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  #11  
Old 08-21-2005, 02:53 PM
MMMMMM MMMMMM is offline
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Default Re: Flat Tax?

[ QUOTE ]
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.

[/ QUOTE ]

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.
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  #12  
Old 08-21-2005, 03:05 PM
cardcounter0 cardcounter0 is offline
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Default Re: 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.
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  #13  
Old 08-21-2005, 03:10 PM
Arnfinn Madsen Arnfinn Madsen is offline
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Default Re: Flat Tax?

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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  #14  
Old 08-21-2005, 03:18 PM
MMMMMM MMMMMM is offline
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Default Re: Flat Tax?

[ QUOTE ]

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.


[/ QUOTE ]

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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  #15  
Old 08-21-2005, 07:40 PM
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Default Re: Flat Tax?

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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.


[/ QUOTE ]

Unless you could scrap Congress too, this would just be an exercise in futility.
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  #16  
Old 08-21-2005, 07:53 PM
andyfox andyfox is offline
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Default Re: Flat Tax?

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.
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  #17  
Old 08-21-2005, 09:20 PM
BadBoyBenny BadBoyBenny is offline
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Default Re: Flat Tax?

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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  #18  
Old 08-22-2005, 12:34 AM
slickpoppa slickpoppa is offline
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Default Re: Flat Tax?

[ QUOTE ]
[ QUOTE ]

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.


[/ QUOTE ]

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

[/ QUOTE ]

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.
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  #19  
Old 08-22-2005, 12:39 AM
warlockjd warlockjd is offline
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Default Re: Flat Tax?

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.
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  #20  
Old 08-22-2005, 12:58 AM
MMMMMM MMMMMM is offline
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Default Re: Flat Tax?

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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