Flat tax needs to be revisited?

Flat tax needs to be revisited? (Full Version)

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tazzygirl -> Flat tax needs to be revisited? (9/5/2009 2:39:52 PM)
Having read this from another blog site, it raised some questions about federal flat taxes. here is the link for the article http://www.ctj.org/pdf/irstop400.pdf my feeling is a flat tax would answer alot of problems, from raising more money equally, to helping dispel such myths, as well as reducing the IRS' payroll and financing costs. thoughts?

Arrogance -> RE: Flat tax needs to be revisited? (9/5/2009 2:43:23 PM)
Short answer: No. Long answer: God, no!

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 2:44:30 PM)
ok.. why not?

sappatoti -> RE: Flat tax needs to be revisited? (9/5/2009 2:49:30 PM)
Personally, I am not going to use the CTJ numbers as a basis for any discussion on the flat tax. They are too biased, in my opinion, for their numbers to be considered neutral. When a neutral source or two releases numbers (and from a pool that is much larger than 400), I'll join the discussion.

Arrogance -> RE: Flat tax needs to be revisited? (9/5/2009 2:52:00 PM)
quote: ORIGINAL: tazzygirl ok.. why not? Without going into any sort of great detail, it would be disastrous for the lower class and would do significant damage to the middle class. Taking more from those with less not only presents a moral dilemma but will also keep them from spending the little money they have.

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 2:54:52 PM)
what do you mean taking more? if you are going to weigh in so emphatically against or for something, perhaps you should explain.

Arrogance -> RE: Flat tax needs to be revisited? (9/5/2009 2:56:55 PM)
Do you understand what a flat-tax is?

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 2:58:53 PM)
quote: ORIGINAL: sappatoti Personally, I am not going to use the CTJ numbers as a basis for any discussion on the flat tax. They are too biased, in my opinion, for their numbers to be considered neutral. When a neutral source or two releases numbers (and from a pool that is much larger than 400), I'll join the discussion. i gave no credence to what the report said. i merely showed what sparked the other board discussion. if you cannot, or decline, to discuss this belief on its own merits, then thats ok.

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 3:00:41 PM)
quote: ORIGINAL: Arrogance Do you understand what a flat-tax is? Having a Business Management degree with a double in Accounting... i may have some clue.

Arrogance -> RE: Flat tax needs to be revisited? (9/5/2009 3:03:35 PM)
Then why do I need to elaborate on saying that it would cause the taxes for the lower and middle classes to increase? It seems obvious, inherent.

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 3:09:29 PM)
if you dont wish to contribute to the discussion, please dont comment. its rather silly.

Arrogance -> RE: Flat tax needs to be revisited? (9/5/2009 3:12:26 PM)
quote: ORIGINAL: tazzygirl if you dont wish to contribute to the discussion, please dont comment. its rather silly. I contributed with a rather obvious point. You asked me to elaborate, I don't understand why the point needs elaboration. And now this has become a multi-post tangent that I hope becomes a multi-page one now.

Musicmystery -> RE: Flat tax needs to be revisited? (9/5/2009 3:19:51 PM)
quote: Having a Business Management degree with a double in Accounting... i may have some clue. But not necessarily. There's a reason the wealthy favor it. And the previous posts have indeed made an obvious point--that it would change a progressive tax structure to a de facto regressive one. Before we get back to the Laffer Curve fiasco Reagonomics proved a failure--it all looks good on paper (or on the napkin he drew it on) IF--note, IF--we know where the middle point of that curve lies. Turns out, it's much, much higher than the supply-siders fantasized. A flat tax is a tax cut for the wealthy at the expense of the lower and middle classes--however the math is packaged.

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 3:30:57 PM)
thank you Master Tim here is my point. according to that web site, and im not sure i believe it, the sample group paid just 17.2%. now, let me say im not believing their numbers, it just caused a spark of interest. how much of those figures were "saved"? AGI can be distorted. As well as investment income. if all these were taxed, without adjustments, and income was the factor, not just wages, many are insisting that would change the structure.

SpinnerofTales -> RE: Flat tax needs to be revisited? (9/5/2009 3:34:39 PM)
quote: ok.. why not? ORIGINAL: tazzygirl 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. Of course, this is a very simple example, but the idea of it is one that concerns me. I would have to have a very strong set of numbers on how a flat tax would work given the size and complexity of our tax base before considering this a good idea on tax reform.

Honsoku -> RE: Flat tax needs to be revisited? (9/5/2009 3:52:46 PM)
quote: ORIGINAL: tazzygirl ok.. why not? Don't mind the snotty one too much, she seems to be trying to live up to her moniker. An absolute flat tax becomes a regressive tax compared to how things are today, because the lower income brackets have a lower (to non-existent) effective tax rate. For example, because of the job I am working, I will effectively pay nothing in taxes (yay for entry level retail) as I can expect to receive a full refund when I file. So an absolute flax tax would increase the taxes I pay. Second point; a flat tax would lead to rapid wealth concentration the likes of which haven't been seen in a long time. Why are 'the rich' rich? Because, at a basic level, they spend less than they make. Which means that 'the rich' tend to concentrate wealth. An absolute flat tax would greatly accelerate the rate of wealth concentration. Why is this not a good thing? Several reasons; 1: At any given point in time, the wealth available is finite. So if the rate of wealth concentration occurs at a rate faster than the rate of growth of available wealth, eventually virtually all wealth will be in the hands of a small minority, effectively creating economic servitude. 2: Increased rates of wealth concentration yield to increased social instability. As the difference between the 'haves' and the 'have-nots' increases, there becomes increased social turmoil due to the perceived injustice. 3: Increased economic instability. Due to the increased concentration of wealth, there is less wealth changing hands on the lower economic rungs. This leads to a less liquid economy, which will be more likely to seize (and possibly collapse) over disruptions. It also creates a lot more myopic economy as fewer people have a lot more sway over the economy as a whole. One of the big warning signs of a depression/meltdown is rapid concentration of wealth.

Arrogance -> RE: Flat tax needs to be revisited? (9/5/2009 3:56:41 PM)
quote: ORIGINAL: Honsoku quote: ORIGINAL: tazzygirl ok.. why not? Don't mind the snotty one too much, she seems to be trying to live up to her moniker. Lol... it was more a stab at humor that either failed or was lost on some.

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 4:14:25 PM)
Thank you for your answer. I keep going back to hearing that the lower half of income earners pay only 3% of taxes. considering many of those are below poverty level, im not sure why its made such a big deal that the top 1% pay 22%, according to the IRS. http://www.kiplinger.com/features/archives/2007/11/taxrank.html My question still remains though. What would change should the tax base be based upon all income, not just wages, offset by only investment losses?

Honsoku -> RE: Flat tax needs to be revisited? (9/5/2009 4:50:59 PM)
quote: ORIGINAL: tazzygirl Thank you for your answer. I keep going back to hearing that the lower half of income earners pay only 3% of taxes. considering many of those are below poverty level, im not sure why its made such a big deal that the top 1% pay 22%, according to the IRS. http://www.kiplinger.com/features/archives/2007/11/taxrank.html My question still remains though. What would change should the tax base be based upon all income, not just wages, offset by only investment losses? I think you may have your numbers confused a bit. According to that article, the top 1% pay 39.89% of the taxes, they make 22% of the income. It's made into a big deal because it is a psychology issue. It seems unfair to be taxed more because you are successful, it seems like you are being 'punished' for success and that just rubs people the wrong way. Even the people that aren't in the upper brackets dislike it because many of them aspire to be in the upper brackets. I'm not a tax accountant, but I don't know of any general personal income that is actually tax free (unless it is relatively insignificant or occurs rarely), though there are quite a few that get preferential treatment. Unrealized capital gains aren't income, and that is where a lot of the wealth is concentrated. However, taxes on that do get paid once the gains are realized. Having the taxes only offset by investment losses would be hard on people in debt, small business owners, the uninsured, victims of crime or disaster, people pursuing an education, and philanthropists (based off of common deductions, found here). So it would make things a lot harder for the lower rungs as they have less of a cushion against those things.

DomImus -> RE: Flat tax needs to be revisited? (9/5/2009 6:05:36 PM)
www.fairtax.org

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