who makes $30,000 a year, under a flat tax of 10%, will pay $3000 in taxes...he may not be able to buy his daughter braces that year. A person who makes $300,000 a year, under the same flat tax of 10%, will pay $30,000 in taxes...and will not be able to buy his daughter a Mercedes for her birthday.
Give each household or wage earner an exemption of say 20,000 on their income. Pay flat tax on amounts above that.



 

sandorski

No Lifer
Oct 10, 1999
69,427
4,812
126
I don't understand the romanticism with the Flat Tax. Sure, it appears to be "fair", but is the Graduated Tax "unfair"?

Before you answer that, are the rich getting poorer? Are they not in fact getting richer and the poor getting poorer? Wouldn't a Flat Tax without other significant changes just accelerate current trends?
 

etech

Lifer
Oct 9, 1999
10,597
0
0
Originally posted by: sandorski
I don't understand the romanticism with the Flat Tax. Sure, it appears to be "fair", but is the Graduated Tax "unfair"?

Before you answer that, are the rich getting poorer? Are they not in fact getting richer and the poor getting poorer? Wouldn't a Flat Tax without other significant changes just accelerate current trends?

How many billions of dollars are wasted each year in calculating and submitting taxes to the government? How much manpower is wasted finding loopholes through thousands of pages of tax codes?

I see it as eliminating that waste and reducing a burden on the economy.

It would reduce Congress?s ability to use the tax code as a social welfare tool and return it to its main purpose which is gathering revenue for the government?s operation.

 

kaizersose

Golden Member
May 15, 2003
1,196
0
76
Originally posted by: sandorski
I don't understand the romanticism with the Flat Tax. Sure, it appears to be "fair", but is the Graduated Tax "unfair"?

Before you answer that, are the rich getting poorer? Are they not in fact getting richer and the poor getting poorer? Wouldn't a Flat Tax without other significant changes just accelerate current trends?
it is not the responsibility of the governement to redistribute wealth in this country. that is called socialism. the entire basis of the "american way" is that everyone is guaranteed an opportunity at success. that does not guarantee success nor does it mean someone will take care of you if you fail--just that the possibility exists..

while some people in this country are lucky enough to inherit their livelyhood, a majority of the rich have, and continue to work extremely hard for their income
 

Bleep

Diamond Member
Oct 9, 1999
3,972
0
0
Give each household or wage earner an exemption of say 20,000 on their income. Pay flat tax on amounts above that.
Here is the first argument that why a flat tax is not a flat tax at all. Right away those that want it start to make exemptions in one way or another. Which is it? you want the wage earner or the household to have the exemption or have you gave that any thought oir just throw that out to make some kind of point that the extremely poor would not have to pay.

All income would not be treated the same, there would still be exemptions for this or that kind of income. Even Forbes that is the champiom of a flat tax had a ton of exempt income from his plan. Even if it ever came about you will not see a decrease in state or local tax. It would not replace any tax that is now collected.

And by the way I have every right to say that a flat tax is stupid just like you have the right to say that the tax system we have now is stupid or some other bad thing about it. Taxes now are not fair or ever will be. A flat tax will not change anything but to make it more unfair. If a multibillionaer wants it it sure cant be good for the lower income wage earner.

Bleep
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
Originally posted by: sandorski
I don't understand the romanticism with the Flat Tax. Sure, it appears to be "fair", but is the Graduated Tax "unfair"?

Before you answer that, are the rich getting poorer? Are they not in fact getting richer and the poor getting poorer? Wouldn't a Flat Tax without other significant changes just accelerate current trends?
I assure you with a flat tax "the rich" will pay more assuming there no longer such thing as capital gain. As it is now, if you have a good accountant, you can deduct almost everything as a business expense and pay little to no tax on those earnings depending how you reinvest them and "deductions" and "expenses" you have. You think MS paid taxes on thier lear Jets? Nope. They earned 15m spent 15m on jet and was not taxed on the initial 15m.. But under a flat tax they would have to earn 20m to buy a 15m jet assuming a 25% flat tax. How high percentage should it be I don't know.. Always loved flat tax.:)

Everytime money changes hands would be best. Forget about income entirly but for the money transfer.
 

Bleep

Diamond Member
Oct 9, 1999
3,972
0
0
Zebo

Do you really think that if a business or individual in business for himself is not going to be able to deduct the cost of improving the business by purchasing machines or other things is going to happen? Your example of microsoft's jets is highly fictional to say the least. The cost of doing business will always be deductable no matter what kind of tax that you have on income.
I see that you do say that rich people pay little if no tax through the use of some accounting process that they can afford.
Check out Swartsnegger's tax bill or his economic adviser's income and his tax bill.

Bleep
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
Do you really think that if a business or individual in business for himself is not going to be able to deduct the cost of improving the business by purchasing machines or other things is going to happen?
flat tax means just that flat. No deductions from revenue or income. Both are taxed at a flat rate no matter the CDB. Otherwise it's not very "flat" is it?
 

Macro2

Diamond Member
May 20, 2000
4,874
0
0
The reason a flatter tax schedule would have trouble is basically that industries like Charities, Real Estate, Tax accountants & tax lawyers, annuities all the way to H&R Block would fight it. It also takes takes power away from Congress...

Mac
 

Orsorum

Lifer
Dec 26, 2001
27,626
3
81
Originally posted by: etech
Originally posted by: sandorski
I don't understand the romanticism with the Flat Tax. Sure, it appears to be "fair", but is the Graduated Tax "unfair"?

Before you answer that, are the rich getting poorer? Are they not in fact getting richer and the poor getting poorer? Wouldn't a Flat Tax without other significant changes just accelerate current trends?

How many billions of dollars are wasted each year in calculating and submitting taxes to the government? How much manpower is wasted finding loopholes through thousands of pages of tax codes?

I see it as eliminating that waste and reducing a burden on the economy.

It would reduce Congress?s ability to use the tax code as a social welfare tool and return it to its main purpose which is gathering revenue for the government?s operation.
I concur.
 

charrison

Lifer
Oct 13, 1999
17,033
1
81
Originally posted by: Orsorum
Originally posted by: etech
Originally posted by: sandorski
I don't understand the romanticism with the Flat Tax. Sure, it appears to be "fair", but is the Graduated Tax "unfair"?

Before you answer that, are the rich getting poorer? Are they not in fact getting richer and the poor getting poorer? Wouldn't a Flat Tax without other significant changes just accelerate current trends?

How many billions of dollars are wasted each year in calculating and submitting taxes to the government? How much manpower is wasted finding loopholes through thousands of pages of tax codes?

I see it as eliminating that waste and reducing a burden on the economy.

It would reduce Congress?s ability to use the tax code as a social welfare tool and return it to its main purpose which is gathering revenue for the government?s operation.
I concur.
 

SuperTool

Lifer
Jan 25, 2000
14,000
2
0
Russia has 13% flat tax.
Looks like the commies got one ahead of us. Reagan will be rolling in his grave as soon as he's dead and buried.
 

sandorski

No Lifer
Oct 10, 1999
69,427
4,812
126
Originally posted by: kaizersose
Originally posted by: sandorski
I don't understand the romanticism with the Flat Tax. Sure, it appears to be "fair", but is the Graduated Tax "unfair"?

Before you answer that, are the rich getting poorer? Are they not in fact getting richer and the poor getting poorer? Wouldn't a Flat Tax without other significant changes just accelerate current trends?
it is not the responsibility of the governement to redistribute wealth in this country. that is called socialism. the entire basis of the "american way" is that everyone is guaranteed an opportunity at success. that does not guarantee success nor does it mean someone will take care of you if you fail--just that the possibility exists..

while some people in this country are lucky enough to inherit their livelyhood, a majority of the rich have, and continue to work extremely hard for their income
Government is what the people make it be. The "American Way" is first and foremost the "People", not an economic system. Though, over time the economic system has adopted the "American Way" as it's own.
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
Originally posted by: SuperTool
Russia has 13% flat tax.
Looks like the commies got one ahead of us. Reagan will be rolling in his grave as soon as he's dead and buried.
Funny these boys paying that aweful 25-40% here arn't on the next plane out and russians are begging to come here and other "socialist" EU's.
 

sandorski

No Lifer
Oct 10, 1999
69,427
4,812
126
Originally posted by: Orsorum
Originally posted by: etech
Originally posted by: sandorski
I don't understand the romanticism with the Flat Tax. Sure, it appears to be "fair", but is the Graduated Tax "unfair"?

Before you answer that, are the rich getting poorer? Are they not in fact getting richer and the poor getting poorer? Wouldn't a Flat Tax without other significant changes just accelerate current trends?

How many billions of dollars are wasted each year in calculating and submitting taxes to the government? How much manpower is wasted finding loopholes through thousands of pages of tax codes?

I see it as eliminating that waste and reducing a burden on the economy.

It would reduce Congress?s ability to use the tax code as a social welfare tool and return it to its main purpose which is gathering revenue for the government?s operation.
I concur.
Those dollars may be wasted, depending how you look at it. Good point though.
 

IGBT

Lifer
Jul 16, 2001
17,832
86
91
Forbes was suggesting this a few years ago..but the fat cats don't like it cause then they would have to pay their fair share instead of hiding behind a slew of deductions. I hear Russia has adopted Forbes idea and their tax revenues went up and greatly simplified the whole tax collection process.......
 

charrison

Lifer
Oct 13, 1999
17,033
1
81
Originally posted by: IGBT
Forbes was suggesting this a few years ago..but the fat cats don't like it cause then they would have to pay their fair share instead of hiding behind a slew of deductions. I hear Russia has adopted Forbes idea and their tax revenues went up and greatly simplified the whole tax collection process.......
I dont know of any fatcats that oppose it....
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
Originally posted by: charrison
Originally posted by: IGBT
Forbes was suggesting this a few years ago..but the fat cats don't like it cause then they would have to pay their fair share instead of hiding behind a slew of deductions. I hear Russia has adopted Forbes idea and their tax revenues went up and greatly simplified the whole tax collection process.......
I dont know of any fatcats that oppose it....
I'm guessing but I bet these people would be opposed :
A second report that the I.R.S. will make public today shows that the number of Americans with high incomes who pay no taxes anywhere in the world has reached a record. In 2000, there were 2,022 Americans with incomes of more than $200,000 who paid no income tax anywhere in the world, up from just 37 in 1977, when the report was first issued.
From here NYT:
New York Times
June 26, 2003

Very Richest's Share of Income Grew Even Bigger, Data Show

By DAVID CAY JOHNSTON

The 400 wealthiest taxpayers accounted for more than 1 percent of all the income in the United States in the year 2000, more than double their share just eight years earlier, according to new data from the Internal Revenue Service. But their tax burden plummeted over the period.

The data, in a report that the I.R.S. released last night, shows that the average income of the 400 wealthiest taxpayers was almost $174 million in 2000. That was nearly quadruple the $46.8 million average in 1992. The minimum income to qualify for the list was $86.8 million in 2000, more than triple the minimum income of $24.4 million of the 400 wealthiest taxpayers in 1992.

While the sharp growth in incomes over that period coincided with the stock market bubble, other factors appear to account for much of the increase. A cut in capital gains tax rates in 1997 to 20 percent from 28 percent encouraged long-term holders of assets, like privately owned businesses, to sell them, and big increases in executive compensation thrust corporate chiefs into the ranks of the nation's aristocracy.

This year's tax cut reduced the capital gains rate further, to 15 percent.

The data from 2000 is the latest available from the I.R.S., but various government reports indicate that salaries, dividends and other forms of income have continued to rise since then, even as the stock market has fallen.

The top 400 reported 1.1 percent of all income earned in 2000, up from 0.5 percent in 1992. Their taxes grew at a much slower rate, from 1 percent of all taxes in 1992 to 1.6 percent in 2000, when their tax bills averaged $38.6 million each.

Those numbers can be read to show that the wealthiest, as a group, carried a disproportionate share of the overall tax burden, 1.6 percent of all taxes, versus just 1.1 percent of all income - evidence that all sides in the tax debate will be able to find ammunition in the data.

In 2000, the top 400 on average paid 22.3 percent of their income in federal income tax, down from 26.4 percent in 1992 and a peak of 29.9 percent in 1995. Two factors explain most of this decline, according to the I.R.S.: reduced tax rates on long-term capital gains and bigger gifts to charity.

Had President Bush's latest tax cuts been in effect in 2000, the average tax bill for the top 400 would have been about $30.4 million, a savings of $8.3 million, or more than a fifth, according to an analysis of the I.R.S. data by The New York Times. That would have resulted in an average tax rate of 17.5 percent.

The rate actually paid by the top 400 in 2000 was about the same as that paid by a single person making $123,000 or a married couple with two children earning $226,000, according to Citizens for Tax Justice, a labor-backed group whose calculations are respected by a broad spectrum of tax experts.

The group favors higher taxes on the wealthy, and its director, Robert S. McIntyre, said yesterday that the I.R.S. data bolsters that viewpoint. "Regardless of which party these 400 are in, these are the guys Bush wants to help, even though they have so much money they don't know what to do with it," he said. "How Bush feels about the half of the population that doesn't have much money is he got them a tax cut worth an average of $19 each."

William W. Beach, a tax expert at the Heritage Foundation, a conservative organization that favors lowering taxes for all Americans, said that the top 400 taxpayers made "the significant contribution" to government revenue about one in every $64 of individual income tax paid. Cutting taxes, he said, will prompt the wealthy to invest more in the economy's growth.

Detailed information about high-income Americans has become increasingly important in setting tax policy, because the government relies on the top 1.3 million households for 37.4 percent of individual federal income tax revenue. The half of Americans who earned less than $27,682 in 2000, paid less than 4 percent of income taxes.

All of the I.R.S. data is based on adjusted gross income, the figure reported on the last line on the front page of individual income tax returns. Interest earned on municipal bonds, which are exempt from tax, is not included.

Over the nine years of tax returns that were examined for the new report, only a handful of taxpayers showed up in the top 400 every year, according to I.R.S. officials. In all, about 2,200 taxpayers made the cut even once. There were a few incomes of more than $1 billion a year in the group, but none as high as $10 billion.

The names of the wealthiest taxpayers are not disclosed in the report, which was prepared at the urging of Joel Slemrod, a University of Michigan business school professor who serves on an I.R.S. advisory panel and is a leading authority on taxation of high-income Americans.

The figures do not include the incomes of the many wealthy Americans who use shelters to reduce their reported incomes below the level of the top 400.

In 1999 and 2000, for example, William T. Esrey - then the chief executive of Sprint, the telecommunications company earned more than $150 million in stock option profits, lofting him onto many lists of the best-paid corporate managers.

That income might have put Mr. Esrey in the I.R.S.'s top 400 taxpayers. But, as later came to light, Mr. Esrey bought a tax shelter from Ernst & Young, the accounting firm, designed to let him delay reporting the profits for tax purposes until the year 2030. Sprint's board forced Mr. Esrey to resign in March after he acknowledged that the shelter was the subject of an I.R.S. audit.

Over the nine years reviewed in the new report, the incomes of the top 400 taxpayers increased at 15 times the rate of the bottom 90 percent of Americans; their average income rose 17 percent, to $27,000, from 1992 to 2000.

Long-term capital gains accounted for 64 percent of the income of the top 400 in 2000, nearly double the level in 1992. Wages contributed 16.7 percent to the incomes of the top 400 in 2000, down from 26.2 percent in 1992, and dividends made up 2.8 percent.

A second report that the I.R.S. will make public today shows that the number of Americans with high incomes who pay no taxes anywhere in the world has reached a record. In 2000, there were 2,022 Americans with incomes of more than $200,000 who paid no income tax anywhere in the world, up from just 37 in 1977, when the report was first issued.
 

charrison

Lifer
Oct 13, 1999
17,033
1
81
Originally posted by: Zebo
Originally posted by: charrison
Originally posted by: IGBT
Forbes was suggesting this a few years ago..but the fat cats don't like it cause then they would have to pay their fair share instead of hiding behind a slew of deductions. I hear Russia has adopted Forbes idea and their tax revenues went up and greatly simplified the whole tax collection process.......
I dont know of any fatcats that oppose it....
I'm guessing but I bet these people would be opposed :
A second report that the I.R.S. will make public today shows that the number of Americans with high incomes who pay no taxes anywhere in the world has reached a record. In 2000, there were 2,022 Americans with incomes of more than $200,000 who paid no income tax anywhere in the world, up from just 37 in 1977, when the report was first issued.
From here NYT:
New York Times
June 26, 2003

Very Richest's Share of Income Grew Even Bigger, Data Show

By DAVID CAY JOHNSTON

The 400 wealthiest taxpayers accounted for more than 1 percent of all the income in the United States in the year 2000, more than double their share just eight years earlier, according to new data from the Internal Revenue Service. But their tax burden plummeted over the period.

The data, in a report that the I.R.S. released last night, shows that the average income of the 400 wealthiest taxpayers was almost $174 million in 2000. That was nearly quadruple the $46.8 million average in 1992. The minimum income to qualify for the list was $86.8 million in 2000, more than triple the minimum income of $24.4 million of the 400 wealthiest taxpayers in 1992.

While the sharp growth in incomes over that period coincided with the stock market bubble, other factors appear to account for much of the increase. A cut in capital gains tax rates in 1997 to 20 percent from 28 percent encouraged long-term holders of assets, like privately owned businesses, to sell them, and big increases in executive compensation thrust corporate chiefs into the ranks of the nation's aristocracy.

This year's tax cut reduced the capital gains rate further, to 15 percent.

The data from 2000 is the latest available from the I.R.S., but various government reports indicate that salaries, dividends and other forms of income have continued to rise since then, even as the stock market has fallen.

The top 400 reported 1.1 percent of all income earned in 2000, up from 0.5 percent in 1992. Their taxes grew at a much slower rate, from 1 percent of all taxes in 1992 to 1.6 percent in 2000, when their tax bills averaged $38.6 million each.

Those numbers can be read to show that the wealthiest, as a group, carried a disproportionate share of the overall tax burden, 1.6 percent of all taxes, versus just 1.1 percent of all income - evidence that all sides in the tax debate will be able to find ammunition in the data.

In 2000, the top 400 on average paid 22.3 percent of their income in federal income tax, down from 26.4 percent in 1992 and a peak of 29.9 percent in 1995. Two factors explain most of this decline, according to the I.R.S.: reduced tax rates on long-term capital gains and bigger gifts to charity.

Had President Bush's latest tax cuts been in effect in 2000, the average tax bill for the top 400 would have been about $30.4 million, a savings of $8.3 million, or more than a fifth, according to an analysis of the I.R.S. data by The New York Times. That would have resulted in an average tax rate of 17.5 percent.

The rate actually paid by the top 400 in 2000 was about the same as that paid by a single person making $123,000 or a married couple with two children earning $226,000, according to Citizens for Tax Justice, a labor-backed group whose calculations are respected by a broad spectrum of tax experts.

The group favors higher taxes on the wealthy, and its director, Robert S. McIntyre, said yesterday that the I.R.S. data bolsters that viewpoint. "Regardless of which party these 400 are in, these are the guys Bush wants to help, even though they have so much money they don't know what to do with it," he said. "How Bush feels about the half of the population that doesn't have much money is he got them a tax cut worth an average of $19 each."

William W. Beach, a tax expert at the Heritage Foundation, a conservative organization that favors lowering taxes for all Americans, said that the top 400 taxpayers made "the significant contribution" to government revenue about one in every $64 of individual income tax paid. Cutting taxes, he said, will prompt the wealthy to invest more in the economy's growth.

Detailed information about high-income Americans has become increasingly important in setting tax policy, because the government relies on the top 1.3 million households for 37.4 percent of individual federal income tax revenue. The half of Americans who earned less than $27,682 in 2000, paid less than 4 percent of income taxes.

All of the I.R.S. data is based on adjusted gross income, the figure reported on the last line on the front page of individual income tax returns. Interest earned on municipal bonds, which are exempt from tax, is not included.

Over the nine years of tax returns that were examined for the new report, only a handful of taxpayers showed up in the top 400 every year, according to I.R.S. officials. In all, about 2,200 taxpayers made the cut even once. There were a few incomes of more than $1 billion a year in the group, but none as high as $10 billion.

The names of the wealthiest taxpayers are not disclosed in the report, which was prepared at the urging of Joel Slemrod, a University of Michigan business school professor who serves on an I.R.S. advisory panel and is a leading authority on taxation of high-income Americans.

The figures do not include the incomes of the many wealthy Americans who use shelters to reduce their reported incomes below the level of the top 400.

In 1999 and 2000, for example, William T. Esrey - then the chief executive of Sprint, the telecommunications company earned more than $150 million in stock option profits, lofting him onto many lists of the best-paid corporate managers.

That income might have put Mr. Esrey in the I.R.S.'s top 400 taxpayers. But, as later came to light, Mr. Esrey bought a tax shelter from Ernst & Young, the accounting firm, designed to let him delay reporting the profits for tax purposes until the year 2030. Sprint's board forced Mr. Esrey to resign in March after he acknowledged that the shelter was the subject of an I.R.S. audit.

Over the nine years reviewed in the new report, the incomes of the top 400 taxpayers increased at 15 times the rate of the bottom 90 percent of Americans; their average income rose 17 percent, to $27,000, from 1992 to 2000.

Long-term capital gains accounted for 64 percent of the income of the top 400 in 2000, nearly double the level in 1992. Wages contributed 16.7 percent to the incomes of the top 400 in 2000, down from 26.2 percent in 1992, and dividends made up 2.8 percent.

A second report that the I.R.S. will make public today shows that the number of Americans with high incomes who pay no taxes anywhere in the world has reached a record. In 2000, there were 2,022 Americans with incomes of more than $200,000 who paid no income tax anywhere in the world, up from just 37 in 1977, when the report was first issued.
I somehow doubt those 2000 as much pull in the tax code as you think....
 

Zebo

Elite Member
Jul 29, 2001
39,398
19
81
you asked who would oppose it...Well...people I gave most certainly would. My dad would who has $$ in tax free t-bills and muni bonds would too.

How bout enron Or hundreds of other companies using the same schemes.

Bottom line is deductions allow those who generate income to become very creative with 55000 pages of code to work from. While your typical employee does not.
 

cavemanmoron

Lifer
Mar 13, 2001
13,664
28
91
the federal Sales tax makes more sense to me'

you buy something,you pay tax
the more you buy the mopre tax you pay,
if you buy a $50,000 Hummer 2
and i buy a $2,000 used rusty pickup, well who can afford to pay more tax

 

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