Flat tax support, arguments for or against it?

[Shadowferal]

The last time any would-be president contender talked about "flat tax" was Sam Brownback. He was taken seriously until he said "capital gains" would be exempt. Then he was just laughed at.

[Independent voter]

There is a "sweet spot" for taxes and it's a dollar amount. Ask someone or a corporation to pay less than the sweet spot and you're losing money. Ask them to pay more than the sweet spot and they will find ways not to pay, moving business off shore, not trying for that raise, the raise putting them in a higher tax bracket.

So our goal as tax collectors is to find the "sweet spot" and ask individuals and corporations to cough up that amount.

[Deleted]

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?

Simple:

1. Do not earn an income.
2. If you do, spread it over several virtual entities so that each one is in Tier 0.

[Shadowferal]

There is a "sweet spot" for taxes and it's a dollar amount. Ask someone or a corporation to pay less than the sweet spot and you're losing money. Ask them to pay more than the sweet spot and they will find ways not to pay, moving business off shore, not trying for that raise, the raise putting them in a higher tax bracket.

So our goal as tax collectors is to find the "sweet spot" and ask individuals and corporations to cough up that amount.

Once upon a time businesses couldn't go off-shore without paying a severe penalty.
They don't want to pay their share of taxes? Fine. Get the fuck out. You no longer have access to the greatest market on the planet. Another business will come along as they do to replace you and scoop up the unemployed you had to leave behind.

[unbound]

Flat tax doesn't work because it ignores reality.

There is a minimum required to pay for basic necessities such as shelter and food. Furthermore, for many non-necessities, there are realistic upper limits that the richest will easily exceed.

Let's approach this with some math.

Take a person making a low wage, say $10/hr and working full time. In a year, they will make $20,800 assuming the person never gets sick. Rent in my area averages at around $1,600/mo, but let's say the person manages to find something decent for $1,300/mo in walking distance to a job. Utilities are about $100/mo, and food will cost a minimum of $200/mo. Add it all up, and you are spending $1,500/mo just for the bare minimum to exist. That comes out to $19,200 in a year. So a flat tax of even 10% brings the person's income down to $18,720, or $480 short of that minimum standard.

Again, that is just for the bare minimum. There was no money for even going to McDonalds, much less a sit down restaurant. No money for games. No money for internet. No money for a pet. Note that I didn't even use minimum wage, and I used probably unrealistically low numbers for those minimums (you really don't want to see what a $1,300/mo apartment looks like around here...or, if you decide to get something that price in the suburbs, you have to add bus/metro/car costs; and I don't think you can really get sufficient groceries for $300/mo in this area without seriously compromising your health).

Take the top end instead with a person making $131 million per year (John Hammergren if you are curious). He probably owns a $20 million mansion which he could buy with cash, but let's assume he has a mortgage which would come out to $94,563 per month or $1.13 million per year. He probably drives something like a Bentley Continental Flying Spur ($300,000) and, again, assuming a loan, would come out to $5,405 per month or $64.9 thousand per year. I would assume pretty high end groceries, so let's allow for $10k/mo or $120k/year. Utilities are probably not cheap on a mansion, so let's allow for $2k/mo or $24k/year. Basically, here are the same minimums as the poor person. If we assume, say, 30% taxes for this person, it leaves $91.7 million per year...take away the expenses, and the person is left with $90.4 million per year.

You can buy all kinds of games, internet, pets, eating out, etc, etc, etc, etc for $90 million per year. And I didn't even apply the same flat tax for both scenarios. Heck, you could apply a flat 70% tax to Mr. Hammergren, and he still has almost $38 million per year to play with.

We can do something similar for what passes as middle class as well. Average income in the US is $52k. Average house price is $189k, or $10,728/year mortgage. Average car costs $33,500, or $7,248/year. Average groceries cost $300/mo, or $3,600/year. Average utilities are around $200/mo, or $2,400/year. If we assume, say, 20% taxes for this person, it leaves $41.6k per year...take away the expenses, and the person is left with $17.6k per year. This allows for going out to eat, having a pet, getting internet, and buying some games within reason. If the flat tax was higher, the impact becomes increasingly harsh.

Here's the kicker. If the middle class person decides to go on a very nice date at, say, Morton's...he will end up dropping $250 or more most likely. He can't afford to do that very often, or he will rapidly run out of money...going more than once per week will drain all his excess money beyond the necessities. If the rich person decides to do the same at Morton's every day of the year, it doesn't even put a dent in his fun money...it's pretty much a rounding error (0.1% of his fun money under 30% flat tax). Heck, if the middle class person goes to McDonald's every day of the year, he will have spent nearly 15% of his fun money. Think about that difference.

This is why a progressive tax system is the most fair. A flat tax only seems fair if you don't think about it.

[alexw]

There is a "sweet spot" for taxes and it's a dollar amount. Ask someone or a corporation to pay less than the sweet spot and you're losing money. Ask them to pay more than the sweet spot and they will find ways not to pay, moving business off shore, not trying for that raise, the raise putting them in a higher tax bracket.

So our goal as tax collectors is to find the "sweet spot" and ask individuals and corporations to cough up that amount.

The sweet spot, the revenue maximizing rate, is between 60 and 80%.

[Deleted]

It's not that your views are different. It's that every single justification you have provided for them is factually incorrect. And with the above, you're simply stating that you don't care what the facts are, because your blind faith in your ideology will trump the reality, in your view.

And that's pretty much exactly the problem.

How are they incorrect exactly? Or are you really unable to grasp the idea that people are individuals and should be able to make their own choices.. at least if they dont endanger others. And I mean directly, as in physically attacking them or taking their property not metaphorically.. like being offensive or mean. This means the power or the goverment should be minimal and whats good for the majority becomes completely irrelevant unless the continuation of that way of life is threatened such as foreign invasion or I dont know, impending Armageddon.

Its common sense that I dont think needs to be proven that lower taxes and smaller government involvement in the lives of the citizens means more freedom. And yes, I also mean the freedom to make bad choices and bearing the consequences of those choices.

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Flat tax doesn't work because it ignores reality.

https://en.wikipedia.org/wiki/Flat_tax

A list of countries that have a flat tax system. Obviously they arent imaginary.

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This is just so cringe-worthy, objectively false by any metric that measures prosperity and completely ignorant of the history.

I am sorry.

Overall prosperity is meaningless though. Say 10% would be filthy rich, the innovators, intellectuals, people with ambitions and 50% would live in poverty, it would still be preferable to something where everyone is average.

[NineSpine]

How are they incorrect exactly? Or are you really unable to grasp the idea that people are individuals and should be able to make their own choices.. at least if they dont endanger others. And I mean directly, as in physically attacking them or taking their property not metaphorically.. like being offensive or mean. This means the power or the goverment should be minimal and whats good for the majority becomes completely irrelevant unless the continuation of that way of life is threatened such as foreign invasion or I dont know, impending Armageddon.

Its common sense that I dont think needs to be proven that lower taxes and smaller government involvement in the lives of the citizens means more freedom. And yes, I also mean the freedom to make bad choices and bearing the consequences of those choices.

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https://en.wikipedia.org/wiki/Flat_tax

A list of countries that have a flat tax system. Obviously they arent imaginary.

A list of countries that are almost entirely non-advanced nations doesn't really make a very strong argument.

There is a fundamental problem with your argument. You are assuming that the system you like is "minimal" government, but it isn't. All economic systems are artificial creations of the government, in their entirety. There is no such thing as a system with more government or less government. Economic systems only exist because a government creates a series of rules and then enforces those rules through force. A laissez-faire economy is just as much a creation of government as a purely socialist system. They are both 100% government created and both 100% government enforced. Because of this, any economic system that benefits the few at the expense of the many is fundamentally immoral and an abuse of government power.

To put it simply: You are asking some people to live in squalor and starve in order to make your economic system work, and you want the government to enforce that economic system through threat of violence. Then, you turn around and say it is wrong for the government to enforce any other economic system. It's bogus bullshit.

[alexw]

How are they incorrect exactly? Or are you really unable to grasp the idea that people are individuals and should be able to make their own choices.. at least if they dont endanger others. And I mean directly, as in physically attacking them or taking their property not metaphorically.. like being offensive or mean. This means the power or the goverment should be minimal and whats good for the majority becomes completely irrelevant unless the continuation of that way of life is threatened such as foreign invasion or I dont know, impending Armageddon.

Its common sense that I dont think needs to be proven that lower taxes and smaller government involvement in the lives of the citizens means more freedom. And yes, I also mean the freedom to make bad choices and bearing the consequences of those choices.

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https://en.wikipedia.org/wiki/Flat_tax

A list of countries that have a flat tax system. Obviously they arent imaginary.

No its not common sense. If someone cannot afford to live do you think they have much freedom? Ask someone working 3 jobs and all hours of the day to barely scrape by if they have much freedom. Ask them if they have the freedom to go get an education and better themselves. Ask them if they have the freedom to take a day off work because their kid is sick.

But of course we know all the answers to these sorts of questions. Its why workers were willing to get killed in the early 1900's to fight the owners of capital so as to expand the powers of government in their favor, and thousands of them did die but it was worth it.

[NineSpine]

Overall prosperity is meaningless though. Say 10% would be filthy rich, the innovators, intellectuals, people with ambitions and 50% would live in poverty, it would still be preferable to something where everyone is average.

Overall prosperity is the only metric which it is moral for government to use as a basis for action. Government using violence to enforce an economic system that benefits the few at the expense of the many is morally repugnant.

[Deleted]

A list of countries that are almost entirely non-advanced nations doesn't really make a very strong argument.

There is a fundamental problem with your argument. You are assuming that the system you like is "minimal" government, but it isn't. All economic systems are artificial creations of the government, in their entirety. There is no such thing as a system with more government or less government. Economic systems only exist because a government creates a series of rules and then enforces those rules through force. A laissez-faire economy is just as much a creation of government as a purely socialist system. They are both 100% government created and both 100% government enforced. Because of this, any economic system that benefits the few at the expense of the many is fundamentally immoral and an abuse of government power.

To put it simply: You are asking some people to live in squalor and starve in order to make your economic system work, and you want the government to enforce that economic system through threat of violence. Then, you turn around and say it is wrong for the government to enforce any other economic system. It's bogus bullshit.

I disagree. Any economic system that freeloaders to benefit from the success of others is immoral and disgusting. No one deserves anything so as long as everyone has equal rights.. and we have, whats the problem? Some fairy godmother doesnt just magically make some people rich and leave others poor, the wealthy are wealthy for a reason and that reason is usually being able to do something or produce something in demand that other people cant.

[NineSpine]

No its not common sense. If someone cannot afford to live do you think they have much freedom? Ask someone working 3 jobs and all hours of the day to barely scrape by if they have much freedom. Ask them if they have the freedom to go get an education and better themselves. Ask them if they have the freedom to take a day off work because their kid is sick.

But of course we know all the answers to these sorts of questions. Its why workers were willing to get killed in the early 1900's to fight the owners of capital so as to expand the powers of government in their favor, and thousands of them did die but it was worth it.

He doesn't have the same definition of "freedom" of us. He has his own definition, which is "Living under my preferred economic system". These libertarian arguments are all a bunch of circular logic.

[Acidbaron]

Flat tax means nobody wins in the long run, not even the higher class as that class is dependent on low to middle class consumption to sustain their growth.

We already invented credit cards last time around to solve this problem can't invent another one.

[Deleted]

I favour it.

Right now im in the highest taks bracket (52%) and it stinks to see that much of your money go to the state.

[Deleted]

No its not common sense. If someone cannot afford to live do you think they have much freedom? Ask someone working 3 jobs and all hours of the day to barely scrape by if they have much freedom. Ask them if they have the freedom to go get an education and better themselves. Ask them if they have the freedom to take a day off work because their kid is sick.

But of course we know all the answers to these sorts of questions. Its why workers were willing to get killed in the early 1900's to fight the owners of capital so as to expand the powers of government in their favor, and thousands of them did die but it was worth it.

Why? Why does this person work 3 jobs instead of starting hes or her own business or doing whatever made the people they want to leech off rich?

[NineSpine]

I disagree. Any economic system that freeloaders to benefit from the success of others is immoral and disgusting. No one deserves anything so as long as everyone has equal rights.. and we have, whats the problem? Some fairy godmother doesnt just magically make some people rich and leave others poor, the wealthy are wealthy for a reason and that reason is usually being able to do something or produce something in demand that other people cant.

You are arguing that it is moral for some people to live in squalor and starve to make your economic system work, but it is immoral for a wealthy person to be forced to live a slightly less opulent life to make a different economic system work. Obviously, that makes no sense. Minor individual sacrifice cannot be immoral if major individual sacrifice is moral. You root all this in totally circular logic: You are saying that your economic system is moral because the people that reap the rewards of it deserve it, because they are successful in your economic system. If I invent a sport where I always win, I can't appeal to my status as the winner to validate the sport.

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Why? Why does this person work 3 jobs instead of starting hes or her own business or doing whatever made the people they want to leech off rich?

Because we already have an economic system where being poor is a crippling financial burden that limits options, and that's a problem you seek to make worse. For example, wealthier people can afford to buy things in bulk and get cheap loans, and they can afford to go without health insurance for a time, allowing them to more easily start businesses. These are not luxuries afforded to poor people.

[Deleted]

You are arguing that it is moral for some people to live in squalor and starve to make your economic system work, but it is immoral for a wealthy person to be forced to live a slightly less opulent life to make a different economic system work. Obviously, that makes no sense. Minor individual sacrifice cannot be immoral if major individual sacrifice is moral. You root all this in totally circular logic: You are saying that your economic system is moral because the people that reap the rewards of it deserve it, because they are successful in your economic system. If I invent a sport where I always win, I can't appeal to my status as the winner to validate the sport.

Yes, one private citizens problems arent another private citizens problems. As I said before, since the rich people arent responsible for those people being poor, its also not their responsibility to fix the problem.

[NineSpine]

Yes, one private citizens problems arent another private citizens problems. As I said before, since the rich people arent responsible for those people being poor, its also not their responsibility to fix the problem.

The economic system isn't private. It is a government creation enforced through government violence.

[Rafoel]

Why are we discussing this? Everybody want to pay less. Rich people want flat tax, as they would pay less. Poor people want scaling tax, as they would pay less.

I support flat tax, for obvious reasons.

[NineSpine]

Why are we discussing this? Everybody want to pay less. Rich people want flat tax, as they would pay less. Poor people want scaling tax, as they would pay less.

I support flat tax, for obvious reasons.

The only reason to support a flat tax is believing that you don't need demand for an economy to work.