Do you believe a FLAT TAX is Fair? Why / Why not?

[Machismo]

Not really. Plenty of honest people are stuck in the poverty trap. You plop them right into say my own economic upbringing and change nothing else about them and odds are they'd be quite successful. Plop me in theirs and chances are good I might not have gotten out. Where you start plays a huge role in predicting where you end up before your personal ability even becomes a factor.

And let's say you're not the guy lobbying the government so you can hide money in offshore accounts or lower the capital gains tax another few percent while also capping the income that can be taxed for social security. You just happen to be the guy on the cusp of that income bracket. You still directly benefit from it even though you weren't the one greasing the wheels.



Yeah that seems like some dreamworld ignorant of reality where such organizations are either not accountable to the people and basically become a defacto authoritarian regime or it essentially evolves into what is government in every real sense just now it's called something different.

You act is if the current model is actually accountable to the people. In my model, the third party would be accountable to the two parties who are paying them.

[Yvaelle]

who gives a shit if it's fair, is it even close to being viable? that, I really doubt.

It's definitely not. Think about the long term impacts of a flat tax policy.

Scenario: Let's break it down by 3 people, representing the important tax brackets.

Annie: makes $3M/year (mostly capital gains), spends $500K/year in expenses, invests the remainder (more capital assets)
Bob: makes $300K/year (mostly income), spends $150K/year in expenses, invests the remainder (some capital gains)
Carla: makes $30K/year, spends $30K/year

The minimum cost of living in this area is $30K/year, if it were any higher, Carla would have to move away to somewhere cheaper - but since she's making exactly $30K/year, she's just getting by, but she saves nothing.

In a progressive tax system, Carla pays no taxes, because she can't afford to pay taxes, and even if she did, the progressive tax system would need to begin supporting Carla to compensate her below-cost-of-living income.

Let's say the tax burden of the society requires $1M/year for services:



So with a flat tax, to pay for the current services, you would need to charge everyone 30%. Or, with a progressive tax, you have a top rate of 31%, just a 1% increase on the top rate, allows you to drop the second rate by 8%, and drop the bottom rate by 20%. Or, for a 2% increase on the top, you can drop the second rate by 17%, and eliminate taxes on the bottom.

Criticism & Rebuttal: Now, in reality, there are a lot more Carla's in the world than Annie's - but the degree of wealth inequality between the real world's Annie's is about that steep despite that Carla's outnumber Annie's - so we could slap on a hundred Carla's per Annie's, but then we would also need to adjust that the super-elite of the world don't have $3M, they make billions.


Impact:Now, look at the impact these tax systems have on these three people. Annie still makes $2M/year after taxes, she still lives the fanciest lifestyle at $500K/year, and she still invests $1.5M year. She does that pretty much for all 3 tax systems, whether flat or progressive, because she has all the real money.

Bob with a 30% flat tax pays $90K in taxes, which is more than the $39K he pays in a progressive tax system. The progressive system actually works better for Bob, under ideal circumstances.

Carla pays $9K of her $30K under a flat tax. Carla is probably dead. All the hundreds of Carla's per Annie's. Loansharks ate them all. Or, in a progressive system, Carla either pays $3K, or $0. If she pays $3K, she has to quit her job and move somewhere cheaper than $30K/year cost of living, because $30K/year is her minimum cost of living in her area. Or, in the Progressive 2 variant, she pays $0, and can continue to work/live in her area.

So why do some rich people often want a flat tax? Because they don't plan on paying it. Whenever proponents of a flat tax, like some US Republicans, put a plan forth - the net result is that the tax rate is something stupidly low, like 10-15%: not the 30%+ it would need to be in reality. Where does the remainder go? Cutting government programs to reduce the annual tax requirement of the government, and massive government deficit (debt in the long-term).

Any time you see someone propose a flat tax of less than 30% in a developed country, just look at those two impacts: what is the tax burden they are assuming they need to cover, and how much tax revenue are they expecting to generate to cover it (always a negative ratio: massive added government deficit). A novel recent variant is the, "But the economy will grow by 30% as a result of this change in tax policy, so we'll collect more taxes!": total bullshit with no basis in economic theory.

Flat tax proposals almost always include a loophole for the rich to not pay the flat tax. Often it's that the flat tax will only be on income, not capital gains (rich people don't have income, they make their money off capital gains). Or it's that there will be tax havens where the rich can move their money overseas (or funnel it through a delaware corporation, etc).

Some rich people are not in favor of flat taxes, because they recognize that total economic collapse is bad for them in the long term.

[Krastyn]

I should have been more specific about an "average earner" I was thinking $50k + at least for a household. The current tiered system favors families making less since you can drop your $50k income to (lets say married couple, 2 kids) gets you $16200 ($4050 x 4) which brings you down quite a bit and that's not even counting home write offs.

I've always thought of homeownership as the biggest barrier for financial relief. The more expensive area you live in, the harder it is to get through the barrier.

I'm only elaborating on how a true flat tax doesn't make any sense.

That does drop your writeoffs, but even under the proposed system, Two adults with two kids would have $60,000 in deductions (assuming both work).

I agree that home ownership the biggest barrier for financial relief. I also think it is the biggest burden financially. People buy too soon, or buy that "starter home" to upgrade 5 years later.

I believe a true flat tax makes as much sense as a true progressive tax does. Neither exist, and likely never will. I do prefer a system closer to a true flat tax, than a true progressive tax though.

[Vyuvarax]

Why is it that the subject of "flat tax" brings everyone out of the woodwork to say how horrible it is to poor people? While a flat tax rate actually would be the most fair TAXING SYSTEM, it is not necessarily fair for the low-income folks because the COST OF GOODS never changes, thus they pay more of their income for buying the necessities of life than someone who makes more money does.

That being said, however, I absolutely HATE the progressive mindset that the rich should pay more because they have more, or the rich don't deserve all the money they make, or any of that crap. Because it's all just crap. They earned that money...go ahead and enjoy it. In America, you have the freedom to go to school, learn a trade or business skill, create a company or product, sell it online or in a brick-n-mortar shop, and get rich or stay middle class or fail and do a bankruptcy. This is NOT a zero-sum game folks!

There is NO GUARANTEE that you will be rich or even have enough money to survive, that is all on YOU. The only guarantee is that you have the EXPRESS RIGHT to TRY. People need to take more personal responsibility imho, too many silver-spoon kids nowadays think the world owes them a living. (Yes, you, go look in a mirror...)

Trump sure earned those millions he inherited, right?

[Zarc]

Problem with modern capitalism is that the capital tends to stack up for the selected individuals.
People who have lots of capital have easier life and have more opportunities to invest that money.
In worst case scenario, rich people end up owning all the property, and rig the system against the poor.
Now chrony-capitalism aside, there is always the risk factor though.

One example of this may be Chinese buying all the property in Vancouver. They buy the apartments and yet they pay 0% in taxes because they don't have to work anymore for living.
I think for argument sake, middle-class tax reliefs are a good thing to pursue.
Rich person can choose not to work and can effectively strategize handling his assets, but middle-class person is forced to work.

Sigh. So annoying. Why would you quote a snippet of my post, put it in bold, and begin your reply in a way that makes no sense considering the context it was placed in?

What you describe is not the "problem with modern capitalism". What you describe is a problem of a form of capitalism. As I was saying...

...there are many forms of capitalism. Denial of this fact by some right-wingers has contributed to an unfortunate situation where many more individuals than otherwise would favors that capitalism be replaced with socialism as an economic system (noting that socialism is both the name of an economic system and a family of political ideologies, some of which wants to have socialism as an economic system and some who do not). Most of these left-leaning folks are, ironically, misinformed by right-wing misinformation. Personally I advocate Nordic or Rhine capitalism, also known as the social market economy, or the mixed economy, as advocated by both Social Democrats, Social Liberals, Christian Democrats and others, over the Laissez-faire, and in my view deeply flawed, form of capitalism.

[Total Crica]

Where you start plays a huge role.

Not once did I deny that. Which part of "I never said I was against giving talented poor people the opportunity to become skilled" was lost on you?

[Uoyredrum]

It's an unethical idea brought about by unethical people, so no.

[Gaidax]

Trump sure earned those millions he inherited, right?

TBH, while I share a notion that the guy is scum and this whole presidency is a charade, he did a lot with the money he got, far more than would some random retard getting inheritance would do.

[shimerra]

Money can buy you time.
In this way private education is fine. It's the insider clubs that are the issue.
i.e "We'll give your son the job title once he gets his economics degree". So the son graduates with 2.0 GPA, gets the job, while 3.9 GPA graduate won't get the job.
You don't always hit economic ruin, but money may be mis-spent. Mis-spent money provides a lot of jobs.

With excessive amounts of cash, you can have excessive spending. That's one argument for flat tax, but it also depends a lot how that money was earned and was that money taxed already while being earned, or did you inherit it.
Some of that cash will be income distributed. The argument is whether it's better to collect that cash passively (taxes) or by active spending.
Active spending seems to cut the middle-man. It would also favour people who work and run businessess.

We need the bottom to have money. If they don't our consumer driven economy crumples. Yeah Trump might buy a golden toilet or a jet but it's the other 329million of us that keep the wheels going buying cars, houses, going to the hospital, etc. It's also the fundamental reason why trickle down economics is straight up bullshit retardation. To enjoy the type of services we do today, or even a bastardized version of it, there's no system where a flat tax doesn't ruin it for hundreds of millions of people crippling demand.

There is no sensible economic justification for a flat tax. It's an idiotic conservative dream world designed that only exists because of a personal delusion it'll reduce their personal tax burden or stop the ebul gubberment from something.

Not once did I deny that. Which part of "I never said I was against giving talented poor people the opportunity to become skilled" was lost on you?

The part where you're hyper focused on this magical skill factor. Your approach appears to be the welfare equivalent of it's worth not helping 20 people who actually need food stamps to make sure 1 person who doesn't really need it can't cheat the system.

[Theodarzna]

One can have a private third party to enforce such things. It does not need to be the government.

That third party would be a defacto government. The third party would have to have the same power as the State who revile to ensure your happy go-lucky world of impersonal shallow transactional relationships remain safe. Without granting that third party State-level powers of coercion that third party ALSO will be subject to the same problems as the First and Second. No matter how you fanangle it, you cannot avoid that problem.

Two people want to make a have a transactional interaction but both want to be sure they will be safe and secure, how do you convince a third party to take on the risks of enforcing that contract and ensuring a safe and secure transactional interaction without giving them State like authority over you? Because if its "I pay the man!" then you have now created a need for a Fourth Party to ensure the Third Party behaves, and then a Fifth Party, and a Sixth and so on.

[Total Crica]

as if the current model is actually accountable to the people

It isn't. Only the talented and skilled people have access to the firepower that protect "the people". If all the talented and skilled people decided, for whatever reason, to use all that firepower on "the people" they are protecting, the people wouldn't stand a chance.

And that is the same under ANY model where the majority of the people neither have the talent nor the skill to access said firepower.

[Machismo]

That third party would be a defacto government. The third party would have to have the same power as the State who revile to ensure your happy go-lucky world of impersonal shallow transactional relationships remain safe. Without granting that third party State-level powers of coercion that third party ALSO will be subject to the same problems as the First and Second. No matter how you fanangle it, you cannot avoid that problem.

Two people want to make a have a transactional interaction but both want to be sure they will be safe and secure, how do you convince a third party to take on the risks of enforcing that contract and ensuring a safe and secure transactional interaction without giving them State like authority over you? Because if its "I pay the man!" then you have now created a need for a Fourth Party to ensure the Third Party behaves, and then a Fifth Party, and a Sixth and so on.

I'm not opposed to government, I simply prefer it be voluntary.

[Ivanstone]

TBH, while I share a notion that the guy is scum and this whole presidency is a charade, he did a lot with the money he got, far more than would some random retard getting inheritance would do.

He actually earned less. If someone with the same inheritance invested in simple index stocks and masturbated for 30 years, that person would be richer than Trump.

[Theodarzna]

I'm not opposed to government, I simply prefer it be voluntary.

Then you are opposed to government, since the way you want to live (Mainly a Capitalist world of easy transactional relationships) cannot exist without that big bad bully to socialize and condition people into obedient Capitalists who play nicely and don't club you over the head for being skeevy or any other slight.

So you are either going to have to accept and obey since its the only entity that makes your system work or please do reject it, but you won't have Capitalism anymore.

[Total Crica]

He actually earned less. If someone with the same inheritance invested in simple index stocks and masturbated for 30 years, that person would be richer than Trump.

Sure, hind-sight is 20/20. There is no guarantee that anyone who does it from now on will be.

[Machismo]

Then you are opposed to government, since the way you want to live (Mainly a Capitalist world of easy transactional relationships) cannot exist without that big bad bully to socialize and condition people into obedient Capitalists who play nicely and don't club you over the head for being skeevy or any other slight.

So you are either going to have to accept and obey since its the only entity that makes your system work or please do reject it, but you won't have Capitalism anymore.

No, I'm not opposed to government, as I have stated many times. I simply prefer it be one that is joined voluntarily.

[Citizen T]

What do I have to be jealous of? I live in a nice apartment in downtown Chicago and I only have a small amount of student debt I accrued with my masters degree, my bachelors was entirely debt free thanks to smart investments by my parents. Economically speaking I lived the middle class wet dream. The fact that you think i'm jealous or that the "Race" was the significant part of the metaphor just means you're not intelligent enough to understand the actual point I was making.

The difference between me and you is I understand the fact that I started out at a relatively higher place doesn't magically make me more awesome than the poor kid who couldn't get out of the ghetto, so to speak. My family's wealth and education directly correlated into their ability to provide that for me and invest in my education. Not every kid has that and the fact that I did increased my probability of being successful later in life. Pulling yourself up by your own boot straps is an idiotic line that does nothing to help anyone. Some people pull their asses off and still can't make it.



Which again, people like you who don't even understand the basics of the economy or capitalism in general sure like to talk alot about it.

You're the one that used a race as your example. Races have winners and losers and you were trying to prevent that by handicapping the winners. Seems kind of jealous to me.

I started out pretty much dirt poor. I served in the military to get myself out of the life of poverty I had. My brothers both went to college while living at home which was better off not having to feed/clothe/supply me. I educated myself -not via college but by reading and hard work - and applied myself working through various crappy jobs until I got a job doing what I love. I've been unemployed supporting a family for 18 months at one point doing whatever I had to do provide for them. I didn't start out better off than very many but certainly was able to make a good life for my family and self. Why should I be punished by higher tax rate? Now I have no disrespect for your situation as I wish everyone could be as well off, but success should not be punished.

[Vyuvarax]

TBH, while I share a notion that the guy is scum and this whole presidency is a charade, he did a lot with the money he got, far more than would some random retard getting inheritance would do.

Like spending it all and going in to massive debt? Sounds like random retard to me.

[Deleted]

yeah, im all for it.

http://uk.reuters.com/video/2017/03/...eoId=371314206

[Theodarzna]

No, I'm not opposed to government, as I have stated many times. I simply prefer it be one that is joined voluntarily.

What you say is nonsense though. Implicit in making scaffolding the whole system will be a coercive system that can enforce, socially condition and impress compliance upon people. Without that you have no means of safely carrying on strictly transactional relationships with just "I pay you to do X or to claim ownership over Y."

Without the coercive state you'll find it just simply won't create the Capitalist utopia you wanted.