Whats wrong with a flat tax?

[Sonikku]

A flat tax would make lower class Americans finally pay their fair share. No more getting out of taxes while reaping all the freebies.

Freakin' poor people get all the breaks around here.

 

[nehalem256]

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

This thread is about tax policy not welfare. The fact that rational people know that a flat tax is really a tax cut for the rich is not advocating welfare. It is advocating common sense.

One common "flat tax" proposal the "Fair Tax" includes something like $500 Billion in wealth redistribution payments. Since when were wealth redistribution payments a conservative ideal?

 

[ShawnD1]

One common "flat tax" proposal the "Fair Tax" includes something like $500 Billion in wealth redistribution payments. Since when were wealth redistribution payments a conservative ideal?

Conservative or liberal depends on why the numbers don't add up correctly.
Giving out free stuff without raising taxes = liberal ideas.
Cutting taxes without cutting spending = conservative ideas.

Fair tax might fall in conservative territory because it goes like this:
1) rich people pay fewer taxes
2) lower and middle class will pay the same taxes or lower
3) magic
4) government suddenly has a budget surplus

 

[epidemis]

This thread is about tax policy not welfare. The fact that rational people know that a flat tax is really a tax cut for the rich is not advocating welfare. It is advocating common sense.

Perhaps in theory, in reality, nope.

 

[Murloc]

What's wrong with it is diminishing marginal utility. The more you have of something, the less each additional one is worth to you. That goes for money as well. A flat rate burdens those with less money more than those with more money. I know it looks fair in strictly accounting terms, but in economical terms it's not. In fact, one of the major flaws of our tax system is it does flatten out (or even declines) after $384K or so. We need a whole slew of new brackets.

this.
It's a completely apolitical economical reasoning. In most countries in the world it indeed works this way, except that in some like mine in some cantons it flats out after 400k$ or they make you pay based on the value of your residence, because by doing that you attract filthy rich people that would just not be here without it.
But if we remove the fact that people can move between countries, then it makes sense to increase the rate with the income: bigger state budget, the dirt poor pay no taxes, the rich aren't losing too much because to someone who earns 30 millions per year, the marginal utility of 1 million is not much. For a middle class family, it's everything.
This is what distinguishes developed countries from BRICs. And you can see the results: rich people have to live in gated communities. Invididualism means less freedom for everyone.

 

[a777pilot]

Once again, the real issue is not the rate of a tax or even the method of a tax, what is the issue is...What is taxed.

If we really want a free market capitalistic system then the two major benefits of that system ought not be taxed. Those would be profit/income and private property.

I don't care if there is a flat tax or a progressive tax. It still taxed the wrong things.

 

[Murloc]

Once again, the real issue is not the rate of a tax or even the method of a tax, what is the issue is...What is taxed.

If we really want a free market capitalistic system then the two major benefits of that system ought not be taxed. Those would be profit/income and private property.

I don't care if there is a flat tax or a progressive tax. It still taxed the wrong things.

if you don't tax that, then you tax consumption with a high-as-shit VAT. Just make it progressive, the more pricey/non-necessary that item is, the higher the tax rate.
This is a strategy for high-evasion countries, because it's a tax that's more difficult to evade e.g. for rich privates who want to buy a car.
In my country there's a lower VAT for first necessity items (food mainly), and then a flat VAT for the rest, but here evasion is not a problem so it's pretty low too.
In Italy where fiscal evasion is high, the VAT is very high (21%).

 

[IHateMyJob2004]

Whats wrong with a flat tax?

It's unfair to those with limited income because they spend nearly their entire income to live on.

And those with more moeny than they need just compete for fancy homes. Does it matter if land prices go from $800K to $600K for premium property? They still get the same damned land but at the same provide a benefit to society through higher taxation.

 

[a777pilot]

if you don't tax that, then you tax consumption with a high-as-shit VAT. Just make it progressive, the more pricey/non-necessary that item is, the higher the tax rate.
This is a strategy for high-evasion countries, because it's a tax that's more difficult to evade e.g. for rich privates who want to buy a car.
In my country there's a lower VAT for first necessity items (food mainly), and then a flat VAT for the rest, but here evasion is not a problem so it's pretty low too.
In Italy where fiscal evasion is high, the VAT is very high (21%).

I'm not, repeat, NOT advocating a VAT.

 

[a777pilot]

And those with more moeny than they need just compete for fancy homes. Does it matter if land prices go from $800K to $600K for premium property? They still get the same damned land but at the same provide a benefit to society through higher taxation.

Taxing, on an annual basis, private real property, is just wrong and is an affront to the principle of private property ownership.

 

[Incorruptible]

And those with more moeny than they need just compete for fancy homes. Does it matter if land prices go from $800K to $600K for premium property? They still get the same damned land but at the same provide a benefit to society through higher taxation.

No, why should they have to help out society, socialism is wrong.

 

[Paul98]

A flat tax would make lower class Americans finally pay their fair share. No more getting out of taxes while reaping all the freebies.

Freakin' poor people get all the breaks around here.

hahahahaha, that was a good one. you almost sound serious

 

[a777pilot]

OK, here's an idea....I'll, for argument's sake only, accept a tax on income....

Using the following as a guide, tax all income at a flat rate with NO deduction at all save one. That one would be 200% of the offical government poverty level. Also, and this is important, no, repeat, NO, tax refunds for those that owe no taxes. In other words no negative taxes. If you need government money because you are poor or disabled, you get it from another source....NOT from the IRS as is the case today.

Here are the 2012 figures: http://liheap.ncat.org/profiles/povertytables/FY2011/popne.htm

 

[nehalem256]

OK, here's an idea....I'll, for argument's sake only, accept a tax on income....

Using the following as a guide, tax all income at a flat rate with NO deduction at all save one. That one would be 200% of the offical government poverty level. Also, and this is important, no, repeat, NO, tax refunds for those that owe no taxes. In other words no negative taxes. If you need government money because you are poor or disabled, you get it from another source....NOT from the IRS as is the case today.

Here are the 2012 figures: http://liheap.ncat.org/profiles/povertytables/FY2011/popne.htm

You do not actually need any deductions. Just make the first income tax bracket at 0% for 0 - $20,000.

 

[a777pilot]

You do not actually need any deductions. Just make the first income tax bracket at 0% for 0 - $20,000.

That would work too, but I still do not want to tax income/profits or private real property (on an annual basis) at all. It's un-American.

 

[Tom]

Once again, the real issue is not the rate of a tax or even the method of a tax, what is the issue is...What is taxed.

If we really want a free market capitalistic system then the two major benefits of that system ought not be taxed. Those would be profit/income and private property.

I don't care if there is a flat tax or a progressive tax. It still taxed the wrong things.

Absurd. Profit doesn't create growth or wealth. Neither does private property.

Consumption creates growth and wealth, which even though you don't explicitly say so, seems to be implied as what should be taxed.

You know who benefits the most from consumption taxes ? Ebeneezer Scrooge and his ilk, in their counting rooms filled with hoarded wealth, creating nothing but misery.

 

[a777pilot]

Absurd. Profit doesn't create growth or wealth. Neither does private property.

LOL! Talk about absurd.

 

[nehalem256]

That would work too, but I still do not want to tax income/profits or private real property (on an annual basis) at all. It's un-American.

My brother and I had this discussion. The problem is that most are "morally" problematic.

Income tax - Taxing people for working seems obviously bad
Property tax - Taxing people for owning things seems bad. Why should the government be able to take your home because you do not have money to give it?
Sales tax- Inherently regressive. And also discourages spending, which would tank the economy.

Which basically leaves you with
Excise taxes
Tariffs
Inheritance taxes

But good luck trying to raise enough revenue off of those.

 

[Nemesis 1]

Than a flat federal sales tax @ 15% is the fairest and best . The rich by big price items they pay the taxes on what they spend / The middle class can only spend so much . A flat federial sales tax is the way to go 15% / Both middle and upper than can save . The poor will never save but would still pay taxes on what they consume. The poor don't deserve a tax break . Sales tax is fair and honest.

 

[IGBT]

the power of the purse will never be relinquished by BigGov. It's how they control and contain you and limit your freedom.

 

[nehalem256]

Than a flat federal sales tax @ 15% is the fairest and best . The rich by big price items they pay the taxes on what they spend / The middle class can only spend so much . A flat federial sales tax is the way to go 15% / Both middle and upper than can save . The poor will never save but would still pay taxes on what they consume. The poor don't deserve a tax break . Sales tax is fair and honest.

So in other words you are admitting that a sales tax is regressive. But still claiming that is "fair"

 

[uclabachelor]

Than a flat federal sales tax @ 15% is the fairest and best . The rich by big price items they pay the taxes on what they spend / The middle class can only spend so much . A flat federial sales tax is the way to go 15% / Both middle and upper than can save . The poor will never save but would still pay taxes on what they consume. The poor don't deserve a tax break . Sales tax is fair and honest.

This doesn't make sense at all. You're so confused.

How is a federal sales tax fair when you provided a scenario that demonstrates regression?

 

[bfdd]

I fail to understand how it is regressive. To me someone not paying taxes or getting deductions for arbitrary bullshit is regressive, progressive is everyone pitching in and working together.