Whats wrong with a flat tax?

[uclabachelor]

When you "invest" in a stock does money change hands?

If it does, then under my plan it would be taxed.

Sure would keep the speculators at bay.

It'll also keep the economy in the tank.

I sure as hell wouldn't invest in stocks if there's an immediate 20% tax upon purchase. I'd just shove that money into a CD and let the bank take the 20% hit with it.

Or just move my money offshore and trade on a foreign market.

 

[a777pilot]

It'll also keep the economy in the tank.

I sure as hell wouldn't invest in stocks if there's an immediate 20% tax upon purchase. I'd just shove that money into a CD and let the bank take the 20% hit with it.

Or just move my money offshore and trade on a foreign market.

Why are you stuck on 20%. Who said 20%? I never did.

 

[thraashman]

Why are you stuck on 20%. Who said 20%? I never did.

Well 20% was the percentage the OP used and is generally the standard percent people use for a federal sales tax amount.

 

[a777pilot]

Well 20% was the percentage the OP used and is generally the standard percent people use for a federal sales tax amount.

That may be true but I was speaking of MY plan. My plan comes no where near 20%.

 

[uclabachelor]

Why are you stuck on 20%. Who said 20%? I never did.

Then what would your rate be?

Actually it doesn't matter, because any upfront tax on investments would make me move all my assets overseas.

I'd rather take the upfront hit once and then trade tax free on foreign markets.

Money out of the US economy, just like that.

 

[a777pilot]

Then what would your rate be?

Actually it doesn't matter, because any upfront tax on investments would make me move all my assets overseas.

I'd rather take the upfront hit once and then trade tax free on foreign markets.

My rate would be 7%.

You would be free to move all you assets anywhere you wished, but if they left the US, you would pay 7% to do so. If or when you decided to bring your money home it would be totally free of any US taxes. I hope you make a ton of money overseas and bring it all back here.....tax free.

 

[uclabachelor]

My rate would be 7%.

You would be free to move all you assets anywhere you wished, but if they left the US, you would pay 7% to do so. If or when you decided to bring your money home it would be totally free of any US taxes. I hope you make a ton of money overseas and bring it all back here.....tax free.

I'm no economic expert but here's how I think it would play out...

Impose a front loaded tax on investments. Everyone moves their investments offshore and pays 7% so they can day trade or whatnot without tax. Money supply becomes extremely tight in the US because guess what, there's no more money circulating in the US economy!

What happened in the US the last time money supply was tight? Hint: Think back to 2008.

 

[bfdd]

btw I find it silly that in a thread about flat tax, in which I brought up a recently passed flat tax(the ACA), no one has yet to comment on it? Instead we're debating percentage rates etc etc etc. Hell even those who champion against flat taxes said the reason for this tax was so no one could be a free loader. Interesting how it's OK here, but not OK for everything else.

 

[a777pilot]

I'm no economic expert but here's how I think it would play out...

Impose a front loaded tax on investments. Everyone moves their investments offshore and pays 7% so they can day trade or whatnot without tax. Money supply becomes extremely tight in the US because guess what, there's no more money circulating in the US economy!

What happened in the US the last time money supply was tight? Hint: Think back to 2008.

Where, i.e., which stock market are you investing? London? Hong Kong?

 

[a777pilot]

btw I find it silly that in a thread about flat tax, in which I brought up a recently passed flat tax(the ACA), no one has yet to comment on it? Instead we're debating percentage rates etc etc etc. Hell even those who champion against flat taxes said the reason for this tax was so no one could be a free loader. Interesting how it's OK here, but not OK for everything else.

Yes, I noticed that too, but I like talking about my tax plan.

 

[uclabachelor]

btw I find it silly that in a thread about flat tax, in which I brought up a recently passed flat tax(the ACA), no one has yet to comment on it? Instead we're debating percentage rates etc etc etc. Hell even those who champion against flat taxes said the reason for this tax was so no one could be a free loader. Interesting how it's OK here, but not OK for everything else.

Why do you think the ACA is a flat tax?

 

[uclabachelor]

Where, i.e., which stock market are you investing? London? Hong Kong?

Anywhere that doesn't impost an upfront tax on trades.

 

[bfdd]

Why do you think the ACA is a flat tax?

Because everyone pays a flat rate, what previously was called a fine, and they get a tax deduction, what was previously called not paying the fine, if they get insurance. There are also special deductions that go along with it, but the rate itself is flat for all Americans.

 

[ShawnD1]

You would kill all short term investing. Like it or not, it's a decent chunk of the market.

Even if it's a 1% tax, that would kill anything shorter than oh 1 day or so.

It would also destroy the bond market which is much much much larger than the stock market.

Let's use an example. I want a loan for $10,000 and I want it for 1 year. At the current interest rates, I could get that for probably 5% at the most and 3% at the lowest. Now suppose there's a 5% sales tax on the bond that I'm selling (money the bank is lending to me). Forget 5% interest, now we're up to 10% interest. This would destroy the middle class. Rich people with money are not going to lend that money at a loss, so we all end up getting screwed by this.

 

[piasabird]

When I sent in my federal tax last year, I took the tax actually paid and divided by the gross pay and my tax rate was about 3%. This is all due to exemptions and credits. The 2 main things that reduced my tax was Housing deductions and deductions for charitable donations. Plus I did not make that much money since my wife lost her job at BOA and had to take a part-time job that paid less.

If you tax the sale of stock you slow down investment. Investors can invest at foreign exchanges and avoid the tax. What we want is foreign investors to invest in America. You obviously do not understand the concept of investing or economics. I do however see how we could have a service fee for every stock purchase. I see some advantage in paying a tax at the time of the sale of stock in certain cases. However, a few things are going on that you should be aware of. The first is that many people invest in stock by using margin which is borrowing money to invest in stock. This type of investing may dry up if you had to pay the tax up front. Then there is shorting stock and options which would may also be affected by having to pay a tax. Then there is the fact that some people make a huge profit on some stocks and you would be losing the 15% on the capital gains. As an example if 2 years ago you purchased Apple stock you could be losing half of the country's capital gains on just that stock.

So if you have a flat tax, it will hurt the poor an awful lot if they have to pay a 20% tax on food. The other problem is when the economy slows down there will be an immediate slowdown on the revenue. However, with Income Tax, it takes at least 6 months to a year for the federal govt to feel the pain of an economic slow-down. I think we need a hybrid system. The thing about the rate of a flat tax on sales is that there are no loop holes so you dont need that high a rate. Also keep in mind that if you are collecting sales tax you have to chase after all the businesses that dont send in their tax money. Sales tax is easier for businesses to cheat on and it has a higher maintenance fee for the IRS. With income tax the IRS and the revenue department gets their money right away from payroll deductions. The Feds would lose this free gift.

Everything has its pros and cons.

 

[uclabachelor]

Because everyone pays a flat rate, what previously was called a fine, and they get a tax deduction, what was previously called not paying the fine, if they get insurance. There are also special deductions that go along with it, but the rate itself is flat for all Americans.

I find it ironic that you think it's a flat tax when in fact it is far from a flat tax.

Affordable Care Act's mandate does not require everyone to buy insurance.

 

[NetGuySC]

Doesn't the fair tax eliminate the.. Poor paying too much... Issue.?

 

[Doppel]

You guys make it seem like working hard and earning a lot of money is an evil thing to do. People are rich because they earned it, why should they pay for EVERYONE else?

Whether they "should" or shouldn't morally is only partially relevant. If a flat tax came into play see Halik's post near top of this thread. It would benefit the rich and the middle and lower classes--neither of whom pay an amount in taxes equal to what they get out of the government--would end up paying more.

 

[MAG1969]

A flat 20% or 30% income tax rate would improve our collection rates and raise our revenue.

also in response to your first part, it's in the constitution



So yeah, that's why we're taxed it has a specific reason. It's the exact reason why the ACA is legal constitutionally.

This is also why it should be unconstitutional... It is NOT UNIFORM... Some states I believe it was Minnesota are exempt from the ACA tax. Please correct me if I am wrong, just re-itteratting what I have heard on tv. Thats how congress bought the votes to get the law passed.

 

[bfdd]

I find it ironic that you think it's a flat tax when in fact it is far from a flat tax.

Affordable Care Act's mandate does not require everyone to buy insurance.

Really it's super far from a flat tax? Everyone has to pay a certain rate, UNLESS THEY QUALIFY FOR THE DEDUCTION. And there are ways to qualify, by being to poor to pay taxes, by already having health insurance or some various other means. It's still a flat rate regardless of economic status.

 

[nehalem256]

It would also destroy the bond market which is much much much larger than the stock market.

Let's use an example. I want a loan for $10,000 and I want it for 1 year. At the current interest rates, I could get that for probably 5% at the most and 3% at the lowest. Now suppose there's a 5% sales tax on the bond that I'm selling (money the bank is lending to me). Forget 5% interest, now we're up to 10% interest. This would destroy the middle class. Rich people with money are not going to lend that money at a loss, so we all end up getting screwed by this.

Not to mention that it is 5% tax every time it changes hands so it is essentially untradeable.

 

[Paul98]

How about an income tax rate based on wealth.

 

[epidemis]

Wow, judging from this thread USA has taken a very hard left turn in recent years. It's somewhat surprising to see welfare advocates instead of die-hard individualists

 

[michal1980]

Wow, judging from this thread USA has taken a very hard left turn in recent years. It's somewhat surprising to see welfare advocates instead of die-hard individualists

the more pigs you have, the more votes they have, the more they vote to feed themselves.

Its easier to have someone else pay for all your needs then to actually work for them.

 

[bfdd]

Wow, judging from this thread USA has taken a very hard left turn in recent years. It's somewhat surprising to see welfare advocates instead of die-hard individualists

I am an individualist for the most part, but I realize things change and I'm ok being asked to pay for certain things. The issue I have mostly comes from the fact we aren't asked to pay for certain things, instead it carries the weight of force and violence behind it. My biggest issue with things like this. Personal responsibility is nearly non-existent in the USA and that's because we've gone away from the individualism in certain aspects of our society.