Flat Taxes.

[krazyace5]

I hear about these from time to time, can someone post some pros and cons on this? It seems like it could be a good idea. Then again I guess if you were making big bucks it would probably suck. Would this be good for middle class?

What would the percentage likely be?

Thanks

[Wake up CALL]

Steve Forbes has probably gone farther than anyone else in defining how a flat tax plan would work. Below is a link with a simple explanation of his proposal:

Flat Tax by Steve Forbes (http://www.pbs.org/newshour/bb/congress/forbes_flat_tax.html)

Keep in mind someone else may have drastically different ideas on how to implement a flat tax. I chose to link to the Forbes plan since he is well known, in the financial biz and one of the few to outline the details rather than just say "A flat tax is better".

[Easy E]

What it doesn't give details on is the final effect on government revenues and any required gov't RIF.

[andyfox]

It would be great if you're making big bucks, because just about all of the flat tax proposals involve a substantial lowering of the top bracket.

The flat tax is just a euphemism, in fact, for lowering the top bracket. Most exponents of the flat tax, with the exception of the now politically marginalized mayor of Oakland Jerry Brown, are conservatives who are always looking for ways for their rich friends to have to trickle down less than they already do.

In fact, we already have a flat tax, when one considers the effect of all taxes, not just income taxes. The payroll tax is a particularly egregious regressive tax that counteracts the effect of the progressive income tax.

My guess is that eventually 1) we'll have a VAT; and 2) social security taxes and funds will be intermingled with general revenues.

The flat tax is a simple idea by and for simple minds.

[Chris Villalobos]

Forget it. Flat taxes will never happen even if they are better than the current system. Just look at all the Tax Accountants that will become unemployed. Can you say lobbyists?

Chris V

[adios]

Accountants should be in demand for quite some time methinks. The problem with the US income tax code is that defining income for all income earners makes the tax code very complicated. It's the life blood of special interest influence.

[adios]

The lowest wage earners (I think up to 30k per household) have the earned income credit available to them which offsets their payroll taxes. Also their is a max amount paid in payroll taxes per tax year. But yeah it's a regressive tax on the middle class.

[adios]

I like a lot of Forbes's ideas. Won't see the light of day though IMO.

[pudley4]

regressive (def.) - 3 : decreasing in rate as the base increases <a regressive tax>

A flat tax stays the same, regardless of whether your income goes up or down.

[Jim Kuhn]

[ QUOTE ]
Also their is a max amount paid in payroll taxes per tax year.

[/ QUOTE ]

I think you are mistaken. There is no cap on the payroll tax. Are you thinking of the social security tax?

[adios]

Andy wrote:

[ QUOTE ]
The payroll tax is a particularly egregious regressive tax that counteracts the effect of the progressive income tax

[/ QUOTE ]

I responded in part with:

[ QUOTE ]
Also their is a max amount paid in payroll taxes per tax year. But yeah it's a regressive tax on the middle class.

[/ QUOTE ]

You asked:

[ QUOTE ]
I think you are mistaken. There is no cap on the payroll tax. Are you thinking of the social security tax?

[/ QUOTE ]

The answer to your question is yes. I was referring to what you call the social security tax and Andy calls the payroll tax. I was using Andy's term.

[andyfox]

Where did I say it's regressive?

What I did say is it's a crock.

[Ray Zee]

yea we will have a VAT someday. but i favor the flat tax for what it does. it eliminates the 2000 bucks a year i pay for my return. and i then wouldnt have to spend any time tracking expenses and stuff. makes life easier. plus you could start it at say 20,000 and that takes away some of its bite on the middle and lower class. the big plus is that since it would be hard to raise it congress might have to control spending somewhat.

[andyfox]

$2,000? You need a new acountant. I use a Beverly Hills crook and even he doesn't cost that much. (And I sure hope he's not a lurker here.) And there are a helluva lot of forms he (or I should say, the computer) fills out for my return, since I have my greedy little fingers in a lot of pies.

I don't see how the flax tax will be hard to raise. I think it would be easier to raise than the current system, since there are a bunch of differnet rates for them to play around with now.

[HDPM]

I like Forbes's plan except 17% is way too high. I think a flat tax of no more than 10% is good. 5% is better. There should be no tax breaks or deductions for having rug rats. Of course, then we would have to eliminate soc. sec., medicaid, medicare, the dept of education, HUD, DEA, ATF, and irrational wars, etc.... What a shame. To live in a free country and have money....

[andyfox]

It wouldn't be a free country for too long. There'd be anarchy followed by revolution.

[Zeno]

[ QUOTE ]
There'd be anarchy followed by revolution.

[/ QUOTE ]

Now your talk'in!

Le Misanthrope

[Zeno]

[ QUOTE ]
The problem with the US income tax code is that defining income for all income earners makes the tax code very complicated.

[/ QUOTE ]

You got that right. I'm trying to do my own taxes and since I became self-employed and work out of my home etc it is a friggin nightmare. The tax code is a delirium tremens.

-Zeno

[HDPM]

No, there wouldn't be anarchy. All the really necessary govt functions could continue. Local law enforcement would continue as before. Just fewer hearings on Janet Jackson's breast and wine and whiskey makers wouldn't have to account for evaporation. Important stuff like that would be gone. Elimination of welfare would be a temporary problem. That is why I said before that I'd have a phaseout of soc. sec, not an immediate elimination. Even though people on it have no right to it.

[Taxman]

The problem with eliminating (or privatizing) welfare is that the poor are basically left to die in times of economic depression. That's what it was like before welfare came into use. Nobody will contribute when they themselves are not prospering. Yeah, yeah they earned it (mostly), but that doesn't mean that the disadvantaged (or especially their children) deserve to starve. Local law enforcement can't continue as before unless we're paying for it. If there were little to no taxes, we'd have to pay for it out of pocket, which sounds suspiciously similar to buying mob protection. Your model is too simplistic. We need many of those organizations, not just to regulate ourselves, but to protect us from outside intrusions. You may be in favor of legalizing drugs, and so am I, but only the ones that will not cause people to hurt other people (PCP, meth etc., should never be legalized) . Someone still needs to look out for those. Eliminating public education is ridiculous as well. Under our current system, it is considered a fundamental right, and I think it should remain that way. Joe Blow working down at the steel mill may not be on welfare, but he still can't send his kind to private school, even if he gets a whole $1200 per year more on his paychecks.

[HDPM]

Probably my statement is too simple. A lot of details need to be worked out. But a few points. Public education is mostly funded at the local level. The federal funding that exists gives the feds control, but doesn't fund the whole operation. Only a small fraction. So there will still be public education controlled at the local level. And taxed there where the citizens can prevent waste better.

Same with drugs. They won't be legal everywhere. Most drug enforcement is at the local level anyway. At least states would be free to experiment w/ out the feds butting in, as they did in the states that loosened marijuana laws.


Welfare in a time of depression may be a problem. I think it would be picked up by charity to a great degree. I am against welfare at the local level too, but at least it is controlled better at the state and local level if it exists.

[andyfox]

I remember when Perot ran for President, one of the reasons he gave for dropping out was that his presence might send the election to the House of Prepresentatives and that would be troublesome for the country. Wasn't the whole purpose of him running to be troublesome for business and usual?

[pudley4]

[ QUOTE ]
Where did I say it's regressive?

What I did say is it's a crock.

[/ QUOTE ]

My fault. I read this:

[ QUOTE ]
In fact, we already have a flat tax, when one considers the effect of all taxes, not just income taxes. The payroll tax is a particularly egregious regressive tax that counteracts the effect of the progressive income tax.

[/ QUOTE ]

and thought you were calling the payroll tax both a flat tax and regressive.

[Taxman]

Ok, as long as we agree that it's not a simple solution. Your response is interesting to me as I recently wrote a paper on the conflict between federalists and antifederalists during the fight for constitutional ratification. It seems you are more of the antifederalist/ state's rights vain. What struck me during my research is how complicated the subject actually is. Both sides often used nearly the same arguments towards different ends. Semantics and interpretation are as important as anything in this debate. To a certain extent I agree that states should be given more authority on various matters, though now I find myself more confused about the subject then when I started. Of course the state taxation system is in need of codification as well. Unless we delegate authority at the smallest level, there will always be complications to overcome.

[andyfox]

What's the best reading on the anti-federalists?