Flat tax support, arguments for or against it?

[Endus]

Tax brackets are steps, platforms you are worried about surpassing. Currently, if you made just a few extra dollars while near a bracket change, you could wind up paying several percent higher. I know too many coworkers worried about too much overtime since our average income is near a bracket change.

This is just completely incorrect.

If a particular bracket is, say, $25,001-$45,000, and you're currently making $44,500, getting a $1000 bump doesn't mean you pay extra tax on the entire $45,500. You only pay that higher bracket for the $500 of income that falls within that bracket. It's not possible to suddenly have less net income because your gross income entered a higher tax bracket.

I'm talking about a straight line from 10% at $100k (and below) to 40% at $1mil (and above). It really wouldn't matter if you were in danger of surpassing 100k for a year, since the tiny percentage change isn't a big deal. Why would I want to get rid of all the tax laws but keep the convoluted brackets?

Brackets are anything but "convoluted". They can be explained completely in a single short paragraph, along with a table of their values.

[TrumpIsPresident]

Flat tax good.
If everyone pay.

[Dezerte]

Tax brackets are steps, platforms you are worried about surpassing. Currently, if you made just a few extra dollars while near a bracket change, you could wind up paying several percent higher. I know too many coworkers worried about too much overtime since our average income is near a bracket change. I'm talking about a straight line from 10% at $100k (and below) to 40% at $1mil (and above). It really wouldn't matter if you were in danger of surpassing 100k for a year, since the tiny percentage change isn't a big deal. Why would I want to get rid of all the tax laws but keep the convoluted brackets?

If the brackets are 100k+ at 10%, and 1 million at 40%. So e.g. you make 1.1 million, the 100k over the tax bracket is taxed at 40% instead of 10%. You are still making more money, you never reduce your income.

[Kokolums]

The positive aspect of a flat tax is that it encourages people to be ambitious. In a progressive tax system, the more you earn, the more you are taxed. As it turns out, many people are actually willing to kill their career advancement to avoid higher taxes and that is a bad thing we shouldn't be encouraging. Many people simply are very bad at long term planning. If you tell them its ok to take on extra taxes for a year or two because in 5 years they will be making much more, they won't listen and avoid that promotion at work instead. This is VERY common. I see it a lot. People are just bad at math.

[Feronar]

I'm personally against a flat tax for this reason: Let's say a 10% flat tax is imposed on all income. Bob makes $10k per year, and has to pay $1k in taxes. $10k is below the poverty line, and Bob is struggling very hard just to get by. A $1k tax would be an enormous burden. Billy on the other hand makes $1 million per year, and would have to pay $100k in taxes. Although he still has to pay a much, much larger dollar amount in taxes, he still has a huge amount of money left over, and his tax bill would have next to zero impact on his lifestyle.

[Endus]

The positive aspect of a flat tax is that it encourages people to be ambitious.

You misspelled "harshly punishes those who are least able to make ends meet already".

That punishment does not encourage "ambition".

In a progressive tax system, the more you earn, the more you are taxed. As it turns out, many people are actually willing to kill their career advancement to avoid higher taxes and that is a bad thing we shouldn't be encouraging.

Pretty much zero evidence that this actually happens, and plenty that it doesn't. You're seriously arguing that people turn down promotions and raises because making more money is "bad"?

Because their net income increases, regardless. You do realize that, right? A raise that puts you into a new tax bracket never means you take home less money.

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I'm personally against a flat tax for this reason: Let's say a 10% flat tax is imposed on all income. Bob makes $10k per year, and has to pay $1k in taxes. $10k is below the poverty line, and Bob is struggling very hard just to get by. A $1k tax would be an enormous burden. Billy on the other hand makes $1 million per year, and would have to pay $100k in taxes. Although he still has to pay a much, much larger dollar amount in taxes, he still has a huge amount of money left over, and his tax bill would have next to zero impact on his lifestyle.

Right.

And the moment they say "okay, yeah, people making under a certain amount should obviously be exempt from paying taxes", they've conceded that a flat tax is a stupid idea that even they don't really agree with.

[Kokolums]

Pretty much zero evidence that this actually happens, and plenty that it doesn't. You're seriously arguing that people turn down promotions and raises because making more money is "bad"?

Personally I've known dozens of people that have done exactly that. I completely disagree with it. But I see it ALL the time.

[melodramocracy]

The only for argument I can think of is one of simplicity and less overhead for the gov't to collect what they think is thiers. It falls flat on its face in every other situation, and puts the most financial burden on those who can afford it the least.

[Paranoid Android]

I glanced over the a few pages and already people for flat taxes so many myths. 1) A flat tax does not equate to loopholes being abolished. I make this argument all the time that if you magically wiped out tax loopholes. Next day there would be some legislation or way to get around paying full taxes. Plus, are we going to make all tax deductions no more, such as charity. 2) Obviously a flat tax is going to greatly benefit the rich and for these who argue our uncontrollable government spending, we will be losing tax dollars that we cannot replace. 3) I love this one. People will not work as hard since they will move up in tax brackets. First they do not understand the tax laws and second, that never happens.

I am for tax brackets so the super-rich actually pay their share. I believe around $450k for married households and beyond it pays the same percentage.

[Tyrianth]

Personally I've known dozens of people that have done exactly that. I completely disagree with it. But I see it ALL the time.

Then they're idiots. In a progressive tax system there is no way that earning more income will net you a lesser net income. In a progressive tax system you pay the particular tax rate for the income that is within that bracket. If you are only $500 into the next bracket then only that $500 is taxed at that rate.

[Paranoid Android]

Personally I've known dozens of people that have done exactly that. I completely disagree with it. But I see it ALL the time.

Your anecdotal story we should believe. So you actually looked at their tax returns? Sure you did, since in the real world I let all my friends look at how much I earn. You see it ALL the time. Wow! so pretty much close to 100% of people you know turn down promotions or wage increases. That is AMAZING!!!

I will add my own story. Every job or promotion that I received and I had to pay more taxes. I chose to take the job and amazingly I still make more money being in a higher tax bracket.

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Then they're idiots. In a progressive tax system there is no way that earning more income will net you a lesser net income.

Please don't believe that story. Just feeding you bullshit.

[Tyrianth]

Your anecdotal story we should believe. So you actually looked at their tax returns? Sure you did, since in the real world I let all my friends look at how much I earn. You see it ALL the time. Wow! so pretty much close to 100% of people you know turn down promotions or wage increases. That is AMAZING!!!

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Please don't believe that story. Just feeding you bullshit.

There's not much to believe or disbelieve. He only said he knows of people who have declined a promotion for that reason. Even said he disagreed with their reason.

[Muzjhath]

Personally I've known dozens of people that have done exactly that. I completely disagree with it. But I see it ALL the time.

I feel sad for those people.
Tell the people you know who've done that they are idiots and they seriously need to read up on how the tax code works. Assuming you live in the US in this case. Or pretty much anywhere in the EU.

[Paranoid Android]

There's not much to believe or disbelieve. He only said he knows of people who have declined a promotion for that reason. Even said he disagreed with their reason.

Watch this.

I know people who felt it was their duty to pay more taxes. So they volunteered NEVER to take a deduction or claim children.

[alexw]

Personally I've known dozens of people that have done exactly that. I completely disagree with it. But I see it ALL the time.

I've known plenty of people that were really lizardmen wearing human skin. I see them about ALL the time.

FYI anyone can claim shit, it doesn't make it true. That's why we rely on this thing called data and its bedfellow evidence. From the studies done on this subject those both say you are 100% wrong.

[Paranoid Android]

I've known plenty of people that were really lizardmen wearing human skin. I see them about ALL the time.

FYI anyone can claim shit, it doesn't make it true. That's why we rely on this thing called data and its bedfellow evidence. From the studies done on this subject those both say you are 100% wrong.

Don't you love people with their anecdotal bullshit?

[Tyrianth]

Watch this.

I know people who felt it was their duty to pay more taxes. So they volunteered NEVER to take a deduction or claim children.

And other than the fact that you're trying to prove a point I would have no reason to disbelieve you. By outright refusing to respond to his point, whether it's true or not, does nothing but shutdown the debate. Especially since his point is so easy to counter by explaining how taxes work.

[Paranoid Android]

And other than the fact that you're trying to prove a point I would have no reason to disbelieve you. By outright refusing to respond to his point, whether it's true or not, does nothing but shutdown the debate. Especially since his point is so easy to counter by explaining how taxes work.

No not really. Since EVERYONE with sense of tax bracket knows that lets say you are at $200k and get a $50k raise that puts you into a new tax bracket. You ONLY pay taxes on the $50k. This is called a Marginal Tax Rate. Watch I post FACTS not stories.

http://www.investopedia.com/terms/m/marginaltaxrate.asp

[Tyrianth]

No not really. Since EVERYONE with sense of tax bracket knows that lets say you are at $200k and get a $50k raise that puts you into a new tax bracket. You ONLY pay taxes on the $50k.

As evidence of this entire thread, no, not everyone knows as not everyone has a "sense of tax bracket".

And you're using the same argument he is that is causing you to get upset. His argument essentially boiled down to that he knows people who don't understand tax brackets, but it's fine for you say to say that EVERYONE knows tax brackets?

You ONLY pay taxes on the $50k. This is called a Marginal Tax Rate. Watch I post FACTS not stories.

http://www.investopedia.com/terms/m/marginaltaxrate.asp

As I have said in multiple posts throughout this thread even demonstrated the math. Not sure why you're telling me this.

[Orbitus]

Not for a flat income tax rate. I am against any income tax. Period. Consumption tax is the way to go. That way even the drug dealers pay more of a fair share of their taxes. You can have a progressive consumption tax however to the extent how much a item costs, the more % taxes you pay on it. The amount of hidden income which is never reported, is more than some would realize. But we will never see such a system here in the US because of political reasons.

So you want to still push the tax rate from the wealthy to the poor? Got it. That would be even worse than a flat tax system.