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

[UnkLegacy]

Everyone should pay the same for the same services.
Flat tax should not even be a % of your salary.
Should be a flat same amount of money for everyone. Since with that money we all receive the same services

That would crush the poor even more then a flat tax. Income taxes alone are about 1.8 trillion. With 360 million people (including those that don't pay taxes, such as babies and children), everyone would have to pay around 5.1k. If you include making up payroll taxes, we're up to 3 trillion and almost 9k per person.

[Vozzek]

Okay, that's true. What about the factor that someone who has $1000 has to be pleased with that because he doesn't want to progress any further in life (education or similar)? For example, I think it's far from realistic that manual labor worker should expect $10000 as income but he should be able to make living out of his $1000 as well.

I don't quite understand what you're saying here. I think you are saying that poor people who are lazy shouldn't expect more money. Lazy people are poor because they don't want to put the work in to advance in life. Is that accurate?

Okay, counter-question: True or False. It is possible for everyone to work hard, go to school to get their degree, get a great job and make good money. In order to convince me that poor people are poor because they are lazy, you have to convince me that if no one was lazy, then no one would be poor. I'm sincerely interested in your answer.

OR

I misread what you were trying to say and am way off base.

[ingsve]

A flat tax is definitely not fair. That's just rhetorics to fool people into making rich people richer and to screw everyone else over. What a progressive tax system does is to make sure the government gets the tax Revenue it needs without crippling the low income population who are the ones in greatest need. For a flat tax to work the tax rate would need to be perhaps 50% which you don't want to do because that would unproportionally affect the lowest income population who don't have any excess in their income. A progressive tax system should not be seen as a system that punishes high income people, instead it is a system that subsidises low income people. See the difference? By proposing a flat 15% tax what you essentially want is for the government to subsidise everyone which is untenable.

This also does not take into account all the tax benefits that are in practice only available to people with high incomes and the fact that the tax on goods and services already punish the low income population more since they don't have any margins in their income and have to spend it all every month to get by while the high income earners typically don't spend their whole income and can save and make more money from the money.

[d00mGuArD]

That would crush the poor even more then a flat tax. Income taxes alone are about 1.8 trillion. With 360 million people (including those that don't pay taxes, such as babies and children), everyone would have to pay around 5.1k. If you include making up payroll taxes, we're up to 3 trillion and almost 9k per person.

Maybe so. And? It is the only system that is fair

Imagine if you go to a restaurant and the guys there say "Ok salad for you is $15. Salad for the guys in next table is $1. But it should affect you the same overall". Bullshit.

We all receive stuff from society so we all have to pay taxes (tax is not theft - we get stuff in return)
We all receive the same stuff for our taxes = we must pay the same money for them. I don't get why anyone should think some people must pay more for the same thing
Either that, or we have to switch to a system where we receive different things from society depending on how much we pay (different schools/different hospitals etc) But I really don't think this would be good idea.

Anything else is unfair. You may argue it is necessary, I agree with that. But unfair. So we should work to change it

[Vozzek]

Maybe so. And? It is the only system that is fair

Imagine if you go to a restaurant and the guys there say "Ok salad for you is $15. Salad for the guys in next table is $1. But it should affect you the same overall". Bullshit.

We all receive stuff from society so we all have to pay taxes (tax is not theft - we get stuff in return)
We all receive the same stuff for our taxes = we must pay the same money for them. I don't get why anyone should think some people must pay more for the same thing
Either that, or we have to switch to a system where we receive different things from society depending on how much we pay (different schools/different hospitals etc) But I really don't think this would be good idea.

Anything else is unfair. You may argue it is necessary, I agree with that. But unfair. So we should work to change it

You make an assumption that we all receive the same level of service for our taxes. But that isn't even remotely true.

The business owner benefits from government services far more than the average person.

They benefit more from police to protect their assets and property.

They benefit more from fire departments to make sure their properties don't burn down.

They benefit from schools to educate their workers and their patrons.

They benefit from a military that protects the peace, allowing for trade and commerce to prosper.

Etc, etc, etc.

Rich people have more stuff that needs to be protected, and therefore, they benefit more from services.

A better example regarding salads, to use your metaphor, is that one of those guys is at McDonald's while the other is eating at a 5 Star restaurant. Yeah, one is paying more for their salad than the other. Yes, that is fair.

[tankbug]

Sure, if prices scale too. A car that costs 100k for the rich guy, will cost only 10k for the poor guy.

[Trifle]

Which is why you tax EBITA, not payroll.

Because EBITDA (and its variations) are not measures generally accepted under U.S. GAAP, the U.S. Securities and Exchange Commission requires that companies registering securities with it (and when filing its periodic reports) reconcile EBITDA to net income in order to avoid misleading investors

EBITA isn't a real thing in the accounting world, so I can't see that happening.

[hrugner]

I can't see any benefit to a flat tax beyond making it easier to understand. If you wanted to make the tax more fair, you'd need to look at how much government sponsored infrastructure each person benefited from and devise some way of paying those who don't use that infrastructure. Targeting things like frequent flights, unoccupied homes, private luxury vehicle ownership, and other such things, would allow you to only draw money from those who are expensive people to maintain. That's far more fair than everyone paying in regardless of how much of a waste they are.

[Deleted]

You know whats the best part of tax? When you want to buy a house so you work overtime to get more money, you get taxed more. You get enough money with hard work so you can buy the house. The government spends your taxmoney on useless shit, like giving out free stuff to ethnic people so they vote on him again. The next day the government buys your neighbour's house and gives it free to an ethnic family who havent worked in their entire life. Suddenly your house worth half the price .

[Dezerte]

A flat tax is not fair.

1) A business/the wealthy benefits far more from a educated & healthy workforce, infrastructure to transport goods and so on.
2) They also have more to lose (e.g. theft or fire) so rely even more on the various services that deal with those issues.
3) How much wealth remains after taxation also matters in terms of paying for other personal things (e.g. housing, food, leisure etc).

[Macaquerie]

Wealth tax is seriously flawed because you end up taxing the same wealth over and over which discourages savings. Savings is often rational and prudent behavior that a wealth tax would tap into again and again every year, which isn't really fair.

With a wealth tax, if you spend every penny you make every year, you get taxed substantially less than a person who makes the same amount but puts away 20k a year for retirement, college savings, etc. Income tax is more fair because it's a one time hit on the money you earn.

And I disagree that it's "unproductive" to save and invest your money. There's considerable debate over this, but there are a lot of people and organizations who believe that the savings rate is too low in the US. Wealth tax would make it lower.

You have to look at the distribution of savings though, and not just the overall rate. The people at the top end of the scale are saving plenty, despite the fact that there aren't really any good returns to be had anywhere, simply because they are raking in so much cash and need to find somewhere to park it. On the other hand, the average Joe is barely making enough to get by and couldn't save more even if he wanted to. The revenue from just a 1-2% wealth tax could lead to tax cuts across the board for working families, putting a lot more money in their pocket. This should far outstrip whatever disincentive to save comes from the tax itself, especially for most families with little to no net worth to begin with.

Besides, your savings already depreciate on a yearly basis due to inflation, which governments try to induce for the exact reason of encouraging more consumer spending. However, this is a sort of an imperfect method because it is based on the notion of equating the poor with debtors and the rich with creditors, which isn't always true. A wealth tax gets you to the same place but more directly.

[Logwyn]

The guy making $35k can get a second job if he wants more money

Yeah!! Make 'um work 80hours a week! Tell that to the low income scum!!!! ArrrgghhH!!!!!

[shimerra]

Besides, your savings already depreciate on a yearly basis due to inflation, which governments try to induce for the exact reason of encouraging more consumer spending. However, this is a sort of an imperfect method because it is based on the notion of equating the poor with debtors and the rich with creditors, which isn't always true. A wealth tax gets you to the same place but more directly.

Actually one of the explicit goals of the Fed is to keep inflation low. And also to maintain full employment. Inflation is and always will be a natural part of the economy and full employment actually speeds up inflation so they end up being somewhat contradictory goals. They primarily manipulate interest rates.

[Viconia]

It's fair, but not what the people want.

[Danner]

Do you believe that a government having a flat tax on its citizens is a fair way to collect tax income for the various programs and expenses of a country?

For example, a 15% flat tax rate would essentially have everyone paying something to contribute to the society in which they live.

The guy making 10k per year would pay $1,500 in taxes, and the guy making 100k per year would pay $15,000 in taxes.

The guy making more pays more in dollars, but the tax percentage is the same as the guy making 10k per year.

This again, eh?

Example	Tax Rate	Gross Income	Net income	Money/Day	Difference/Day
Poor Person	Flat - 15%	$10 000	$8 500	$23	-
Poor Person	Progressive - 0%	$10 000	$10 000	$27	+$4
Rich Person	Flat - 15%	$10 000 000	$8 500 000	$23 287	-
Rich Person	Progressive - 20%	$10 000 000	$8 000 000	$21 917	-$1370

The only thing a flat tax gains you is to take money from the poor to make tax breaks for the rich. As such, if you do the math this entire idea is nothing but a disingenuous "fuck poor people over" move.

Compare the flat tax world with progressive taxes:
The rich example person has to pay more taxes, yes. But he still has > 20k to spend daily on stuff he needs. He isn't gonna miss that extra $1370 / day.
The poor example person has to pay less taxes. That extra $4 he has to play with every day is almost a fifth of his entire money pool. And on a budget where money is this tight, that money is literally the difference between sending a kid to college or not.

But let's pretend we do taxes this way. I hope you are willing to follow through with this. Because the guy who makes 10M per year is certainly not gonna pay 1.5M in taxes in any reality I know of. Typically they always somehow end up hiring some creative accountant, and end up paying $0 in taxes. Funny how that works. In a flat tax world, there will be no tax deductions - because then it is no longer a flat tax. I take it you are perfectly happy with this?

[segara82]

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

Holy sh...
Thanks for the laugh, nearly threw me of my chair.
Do yourself (and us) the favor of reading how the Sicilian Mafia started out.

[Ghostpanther]

No because low income means you pay more of your income relative to someone who is rich. Someone who has $1000 and pays $150 in tax is more affected than someone who has $10000 and pay $1500.

This. But personally I do not like income taxes period. It is too easy to hide income or use loops holes.

[ItachiZaku]

It gets particularly silly since a flat tax does nothing to address the issues of tax breaks and exceptions, which the wealthy are far more capable of exploiting, and which is the main issue with most tax systems when you dig down into it.

I've always been in favor of a flat tax only after a massive overhaul of tax breaks. Maybe something like tax breaks can only reduce your overall taxable income by a certain %, a very small percentage at that. Maybe if it is 15% for everyone, you can bust your ass to get it down to 14%, but no way should someone making 3 million a year pay less than someone making 35K.

[Antiganon]

Do you believe that a government having a flat tax on its citizens is a fair way to collect tax income for the various programs and expenses of a country?

For example, a 15% flat tax rate would essentially have everyone paying something to contribute to the society in which they live.

The guy making 10k per year would pay $1,500 in taxes, and the guy making 100k per year would pay $15,000 in taxes.

The guy making more pays more in dollars, but the tax percentage is the same as the guy making 10k per year.

IMHO, this is the fairest way to collect tax income from a country's citizens.


Keep in mind, stealing from someone is still stealing, no matter if you vote to do so or not.

1) Taxes are not theft. They are dues, willingly paid by the citizenry in exchange for their use of the infrastructure that we consider to be a key component of modern society. Anyone who does not want to pay taxes is free to leave for a country with less or no taxes. Choosing to remain in a country with taxation is tacit consent to paying taxes.

2) Taxes should be levied on the population based on two, and only two factors:
a) The government's need for funds to provide for the basic needs of the state and its citizens.
b) The individual taxpayer's ability to pay.

A family of 4 with 2 working parents and kids not yet in school making 100k per year has significantly less ability to pay than a single person making 100k per year, or a family of 4 making 100k per year with no childcare expenses.

Let's look at some typical monthly expenses (in my area, not sure about where anyone else lives):
Rent/Mortgage - $1200 (3br house on 1/4 acre lot in decent school district)
Childcare - $1000 (2 kids, 5 days a week, 9 hours a day)
Transportation - $750 (Car payments, gas, etc)
Food - $500 (Includes things you buy in the grocery store that are not food, such as toiletries, dishwashing/laundry supplies, diapers, etc)
Utilities - $500 (Electric, heat, water, sewer, phone, TV, internet)

Those bare essentials, which assumes no debt carried other than car payments and rent/mortgage, comes to nearly $4000 per month. That's about $45k annually. Those same living expenses do not apply evenly to all three scenarios - the single person would have no childcare expense, half the expenditure on transportation, 35% the expenditure on food (would be 25%, but kids eat less than adults), and about 75% of the expenditure on utilities. The family with a stay-at-home parent would have no childcare expenses, and about 75% the expenditure on transportation, with the rest the same.

Now, let's assume a flat 25% tax (15% is way, WAY too low to be practical unless there are heavy sales/property/excise/luxury/etc taxes as well).

Family of 4 with 2 earners - 100k, less 45k expenses, less 25k taxes, leaves 30k for discretionary spending. This needs to cover clothing, any education/childcare related costs for the children (they need extra clothing/diapers/food/etc at daycare in addition to what is kept at home), healthcare expenses for two adults and two children, any home repairs or incidentals, savings for college and/or retirement, etc.
Flexible spending capability - 30k

Single person - 100k, less 25.5k expenses, less 25k taxes, leaves 49.5k for discretionary spending. This needs to cover clothing, healthcare expenses for one adult, home repairs or incidentals, savings for retirement, etc.
Flexible spending capability - 49.5k

Family of 4 with stay-at-home parent - 100k, less 33.3k expenses, less 25k taxes, leaves 41.7k for discretionary spending. Needs to cover clothing, healthcare expenses for two adults and two children, any home repairs or incidentals, savings for college and/or retirement, etc.
Flexible spending capability - 41.7k

Note that the gap between the family of 4 with two earners and the single adult is nearly 20k in flexible spending capability. That is a HUGE difference, equivalent to both wage-earning parents getting raises of over 25%.

A flat tax system could be supportive enough AND (more) equitable, but it would have to be taxed like corporate profits - revenue less expenses.

Let's take the same three examples, and instead apply a 30% flat tax on income less expenses.

Family of 4 with 2 earners - 100k, less 45k expenses. 55k taxable. 16.5k tax burden. 38.5k remaining for discretionary spending.
Single adult - 100k, less 25.5k expenses. 74.5k taxable. 22.35k tax burden. 52.15k remaining for discretionary spending.
Family of 4 with stay-at-home parent - 100k, less 33.3k expenses. 66.7k taxable. 20k tax burden. 46.7k remaining for discretionary spending.

Similar flat tax system, with an even higher rate, but notice that now the gap between the family of 4 with 2 earners and the single adult has narrowed considerably, to 13.65k. Additionally, EVERYONE took home more money, even the single person. And that is with a HIGHER tax rate.

To your other point - income equality is not an inherently bad thing. Middle class people seeing wealthy people who have the things that they want provides a motivation to work harder. The problem is the more about the degree of wealth inequality. Many wealthy people could immediately stop working, invest their savings, and live a comfortable life off the dividends and capital gains for many, many years. Middle class people have no ability to invest in a similar manner, as they do not have the disposable income or inherited wealth required to do so.

A progressive individual income tax system is the only equitable means that society has to adequately fund itself in the current economic environment.

Move to a heavily socialist economy with government funded essentials for everyone, and a flat tax is suddenly viable. Notice that those in favor of a flat tax are almost universally against the expansion of any of the social programs required for it to actually work.

It's because conservatives who favor a flat tax don't actually want equitable taxation or quality of life, they want to shit on the plates of the poor and pretend they paid for dinner.

- - - Updated - - -

You have to look at the distribution of savings though, and not just the overall rate. The people at the top end of the scale are saving plenty, despite the fact that there aren't really any good returns to be had anywhere, simply because they are raking in so much cash and need to find somewhere to park it. On the other hand, the average Joe is barely making enough to get by and couldn't save more even if he wanted to. The revenue from just a 1-2% wealth tax could lead to tax cuts across the board for working families, putting a lot more money in their pocket. This should far outstrip whatever disincentive to save comes from the tax itself, especially for most families with little to no net worth to begin with.

Besides, your savings already depreciate on a yearly basis due to inflation, which governments try to induce for the exact reason of encouraging more consumer spending. However, this is a sort of an imperfect method because it is based on the notion of equating the poor with debtors and the rich with creditors, which isn't always true. A wealth tax gets you to the same place but more directly.

Savings, meaning dumping cash into a savings account, is a poor investment. Since deflation isn't a thing in any developed economy, money saved for later will always have equal or less spending power than money spent today.

When people talk about saving money, what they should really be talking about is building equity. Putting $1k a month into a savings account does nothing for you or the economy other than provide a rainy day fund if shit hits the fan. Putting $1k a month into a mortgage builds equity in an asset that will (hopefully) appreciate in value.

[Machismo]

Holy sh...
Thanks for the laugh, nearly threw me of my chair.
Do yourself (and us) the favor of reading how the Sicilian Mafia started out.

I'm fine with a mafia. Of course, the mafia families often worked with independent third parties in order to maintain relations.