Flat tax support, arguments for or against it?

[krunksmash]

But that fails in a demand deficit economy (basically the whole world right now). You can lower interest rates as low as you like but zero interest or even negative interest rates is still better than spending it to make goods/services you cannot sell and thus losing it all.

but if the middle class is no longer getting taxed 30% - 50% of their income they will spend more increasing demand.

[Actarius]

thought i was pretty clear, income is income, all this BS in the current tax code would be thrown out, Capitol gains, standared income, w/e I really dont give a damn if its tractable income/ gain in profit its counted twords your total income.

Yeah you're waaaay oversimplifying it. Sure, in theory, you could say 10% or 20% tiers. Personally I'd like 30/40% tiers but the numbers are arbitrary.

The basic questions:

What is taxable money? Capital gains and employee income are pretty straight. Do we abolish sales tax for a flat tax? What about special taxes like gas/alcohol/cigarettes/etc? What about estate tax, death tax, self-employed tax, how much income do you need before you have to declare it?

Does alimony/child support get taxed when received? what about social security? Credit forgiveness? Insurance? IRA/401K/HSA gains?

What money is taxable from business/corporation? Gross? Net? If Net, what counts as deductions?

Do we still have deductions for health care expenses, student loan interest, sales tax, charitable contributions, etc?

Like I could sit here all day all list considerations.

If your answer is simply "All Income is Taxed" you still need to define income, and then the loophole of people finding a way to have their income exist in such a way that it's not legally "income".

[Orange Joe]

but if the middle class is no longer getting taxed 30% - 50% of their income they will spend more increasing demand.

Same could be said of the poor.

Also the current highest tax bracket atm is 39.6%
https://www.irs.com/articles/project...tax-rates-2016

[Deleted]

but if the middle class is no longer getting taxed 30% - 50% of their income they will spend more increasing demand.

you do realise in a flat system they would have to pay more then then pay now right?

x amount of tax money is required to run the country, you can't argue with this, it has to come from somewhere, the amount could go up or down, but some amount is always needed.
in a perfect progressive system, most of the money comes from the rich. in a flat system, the rich pay a lot less, thus the poor/middle class must pay more.

[alexw]

but if the middle class is no longer getting taxed 30% - 50% of their income they will spend more increasing demand.

No that is not how it works. All the money the gov takes in it spends. Moreover the system overall is redistributive (but not as redistributive as it needs to be), it takes the most from the wealthy and transfers it to the poor and average. That means given that the wealthy spend very little of their income while the poor and average spend virtually all of it that economic demand overall is increased. What you suggest would do the opposite and decrease economic demand due to the upwards redistributive effect of flat taxes.

[cuafpr]

I support a graduated flat tax, but not a straight one.

this as long as the curve is gradual... much more so than i know early this year i took a new job that was a nice raise only to watch my take home barely change due to higher taxes .... >.<

[Raeph]

Ok first you need to define the term flat tax. Flat tax seems to be one of three different concepts.

1)Flat Income tax: current tax code is wiped out to the last page and replaced with an X% tax. This % is anywhere from 10-25% depending on who you ask. (ex: everyone pays 15% of their income in tax)

2)Consumption tax: national sales tax or VAT, which is added to purchases, though usually food items are not taxed. (ex:tax of 15% is added to all non-necessary purchases)

3)Progressive-Flat Income tax: Current tax code is wiped out to the last page then you have a flat tax for everyone that kicks in at a particular income level. Below that you pay little to nothing on that income and often a prebate system of governmental direct payments is involved. (ex: above X income level you pay 15%, below you pay 0-5%)

1: For - gets rid of loopholes and simplifies workers relationship to tax preparation. Increases revenue collection by moving the tax burden from (upper/middle/lower income brackets) 55/45/0 balance in revenue collection to a 25/60/15 balance.

Against - Can tax sections of the populace into poverty. Some schemes do not tax into account capital gains. Some tax credits which are helpful to lower and middle income (child care tax, earned income, mortgage interest, etc) and are eliminated with other arcane loopholes.

2: For - You are taxed by your interaction with the economy. Very difficult to hide from the IRS as every dollar you spend on goods beyond food is taxed at use and not earning. Higher income will by default pay more in taxes because of their higher degree of consumption, purely by having greater resources.

Against - Very difficult to give aid to low income. Can price lower and middle income people out of economic purchases, thereby slowing consumption. Very high bureaucratic costs to manage the system which eats into revenue collections or ends up forcing a high % of tax added to goods and services. The question of "What goods are necessary and should not be taxed?" involves convoluted processes and can negatively effect consumer livelihood if too stringent or revenue targets if too liberal.

3: For - Income level target can be set to not tax workers into poverty (150-200% of poverty level). Prebates ensure that middle and lower income class has easier access to tax credits as they are front loaded in the system, once eligibility has been established, with usually monthly payments. Progressive tax structure where those who can pay more in tax do pay more in tax.

Against - Generally ignores capital gains income. Income level targets do not take into account individual circumstances and still can lead to being taxed into poverty. Sharp increase in taxation on income above threshold makes lower and middle income workers loose significant funds in taxation compared to higher income workers above the threshold. Prebate system is paid to every taxpayer regardless of objective need.

It is an interesting idea however the only reason to institute a flat tax is to increase taxes on poor and middle income to increase tax revenue. That would require a change in current taxation goals of income redistribution to specific revenue targets, similar to how feudal or ancient cultures would shake down their populace to pay for projects or wars.

[Cykes]

Easy, erase the current tax code code and implement what I said, its simple and black and white. Bob earns 100K a year, bob is in tier 1 10%, jill earns 1.2 mil a year, Jill is in tier 2 20%.

Dan co is 750K a year, dan co is tier 1 10%, lesley LLC is 2 mill a year, lesley LLC is tier 2 20%.

done. where is the loop hole?

There has to be a regional cost of life modifier to help low income people living in high cost of living areas.
Either that or the threshold for the taxed minimum has to change depending on where you live.

Cost of living in areas like DC, NY, etc. is astronomical vs other cities and states, like NC, WV, etc.
What might be taxed in one state could place undue burden on another person living in one of those places.

A major issue we have in society is people being essentially slaves to work, with two or even three jobs in order to support the family they barely see.

[Kapadons]

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But that fails in a demand deficit economy (basically the whole world right now). You can lower interest rates as low as you like but zero interest or even negative interest rates is still better than spending it to make goods/services you cannot sell and thus losing it all.

Plenty of businesses are growing. Even now. It's not the entire economy. But even now, my company is taking profits to open new locations instead of stacking cash in the bank. Part of that equation for us ( not all of it) is that there isn't any reason to stick money in the bank and let it sit there. It used to earn you money while being there. Now it doesn't. So as a company, we have decided to expand into new markets with profit rather than sit on it.

To be fair, we would have more than likely done this even if interest rates were still decent. We are a relatively new company that is trying to grow. But expansion has been nudged along by low interest rates. It also helps that low interest rates means low payments on any loans, so the barrier for profit becomes lower.

This obviously doesn't help a company that is NOT trying to grow or has hit their ceiling on the demand for their product.

How come it hasn't really worked then? Some countries even went negative interest and still didn't see a noticeable spending increase.

Many many factors. Take a while for us to discuss all the reasons low interest rates haven't Soared the economy. But, that wasn't their only intention. The houseing market has been significantly helped by them.

[alexw]

Plenty of businesses are growing. Even now. It's not the entire economy. But even now, my company is taking profits to open new locations instead of stacking cash in the bank. Part of that equation for us ( not all of it) is that there isn't any reason to stick money in the bank and let it sit there. It used to earn you money while being there. Now it doesn't. So as a company, we have decided to expand into new markets with profit rather than sit on it.

To be fair, we would have more than likely done this even if interest rates were still decent. We are a relatively new company that is trying to grow. But expansion has been nudged along by low interest rates. It also helps that low interest rates means low payments on any loans, so the barrier for profit becomes lower.

This obviously doesn't help a company that is NOT trying to grow or has hit their ceiling on the demand for their product.



Many many factors. Take a while for us to discuss all the reasons low interest rates haven't Soared the economy. But, that wasn't their only intention. The houseing market has been significantly helped by them.

You are talking about certain specific companies. I am talking about macro-level economics as applies to the overall economy. For a fact we know there is a substantial deficit of income based demand which is why lowering interest rates has not worked at all as well as initially hoped. What is needed is substantial pay rises and fiscal policy changes rather than monetary.

[Bollocks]

Are we talking about flat consumption taxes or a flat tax on income. If its a broad statement on flat tax , then no, its a terrible idea unless you plan to do some crazy stuff with the rates.

Also heil Singapore, we should all have 0% corporate taxes.

[purebalance]

For.

we have tried the multi-tiered system, it does not work, the poor pay nothing but get no where, the rich pay nothing by exploiting tax code, and the middle class gets taxed into poverty.

I fully support a 2 tiered flat tax under 1 mil 10%, over 1 mil 20% no deductions or deferral, you know exactly how much will come out of your check each month and no income bracket gets treated unfairly or excessively taxed.

you under the poverty line? well your guaranteed 100% of your paid taxes back come tax time.

this would also drive the economy because more businesses would be willing to build in the states and hire more.

I'd be ok with this. I mean what really got me though about this was when one of the doctors I work with was literally busting his ass last year and due to tax brackets he actually made less money after he filed his taxes and I mentioned that in a similar thread and people were like "boo hoo rich people" as if working more and being educated shouldn't entitle you to more money not more penalty.

[Orbitus]

Citizens get taxed 50% - 75% less, they now have more money, when people have more money that spend more money, the surge in spending increases profits and increases demand for goods, companies hire to meet demand newly employed people earn money keep 80% - 90% of what they earn and spend more feeding growth.

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thats fixed by putting an iron grip on what qualifies as " not income "

And then the government deficits go from manageable to $2 trillion a year.

[Deathquoi]

so all of you thinks its fair that middle class like me and my parents get riped for 40% of our checks while the rich exploit the piss out of the tax code to pay damn near nothing?

If you think a flat tax system wouldn't include a stupid number of loopholes, you're kidding yourself.

[Garnier Fructis]

I'd be ok with this. I mean what really got me though about this was when one of the doctors I work with was literally busting his ass last year and due to tax brackets he actually made less money after he filed his taxes and I mentioned that in a similar thread and people were like "boo hoo rich people" as if working more and being educated shouldn't entitle you to more money not more penalty.

This is confusing. Do you mean to say that his raw income went up, so he went to a different tax bracket and he ended up making less money because of that?

Because if that's the case, then your doctor is lying to you. The tax rate for each bracket only applies to the amount in that bracket, so if a higher tax rate starts at, say, $150,000 then only the income above $150,000 is taxed at the higher rate, i.e. if income was $150,500, then only $500 is subject to the higher tax rate.

You don't lose money by making enough income to fall into the next highest bracket, that's just a nonsense sob story people say because they want the law to be changed so they pay less taxes in general.

[Masark]

I'd be ok with this. I mean what really got me though about this was when one of the doctors I work with was literally busting his ass last year and due to tax brackets he actually made less money after he filed his taxes and I mentioned that in a similar thread and people were like "boo hoo rich people" as if working more and being educated shouldn't entitle you to more money not more penalty.

Thank you for demonstrating that neither you nor your doctor know how tax brackets work and thus that your opinions regarding tax policy can be safely ignored.

[Cthulhu 2020]

For.

we have tried the multi-tiered system, it does not work, the poor pay nothing but get no where, the rich pay nothing by exploiting tax code, and the middle class gets taxed into poverty.

I fully support a 2 tiered flat tax under 1 mil 10%, over 1 mil 20% no deductions or deferral, you know exactly how much will come out of your check each month and no income bracket gets treated unfairly or excessively taxed.

you under the poverty line? well your guaranteed 100% of your paid taxes back come tax time.

this would also drive the economy because more businesses would be willing to build in the states and hire more.

"This machine doesn't work. I put a wrench in its gears, cut its wires, and took the wheels off. That means this kind of machine will never work, even if we fixed all of those problems."

A progressive tax system works just fine, and isn't any more exploitable than a flat tax system. If we implement a flat tax system, those at the top just START OFF paying even less before they start to game the system. A flat tax system will not work, as it places the burden of funding government heavily on the middle class, those who cannot afford to support it that much.

[Mihalik]

You don't lose money by making enough income to fall into the next highest bracket, that's just a nonsense sob story people say because they want the law to be changed so they pay less taxes in general.

It is actually one of those sob stories parroted in horribly badly acted commercials funded by lobby groups, that people who will never see 150k in one place in their lives lap up and then get all outraged about taxes, convinced that someone somewhere is "robbing them too".

It is literally a text book case of stupidity all around.

[Kapadons]

So which is it, corporations use loopholes to pay no/little taxes or we can't have a flat tax because that will shift the tax burden from corporations to middle class?

[Mihalik]

And then the government deficits go from manageable to $2 trillion a year.

Deficit only matters if the President is a Democrat. Didn't you know that?