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I think Steve Forbes makes a lot of sense and raises some excellent points.

Any rebuttals of his specific points?

Comments in general?

"One Simple Rate
A flat tax would unleash a stupendous economic boom.

BY STEVE FORBES
Sunday, August 21, 2005 12:01 a.m. EDT

A major domestic battle looms this fall, when tax reform--a centerpiece of the president's bold domestic agenda--will finally be on the table. The President's Advisory Panel on Federal Tax Reform is expected to release its findings by the end of September. After the political shellacking the White House took on Social Security, the administration will be strongly tempted to take a conciliatory path that supports only superficial reforms, essentially preserving the status quo of our hideous income tax code.

Such a course would have perilous consequences, economically and politically. In fact, the administration has an opportunity here to boldly retake the initiative, to recover lost political support and thrust an already decent economy into high gear and, at the same time, make America better able to meet intensifying competition from China, India and others. How? By junking the entire federal income tax code and starting over with a flat tax. A growing number of countries are doing this--and so should we.

The current system is beyond redemption, a beast whose complexity, confusion and outright unfairness have corrupted our economy and society. Americans waste more than $200 billion and over six billion hours each year filling out tax forms. They engage in all kinds of useless economic activity intended to take advantage of the code's maze of deductions and to reduce taxes--from deducting donations of old socks to making unwanted investments. The waste of brainpower--at a time of increasing global competition--is incalculable.

The code corrupts our system of government by encouraging the crassest political conduct and by creating a massive, intrusive federal bureaucracy. One-sixth of the private-sector employees in Washington are employed by the lobbying industry. Half their efforts are directed at wangling changes in the tax code. Few people realize that our health-care system, with its runaway costs, is, in fact, the ultimate product of the tax-code distortion in our economy. And last, but most definitely not least, we simply pay too much in tax. When you take into account all the taxes, fees and tolls paid to the government, the typical American pays somewhere around half or more of his income in taxes. Why do we the people accept this?

My flat tax plan has one simple rate, on the federal level: 17% on personal income and 17% on corporate profits. There would be generous exemptions for individuals: $13,200 for each adult; $4,000 for each child or dependent, and a refundable tax credit of $1,000 per child 16 or younger. A family of four would pay no federal income tax on its first $46,165 of income. Exemptions for a family of six--mom, dad, four kids--would be $65,930. No anti-risk-taking capital gains levy; the capital gains tax would go to zero. The abusive Alternative Minimum (really maximum) Tax would be abolished. No more death tax: You'd leave the world unmolested by the IRS. No taxation without respiration!

Corporate profits would be taxed at a rate of 17%. Companies could expense all investments at once: no more depreciation schedules. If these instant write-offs produce a loss, that could be carried forward to use against future profits for as many years as necessary to use it up. And businesses would be taxed only on income made in the U.S.

The economic boom the flat tax would unleash would be stupendous, ushering in a long-term, noninflationary expansion of historic proportions. The current expansion would pale in comparison. Once again, we would be the clear global leader in high-tech and medical innovations--unlike today, when our lead, thanks in no small part to the tax code, is now under increasing assault.

How would a flat tax do this? What so many "experts" can't grasp is that taxes are not only a means of raising revenue for governments but also a price and a burden. The tax you pay on income is the price you pay for working; the tax on profits is the price you pay for being successful, and the levy on capital gains is the price you pay for taking risks that work out. When you lower the price of good things, such as productive work, success and risk taking, you get more of them. The flat tax does that dramatically.

Experience demonstrates time and time again--the Harding-Coolidge tax cuts of the 1920s, the Kennedy cuts of the '60s, the Reagan cuts of the '80s and the Bush reductions of 2003--that lower tax rates lead to more economic activity, which leads to more government revenue. Fiscal Associates of Alexandria, Va., an economic consulting firm, did an analysis of the flat tax. Its findings: Between 2005 and 2015, the Forbes Flat Tax Plan would generate $56 billion more in new government revenue than the current income tax. More important, an estimated $6 trillion in additional assets would be created, an immense boost to our nation's balance sheet. This study also predicts that that flat tax would lead to nearly 3.5 million new jobs by 2011--jobs that otherwise would not exist.

To avoid puerile and divisive debate about who would gain and who would lose, my flat tax is designed to be a tax cut for all. Because some people will only focus on what they lose in the way of deductions under the flat tax--ignoring the fact that their income tax payments would go down--my plan gives you a choice: When the flat tax is implemented, you can file your postcard return under this new, simple system, or continue to file your tax returns, with all of their mind-numbing complexity, under the old system. See for yourself which is better. I think most would conclude that the flat tax is best.

Other countries are getting the message, even if we have yet to. Hong Kong has successfully had a variation of the flat tax for 60 years. Lithuania, Latvia and Estonia enacted flat taxes in the 1990s that have been hugely successful. Russia put in a flat tax four years ago, and revenues have more than doubled in real terms. Ukraine, Slovakia, Romania, Georgia and Serbia have also successfully enacted flat taxes. How ironic that onetime Communist nations have been reaping the benefits of a flat tax before that bastion of free enterprise, the U.S.

President Bush should understand that trying to tinker with the tax beast won't work. In 1986, Ronald Reagan simplified the tax code somewhat: A number of tax shelters were eliminated and the number of tax brackets were cut to two: 28% and 15%. But the code remained intact. No sooner was the ink of Reagan's signature dry than Washington politicians slid back into their bad, old habits. Since his day, the federal income tax code has been amended 14,000 times. The tax system today is 60% larger than it was after the Reagan reforms. The flat tax's very simplicity makes such backsliding difficult: Any change would trigger a national debate. For insurance, the Forbes Flat Tax also contains a supermajority provision--taxes can't be raised unless approved by a 60% vote in both the House and Senate. Few tax boosts in recent decades have surmounted such a barrier. The usual objections to the flat tax don't hold up. The flat tax will help housing--personal incomes would go up and interest rates would go down--and boost charitable giving. Experience demonstrates that when people earn more they give more.

What about a national retail sales tax? The most prominent plan encompassing this idea proposes a sales tax of 30% to replace the income tax and payroll tax. This 30% tax poses many challenges, among them repealing the 16th Amendment, which allows Washington to impose the income tax--a lengthy, onerous process. Otherwise, we would likely end up with both an income tax and a sales tax.

The national sales tax would dramatically raise prices of many goods and services. Imagine a couple buying a new house costing, say, $200,000, coughing up an extra $60,000 in sales taxes. A new dedicated bureaucracy would be necessary to collect the tax and to disburse rebates (which the plan's advocates propose) from Uncle Sam to tens of millions of Americans every month to repay them for a portion of the sales tax they pay on food and clothing. Under the circumstances, the flat tax seems the best alternative to the current abomination.

That's why President Bush should pull a Ronald Reagan--he should demand that Congress destroy this hideous tax system, the way Reagan demanded that Mikhail Gorbachev tear down the Berlin Wall. Should the president make such a plea, the American people would surprise the Washington cynics and give him a grateful, full-throated cry of support.

Mr. Forbes, editor in chief of Forbes Magazine and president & CEO of Forbes Inc., is the author of "Flat Tax Revolution: Using a Postcard to Abolish the IRS" (Regnery, 2005). "

http://www.opinionjournal.com/extra/?id=110007139

I don't see how this could possibly happen. The amount of inertia involved is beyond comprehension.

August 7, L.A. Times:

MICHAEL KINSLEY
Poking holes in the flat tax

The right is resurrecting another one of its hot-button ideas that go nowhere. This one's still a game of three-card monte.

IT'S TRUE THAT the Republicans are the party of ideas and the Democrats are the party of reaction. Republicans set the agenda, and Democrats try to talk the country out of it. But the Republican Party is hardly the Institute for Advanced Studies. The GOP uses ideas like seasonal sports equipment — taking them out when needed, then scraping the mud off and stuffing them back into the garage until they are needed again.

Remember term limits for members of Congress? The flag-burning amendment? The balanced-budget amendment? Each of these has had a moment or two of glory, when Republican politicians, conservative TV and radio hosts and the Wall Street Journal editorial page all decided simultaneously that implementing this idea was vital to the survival of Western civilization. Polls soon showed a majority of Americans agreeing with them. The idea seemed unstoppable. It had the winds of history behind it.
And then the wind died and the idea went away. I still can't figure out how we have avoided trashing the Constitution with an idiotic amendment against burning the flag. But the failure of these hot-button issues, in stunning contrast to the success of the party that has ridden them to power, suggests that for Republicans, ideas serve politics, rather than the other way around.

The so-called flat tax is another hobby horse of the right that swept the nation, then got swept away. But someone forgot to tell Steve Forbes, the amiably blank-faced magazine heir, who ran for president on the issue in 1996 and 2000. Now he has a book out: "Flat Tax Revolution." It's getting the full fair-and-balanced treatment — that is, unashamed open-throated puffery — on Fox News and other conservative outlets. So even though the idea looks pretty dead right now, a stake through its heart might still be prudent.

The flat tax is a game of three-card monte that deliberately confuses the issues of simplicity, fairness and the total tax burden on society. A simpler tax system would be a very good thing: good for the economy, and good for everyone's sanity. But contrary to what Forbes would have you believe, progressive tax rates — higher taxes on higher incomes — aren't what make the current system so complicated. It's as easy to multiply by 40% as it is to multiply by 17%. Even Republicans can easily do it — or hire someone to do it for them, if necessary.

The complications come in defining and calculating income. Some of the complications are unavoidable because people and companies have complicated affairs. The day may come when you can file your income tax on a postcard (millions come close even today, with the sorta-simple 1040EZ), but that day will never arrive for Steve Forbes. As for the unnecessary complications, most of them were not put there by people or interest groups pushing for higher taxes and bigger government. Quite the opposite: The complications are mostly special rules for people or companies trying to lower their taxes.

The nub of Forbes' proposal is this: Everybody would pay an income tax of 17%, with most deductions eliminated, but enough basic exemptions so a family of four would owe no income tax until it had income of more than $46,000. Of course, it would still pay the FICA Social Security tax. FICA, which starts at dollar-one, is already a bigger burden than the income tax for most people. But it tops out at incomes of $90,000 and doesn't apply to investment income at all. But that is just fairness talking.

Forbes figures that almost everybody would pay less under his proposal than under the current system. And just to make sure, he would let you opt to calculate your taxes under current rules, if you prefer. So everybody would pay less. That is swell. But it has nothing to do with the flatness or otherwise of the tax system. You could just as well combine a tax cut with a proposal to release all the animals from the National Zoo. People might like that too. A simpler tax system would be very nice. But find me some folks who would choose a flat tax over the current system even if it meant that they would pay more, not less. Then I'd be impressed.

And if everyone gets a tax cut, where does the money come from? Do you really have to ask? It seems that no amount of recent experience can put a dent in the wonderfully convenient belief that you can raise tax revenues by cutting taxes, because lower taxes inspire people to work longer and think harder, yadda yadda yadda.

Debate on this quickly becomes theological, so let's note only that tax rates were higher than they are now when Forbes had the inspiration to be born into a wealthy family, and higher still when his father, Malcolm, first built the family fortune.

Next idea, please. Or, heck, why don't we take the balanced budget amendment out for another spin? It's been a while.

Here's another topic where I lean conservative. I like the proposal. The key is simplification - if too many loopholes/deductions remain, I don't see the purpose.

Obviously, we need some method of supporting lower income families, and Forbes has addressed that. As for corporations, he does leave some grey areas that I noticed in a single reading: "Companies could expense all investments at once: no more depreciation schedules. If these instant write-offs produce a loss, that could be carried forward to use against future profits for as many years as necessary to use it up. And businesses would be taxed only on income made in the U.S."

The plan should get rid of the word "could" - companies either depreciate or they don't. Set the rules and keep them simple. Also, not taxing income made outside of the U.S. is asking for trouble - it is setting up a loophole.

We should move the cheese of the IRS and tax accountants. Get rid of as much bureaucracy as possible in this area.

I'm not sure Forbes is the right guy to lead the charge, but he is headed in the right direction.

-ptmusic

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No more death tax: You'd leave the world unmolested by the IRS. No taxation without respiration!

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Since abolishing the "death tax" would allow the wealthiest 2% of americans to evade the capital gains tax entirely, I think the second sentence should probably just be changed to "No taxation."

Of course, since we all know that we're going to be in the wealthiest 2% one day, we should totally abolish it anyway!

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No more death tax: You'd leave the world unmolested by the IRS. No taxation without respiration!

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Since abolishing the "death tax" would allow the wealthiest 2% of americans to evade the capital gains tax entirely, I think the second sentence should probably just be changed to "No taxation."

Of course, since we all know that we're going to be in the wealthiest 2% one day, we should totally abolish it anyway!

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The tax system right now is so grossly inefficient that it relies on unfair taxes like the death tax. A simpler tax system is necessary. Another interesting solution is the Fair Tax. Read up on it at fairtax.org

So what holes do you think he poked with this article?

The following appears the closest thing to any rebuttal of an actual point which he provided--and it seems awfully weak:

"And if everyone gets a tax cut, where does the money come from? Do you really have to ask? It seems that no amount of recent experience can put a dent in the wonderfully convenient belief that you can raise tax revenues by cutting taxes, because lower taxes inspire people to work longer and think harder, yadda yadda yadda."

Notice that Forbes at least provided some base evidence that cutting taxes has coincided with raised revenue periods (ostensibly through increased production). If I recall correctly, adios has done the same (and perhaps in more detail) on this forum. All Kinsley is doing here is jeering at the notion. Nice rebuttal Mr. Kinsley.

Forbes also calls for scrapping the entire federal tax code in order to, in essence, re-simplify things and largely eliminate the hundreds of billions of dollars that are currently being wasted on implementation and compliance. Kinsley doesn't even try to touch that.

Sorry Andy but you could have compiled a far better rebuttal yourself.

I pretty much agree, ptmusic, but at the risk of a tangent my take on the following is a bit different:

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Also, not taxing income made outside of the U.S. is asking for trouble - it is setting up a loophole.

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I am under the impression that other countries do not tax their own companies on profits made abroad. The USA may be the only country (or only major country, at least) with such rules which leaves us at a significant competitive disadvantage on the international front. I could be wrong and I'm sure there is more to it than just this, but perhaps another thread would be merited so that I don't hijack my own thread. Heh.

You are avoiding the issue of how income is defined and computed. Do you think it really makes a difference that income is taxed at 32% or 28% or 17%? The real difference is how you define "earnings" and "income" to be taxed.

The only thing I see in this proposal in regards to that is to allow corporations instant 100% depreciation. That should reduce those corporate earnings to $0 rather quickly to apply that "fair" 17% rate to.

First of all, I think it's important to note, like the reply article did, that the problem with the tax code is not percentages, but income calculation. The flat tax seems to be a "simplification" of the code, but it's not at all.

When Russia switched over in 2001, conservatives essentially had a giant collective orgasm, because revenues rose 5% that year (http://www.nationalreview.com/murdoc...ck030102.shtml). However, Russia's success came primarily from the fact that before the flat tax was instituted, it had a terribly system, where oftentimes the very wealthy paid absolutely nothing. What Putin did to help the economy was cut down on loopholes and favoritism. While conservatives here took this as proof of the system's success, it hardly was. In the U.S. it's different, as while we have loopholes etc., we still have a system that the wealthy have trouble avoiding.

The problems with our system revolve around loopholes (especially with businesses, which recently were found to be paying far less than should be their share - I'll see if I can dig up the article).

I don't want to get into economics too heavily, as I'm honestly not knowledgeable enough to debate with someone who really knows their stuff. I just believe that the flat tax doesn't properly address what are actually the shortcomings of our code.

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You are avoiding the issue of how income is defined and computed. Do you think it really makes a difference that income is taxed at 32% or 28% or 17%? The real difference is how you define "earnings" and "income" to be taxed.

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Good point and while I get the impression that Forbes wants to scrap the old tax code and replace it with something far simpler, I think we need more details from him on the specifics bo questions. Has he provided such details or is it mainly just the idea that under the flat tax there are no deductions other than the basic exemptions? If so I would guess that "income" = gross income minus business expenses minus the standard exemption. In other words you couldn't itemize deductions on your personal return anymore if you went with the flat tax.

Define gross income. Currently we have things called "passive income", "unearned income", "interest income", "dividends", etc.

Define "business expenses". Currently we have amortizations, allocations, contigency funds, set-asides, depreciation, etc.

I am in favor of a flat tax. I think the start level should be relatively high (to not tax poor people) and the tax rate relatively high.

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Define gross income. Currently we have things called "passive income", "unearned income", "interest income", "dividends", etc.

Define "business expenses". Currently we have amortizations, allocations, contigency funds, set-asides, depreciation, etc.

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That's what I want Steve Forbes to define, or at least to address. Anyone know if he has done so anywhere else?

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Forbes also calls for scrapping the entire federal tax code in order to, in essence, re-simplify things and largely eliminate the hundreds of billions of dollars that are currently being wasted on implementation and compliance. Kinsley doesn't even try to touch that.

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Unless you could scrap Congress too, this would just be an exercise in futility.

When you posted about Forbes and the flat tax, I remembered having seen Kinsley's article in the Times and thought I would post it as a counterpoint to yours by Forbes. I agree with you that it wasn't Kinsley's best effort. And I thank you for your compliment to me.

Two points that Kinsley did make with which I agree are 1) income isn't simple to determine; and 2) "flat" tax is usually a euphemism for "lower" tax.

Lots of the complexity in the tax system is there because of special privileges granted to special people who have special influence on not so special legislators. The tax code is largely written by those who benefit the most from it. It's a political instrument as much as an economic one.

But simple is not always better. The point Kinsley made was that Steve Forbes himself could never use the simple card he's shown with on the cover of his book. If you make all your income from a payroll check, then it would be easy. Complications set in when you have other types of income, when you're self-employed, when you run a business, etc.

It's no coincidence that 17% is much lower than today's top bracket figure. I have no hard evidence on which to base my sense that conservative Republicans like the flat tax because it means a lower tax for their rich friends. But I also have no evidence on which to base my sense that liberal Democrats dislike the flat tax because it means a lower maximum marginal tax rate. Still my money's on both assertions being true.

The other thing I would add is that modification or simplification or overhaul of the income tax system wouldn't be worth much unless we look at our entire tax system. I still maintain that our tax system is already much flatter than people assume, when the impact of all taxes, not just the income tax, is taken into account. I'm in favor of a progressive tax system, so the flat tax, in and of itself, is an idea with which I disagree. Simplication of the tax code, which is a mess (and here I agree with President Bush and Steve Forbes), is an idea behind which I can stand. But Forbes' plan seems too simple.

1.) I think if a flat tax is propsoed then it should include all national taxes (Social Security). What would this raise the rate to?

2.) What about the people who are getting deductions on their mortgage interest. They made a long term purchase, with the understanding that the government gives them some economic benfits for making that purchase, now maybe they have to scrap other plans to afford their house payments. Besdies the potential duplicity, I also think that hte government is right to encourage home ownership, because it is the only thing that offests the consumer debt in this country.

3.) If he plans to use both the current tax code and the new flat tas code, how would that simplify the code or reduce the intellectual capital spent complying. It sounds like what he is proposing is a new AMT, not a new tax system.

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Define gross income. Currently we have things called "passive income", "unearned income", "interest income", "dividends", etc.

Define "business expenses". Currently we have amortizations, allocations, contigency funds, set-asides, depreciation, etc.

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That's what I want Steve Forbes to define, or at least to address. Anyone know if he has done so anywhere else?

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I doubt it. If you are really interested in this idea you should look the websites of conservative think tanks. While I doubt anyone has come up with a magic system that would drastically simplify the tax code, there might be some good ideas out there that could help things a little. But the problem with discussions about tax simplification is that most proponents of tax simplification, like Forbes, actually want to do more than just simplify the tax code. They want to end progressive taxation, but don't have the political cajones to come out and say it, so they promote a flat tax as a magical way to simplify the tax code.

I don't necessarily have a problem with a flat tax rate, but it is really a completely separate issue from tax simplification. People like Forbes who dishonestly pitch the flat tax as a way to simplify the tax code inhibit productive discussion.

Flat tax thoughts

FT effectively shifts a great deal of the tax burden from the uberrich to the poor and middle class. (Edit: That is, if this legislation went through, I guarantee this would be the result. The exemptions he mentions would disappear, and people making 10,000 a year would be taxed at a higher 17% rate.)

Still don't understand how nonplutocrats support this.

His rosy plan is unrealistic. Huge deficits will ensue.

You're making two errors:

1) Presuming that I am not interested in the question I'm asking. What if I haven't looked up the websites of conservative think tanks about this because I'm not that interested...but I still am interested in exploring the idea a bit further especially on this forum? If I had posted on another forum a query about whether insects have brains, in a relevant thread, would you say: "I doubt you're really interested, or you would have taken the time to research it elsewhere." Sheesh. Who put vinegar in your coffee this morning anyway?

2) Presuming that Forbes is "dishonestly" pitching the flat tax as a way to simplify the tax code. Maybe he is and maybe he isn't. And maybe the flat tax would help to simplify the tax code (with a higher exemption level than at present but fewer deductions)--or maybe it wouldn't. My guess is the former, but how are we to know either way for sure based only on the two columns posted thus far in this thread?

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FT effectively shifts a great deal of the tax burden from the uberrich to the poor and middle class. (Edit: That is, if this legislation went through, I guarantee this would be the result. The exemptions he mentions would disappear, and people making 10,000 a year would be taxed at a higher 17% rate.)

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On what do you base your "guarantee"?

Also, aren't the basic exemptions at present higher than they were a decade or two ago? What is it now, $7800 dollars or so? So why would Forbes' propsed 13K-ish personal exemption disappear if the exemption we already get hasn't disappeared but has rather increased slightly over the years?

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On what do you base your "guarantee"?

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On historical precedent of conservative previous tax plans.

For example, the Bush tax plan sold as good for the middle/lower class, really shifted more of the tax burden to them. The ole Repub bait and switch.

Forbes is disingenuous with the 'simplification of the tax code' angle.

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You're making two errors:

1) Presuming that I am not interested in the question I'm asking. What if I haven't looked up the websites of conservative think tanks about this because I'm not that interested...but I still am interested in exploring the idea a bit further especially on this forum? If I had posted on another forum a query about whether insects have brains, in a relevant thread, would you say: "I doubt you're really interested, or you would have taken the time to research it elsewhere." Sheesh. Who put vinegar in your coffee this morning anyway?

2) Presuming that Forbes is "dishonestly" pitching the flat tax as a way to simplify the tax code. Maybe he is and maybe he isn't. And maybe the flat tax would help to simplify the tax code (with a higher exemption level than at present but fewer deductions)--or maybe it wouldn't. My guess is the former, but how are we to know either way for sure based only on the two columns posted thus far in this thread?

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1) I am not doubting your interest in the subject matter. I am doubting that Steve Forbes has actually formulated any realistic way of simplifying the tax code. My suggestion of looking at conservative think tanks was sincere.

2) From reading his article I think it is pretty obvious that Forbes is not being completely honest about what he wants to accomplish with the flat tax.

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For example, the Bush tax plan sold as good for the middle/lower class, really shifted more of the tax burden to them. The ole Repub bait and switch.

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But it did lower the taxes the middle class and poor have to pay. In my view that IS good for them.

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Forbes is disingenuous with the 'simplification of the tax code' angle.

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Maybe.

It lowered taxes for everyone, but it shifted more of the total tax burden to the lower and middle classes.

Surely we can agree on this fact?

Kinsley's article was almost all puff. The man should be put on a raft with limited supplies and towed out to sea, where the Good Lord can determine his fate. If sharks chew off both his arms, then I would consider that a just punishment for his crimes against journalistic integrity.

1.) Income is not simple to determine. This revelation is not all that stupendous. Does he offer any resolutions?

2. Flat tax is roughly equal to lower tax. I find nothing wrong with this if it corresponded to a reduction in spending by the idiots in congress, not that any of us are holding are collective breathes on that score, or that such a reasonable course would be implemented by the criminals we elect to the Federal Legislative Body.

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Lots of the complexity in the tax system is there because of special privileges granted to special people who have special influence on not so special legislators.

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Wasn't there a Saturday Night Live character that used to say 'Now isn't that special'!

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But simple is not always better....But Forbes' plan seems too simple.

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Would it be worth a try? At least starting simple, it may acutally come out of the legislative process as a more or less sane change, as opposed to trying to simplfy or adjust the existing tax code we have. I have dealt with our present tax code, as I am sure you and also many others that post here have, and it is a convoluted mess.

-Zeno

Yes, but so what? That is the least important part of the entire picture.

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It lowered taxes for everyone, but it shifted more of the total tax burden to the lower and middle classes.

Surely we can agree on this fact?

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Yes, but so what? That is the least important part of the entire picture.

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My my are we at opposite poles.

To me this is obviously the most important part of the entire picture. Class warfare at its finest.

I believe it is least important, because:

1) middle or lower classes paying less = still better for them

2) economic growth helps them too, and lowering taxes for everyone spurs economic growth

3) look at the results of other countries who have implemented the flat tax (as referenced in the first article)..

Bottom line is that if you're getting richer it shouldn't much bother you if your neighbor is keeping ahead of you. So you're both getting richer. Great.

Business expenses

"I used to deduct condoms!"

-- David Lee Roth
playing himself in The Sopranos, series 5.

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I am in favor of a flat tax.

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So you're in favor of tax avoidance.

Please realize that the IRS is more dangerous than the CIA.

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On what do you base your "guarantee"?

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On historical precedent of conservative previous tax plans.

For example, the Bush tax plan sold as good for the middle/lower class, really shifted more of the tax burden to them. The ole Repub bait and switch.

Forbes is disingenuous with the 'simplification of the tax code' angle.

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A middle class taxpayer pays less tax now than before. It's very simple math.

natedogg

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It lowered taxes for everyone, but it shifted more of the total tax burden to the lower and middle classes.

Surely we can agree on this fact?

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Yes, but so what? That is the least important part of the entire picture.

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My my are we at opposite poles.

To me this is obviously the most important part of the entire picture. Class warfare at its finest.

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Surely you are not so partisan and blinded by talking points that you'd rather pay *more* taxes as long as the total tax paid by the "class" you are in is more/less/whatever. And you are the one talking class warfare....

I mean, your tax payment is lowered and all you can do is complain about some spin on the total tax burden based on arbitrary cutoffs of groups of people, some of whom you happen to indentify with.

*You pay less tax now*. And you're mad about it.

amazing.

natedogg

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A middle class taxpayer pays less tax now than before. It's very simple math.

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Everyone pays less under his plan. My point is that adds up to deficits, won't work. Then, the poor will end up paying more if I know repubs, and the rich less.....

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A middle class taxpayer pays less tax now than before. It's very simple math.

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Everyone pays less under his plan. My point is that adds up to deficits, won't work. Then, the poor will end up paying more if I know repubs, and the rich less.....

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So your main objection to the proposal has nothing to do with the proposal itself, but rather a fear of some future proposal that will change it? Interesting....

natedogg

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2) economic growth helps them too, and lowering taxes for everyone spurs economic growth

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I have always maintained (since the Bush tax cut was proposed) that the proper way to go about stimulating the economy is as follows.

Reduce the poorest of the poor's tax rate to zero. This money, from broke people that aren't even getting their necessities, goes directly into the economy right away on staples they need..

Wal-Mart, Goodwill, you name it.

Then demand increases for Wal-Mart employees and production Wal-Mart like goods.

This is the proper way to stimulate the economy, from the bottom up, and it will not spur a jobless recovery, as we have seen.

Here is Warren Buffet's view. linky

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Surely you are not so partisan and blinded by talking points that you'd rather pay *more* taxes as long as the tax paid by the "class" you are in is more/less/whatever. And you are the one talking class warfare....

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This would not apply if I was in the plutocrat class, or even the $250k bracket. Poor people in this country are overtaxed. My particle bracket is irrelevant to the argument.

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I mean, your tax payment is lowered and all you can do is complain about some spin on the total tax burden based on arbitrary cutoffs of groups of people, some of whom you happen to indentify with.

*You pay less tax now*. And you're mad about it

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You misunderstand my point entirely, I think the above clears it up.

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So your main objection to the proposal has nothing to do with the proposal itself, but rather a fear of some future proposal that will change it? Interesting....

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My main problem with the proposal is that the numbers do not add up and it simply will not work.

He assumes increased tax revenues from increased GDP due to the incentive to work more at a lower tax rate. This is at this point an unproven theory.

As a sidepoint, as posted above, in countries such as Russia, that people use to support the flat tax, the very rich were going largely totally untaxed, so that flat tax increased total tax revenues. That simply is not the case with the U.S.

Now, believing that his plan is unrealist and will not work, yes, I look at what the logical revisions would be if as a Repub admin did the necessary reshaping to make the numbers balance. And I further believe that I am on the right track.

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Reduce the poorest of the poor's tax rate to zero. This money, from broke people that aren't even getting their necessities, goes directly into the economy right away on staples they need..

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The poorest people don't pay any income tax now anyway.

Other than that, it appears you've managed to mix my post and Natedogg's post with your use of the Copy function, and are responding to him in the latter part of your post. Don't worry, it's happened to me before, too.

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The poorest people don't pay any income tax now anyway.

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I guess everyone has a different definition of poor, but if you're single and making less than $40k that's poor in my book.

Obviously, though, I would start with those making less than $10k, then $15k, and gradually go up the chain until all tax cut $ was budgeted.

So the basic problem of a flat tax is a basic principle that you learn in economics called diminishing marginal utility. The basic idea is that for every additional dollar that you earn, every single dollar is worth less. If I only have $5 to my name, every dollar is precious. I will probably not be spending any of that money on any luxuries. If I want a candy bar for example, $1 is just too steep of a price. If however I have $1000, I can afford to spend a couple bucks here and there for my pleasure. Candy bars galore!

This relates to taxation because for someone who makes $60,000 a year, 20% ($12,000) can cause tangible differences in one's lifestyle. However for someone making $10 million a year, that 20% ($2 million) doesn't affect all that much (aside from luxuries). Basically you are taxing a rich person's luxuries and a poorer/middle class person's necessities with a flat tax.

This is why a progressive tax is much more fair. Nobody gets taxed on their first $30,000 of income, everybody gets taxed X% on their next $30,000 of income, >X% on the 3rd $30,000, etc.

I'm not trying to say that our tax system is perfect or that we can't use some serious reforms. But a flat tax is not the way to go.