Why don't we have a flat tax system for personal income taxes?

[BansheeX]

Originally posted by: ModerateRepZero

Personal and corporate income taxes are a complete joke, they can easily be abolished with a corresponding reduction in government spending.

Key word: can. The simple reason why supply side economics fail to work is that government spending has gone in only one direction: UP. And no matter what tax you enact, flat, sales, etc. there's always someone who loses. changes will not necessarily solve the problem (see the AMT which hasn't been indexed for inflation and now ensnares middle class as well as the affluent it was originally designed to target).

Government deficits and corruption goes up because people keep electing socialists as it is politically unviable to say you're going to take something away that they've been deceived into thinking is sustainable and important. Government CAN'T spend unless they are enabled to by tax and monetary policy that voters continually elect. Politicians CAN'T be bribed for special tax credits or subsidies if income taxes don't exist. Likewise, they can't inflate under a gold standard because gold can't be manufactured like paper fiat units. That limitation was scrapped in 1971.

Originally posted by: ModerateRepZero

-Barely enforceable. Since the IRS can't audit everyone, they turn to intimidation tactics to deter evasion. Lots of good people are put through hell, others get away without paying.

In David Cay Johnston's book, Perfectly Legal, he argues that the government has cracked down harder on low-income families/individuals due to pressure from more well-off targets.

I'm not surprised, it's a useless government arm that begets these types of collusive consequences. I'm sure they get bought by businesses to bully competitors, too, on the corporate level. Socialist idealism at its finest. Once again, this would be impossible if income taxes didn't exist, because the IRS can't exist without them.

Originally posted by: ModerateRepZero

Disincentivizes production, that horse that pulls the cart of consumption

Wasn't there a report within the last month or two which reported that the US still leads in global productivity? And despite American complaints of taxes, they're nowhere NEAR Europe, ie. Britain.

It's the opposite, we have a negative savings rate and are setting record trade deficits of around 70 billion every month. Our manufacturing base is completely gone, our whole phony economy is based on credit extensions from foreign savings to buy their imports. Sound goofy? It is. We're the epicenter of this mess, we abuse a reserve currency status gained under gold to export our inflation around the world and consume its products so that they can add more of our funny money to their vaults. On one hand, they're idiots, it certainly does their citizenry no good. But a government like China might prefer to hold a financial weapon of 1 trillion dollars in reserves. It gives them enormous political leverage over us, if they were to dump those dollars at once on the world market, our currency would collapse overnight.

Originally posted by: ModerateRepZero

Could be considered double taxation with inflationary currency as government considers nominal dollar gains made on inflation to be taxable revenue despite no gains in value realized.

Not sure what you're talking about; if you're referring to TIPS as investment, simple solution is to put it in a tax-free account ie IRA account.

This is a simplification, but let's say you invest in a commodity for $100. Government increases the money supply by 10% at no labor or material cost. Now your commodity is worth $110 and you sell. You made $10 nominally, but every dollar is 10% less scarce/valuable relative to goods you buy with them, so it's a wash. Government sees it as a profit of $10, though, and taxes it. You tried to protect yourself from inflation, and you still lost because inflationary gains are taxed under capital gains.

In fact, this is precisely what happened when the income tax was first instituted. Tax brackets are based on NOMINAL values, and after the inflation of WWI, money had been devalued so much that people who were in the lower brackets crept up into the higher ones. From that point on, the brackets were adjusted for inflation. That was when inflation calculations were honest, though. They've changed them substantially in the past thirty years.