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ORIGINAL: tazzygirl

its my belief that they shouldnt pay taxes. under the current system, they would regain it back anyways... plus extra, if they have children.

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ORIGINAL: CallaFirestormBW

I have to admit that I am keen on the concept of the 'flat tax', and always have been. I -swore- I wasn't going to get myself mired in another one of these discussions, but really, flat-tax makes complete common sense. In a way, it is equivalent to the concept of the 'tithe'. It is reasonable and fair -- everyone pays the same percentage, whether you earn $5 an hour or $500 an hour -- and yet the amount is scaled sensibly, and everyone pays -something-... which is, indubitably, absolutely just.

Dame Calla

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ORIGINAL: tazzygirl
earned income credit

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What would change should the tax base be based upon all income, not just wages, offset by only investment losses?

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Let me try to illustrate one of the problems with an incredibly simplistic model (I don't do this because I don't think you can't understand a more complex model but because my financial expertise doesn't allow me to construct one on the fly)....that said:

Picture a population of 100 people. 90 of them make $10,000 per year, 10 of them make $1,000,000. Under a graduated tax system, the lower 90% pay 20% in taxes. The top 10% pay 40% in taxes. This means that the lower 90% will pay $2,000 per year in taxes, leaving them with $8,000 to spend on their own personal living expenses. The upper 10% will pay $400,000, leaving them $600,000 to spend on their own personal living expenses. It will also result in a tax revenue of $4,180,000.

Now, under a flat tax, in order to keep that same tax revenue level, every person in that group of 100 people would have to pay $4180 in taxes. This results in the lower 90% paying twice as much in taxes while lowering the amount of taxes that the upper 10% pay by an incredible amount. The end result would be that the lower 90% of taxpayers would be left with less than $6,000 to spend on their living expenses while leaving the top 10% of the taxpayers with $995,480 to spend on their living expenses.

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ORIGINAL: Musicmystery

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What would change should the tax base be based upon all income, not just wages, offset by only investment losses?

I'm lost. This makes no sense.

Income tax IS based already upon all income, not just wages, offset by investment losses.

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The point of shelters is precisely to shift income from highly taxed to lowly taxed forms. For example, when lower taxes on capital gains cause an executive to shelter income by switching the form of compensation from wages to stock options (which generate capital gains), revenues from capital gains taxes increase, but tax revenues from wages fall by even more, so overall revenues fall.

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ORIGINAL: CallaFirestormBW

I have to admit that I am keen on the concept of the 'flat tax', and always have been. I -swore- I wasn't going to get myself mired in another one of these discussions, but really, flat-tax makes complete common sense. In a way, it is equivalent to the concept of the 'tithe'. It is reasonable and fair -- everyone pays the same percentage, whether you earn $5 an hour or $500 an hour -- and yet the amount is scaled sensibly, and everyone pays -something-... which is, indubitably, absolutely just.

Dame Calla

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I believe that -everyone- should pay something towards the communal services that we all use.

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ORIGINAL: tazzygirl

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ORIGINAL: Musicmystery

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What would change should the tax base be based upon all income, not just wages, offset by only investment losses?

I'm lost. This makes no sense.

Income tax IS based already upon all income, not just wages, offset by investment losses.

With the ability to divert funds... sometimes to be taxed later.. health care spending accounts, IRA's, ect...


Definition: Adjusted Gross Income (AGI) is income from taxable sources (gross income) less tax deductions that are allowable even if you do not itemize deductions on your tax return.
Taxable income can include salaries or other employment income, interest and dividends, and long- and short-term capital gains and losses.

The adjustments include certain IRA deductions, moving expenses, and unreimbursed business expenses. Here is a full list of Above-the-Line Deductions.

You can figure your AGI on the first page of your federal tax return. Adjusted Gross Income serves as the basis for figuring income tax you owe.

Adjustments to Income
Adjustments are certain expenses which directly reduce your total income. You do not need to itemize your deductions in order to claim these expenses. Adjustments reduce your total income to arrive at your Adjusted Gross Income (AGI).


•Classroom expenses
•Qualified performing artists and other professions
•IRA deduction
•Student loan interest
•Tuition and fees deduction
•Health savings account deduction
•Moving expenses
•Self-employment tax deduction
•Self-employment health insurance
•SEP deduction
•Early withdrawal penalty
•Alimony paid
•Domestic Production Activities Deduction (a new deduction for businesses)

http://financialsoft.about.com/od/glossaryindexa/g/AdjGrossInc_def.htm

Then there is the capital gains and the situation of shelters, among other things...

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The point of shelters is precisely to shift income from highly taxed to lowly taxed forms. For example, when lower taxes on capital gains cause an executive to shelter income by switching the form of compensation from wages to stock options (which generate capital gains), revenues from capital gains taxes increase, but tax revenues from wages fall by even more, so overall revenues fall.

http://www.brookings.edu/opinions/1997/09taxes_gale.aspx

Just seems to me that if we end these options, and people actually are taxed on all income, minus losses.... then wouldnt it be even for all?