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  #51  
Old 05-27-2011, 07:51 AM
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Or tell Congress to change the tax laws. I wonder which one poor voters might find more attainable. There are a lot of them, you know.
I guess you missed my point, as did others.

The point is, there's the same set of tax rules for everyone, but you have to be rich to take advantage of some of the rules. Lemur is crying about the McDonalds worker who can't take advantage of dividend income tax breaks; notwithstanding the fact that I agree that dividend income shouldn't be taxed at advantaged rates.

By the way, how much income tax is that McDonalds worker paying, anyway, Lemur?
  #52  
Old 05-27-2011, 08:15 AM
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The point is, there's the same set of tax rules for everyone, but you have to be rich to take advantage of some of the rules.
"The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread. " --Anatole France
  #53  
Old 05-27-2011, 08:42 AM
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I would note that currently the tax rates are the same for everyone as well, isn't it? Everyone is taxed the same amount for each bracket. Some people just reach the higher brackets.

A guy making 100k and a guy making 30k are charged the same rate on the first 30k. I honestly think most flat-taxers simply don't understand that.

Last edited by Lobohan; 05-27-2011 at 08:47 AM.
  #54  
Old 05-27-2011, 08:48 AM
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By the way, how much income tax is that McDonalds worker paying, anyway, Lemur?
What is the fascination with comparing the relative levels of one type of taxation for one level of the government as proof that certain segments of society don't carry their weight? Every level of government is necessary for the successful management of this country, and they are funded by a number of different types of taxes.

Once you factor in ALL taxes to fund ALL government it's a hell of a lot flatter than the federal income tax alone. It's basically, the dirt poor pay somewhat less than the poor/middle/wealthy who pay somewhat less than the really wealthy.

Flatten out one tax rate for one segment of government and it will rapidly become, dirt poor pay somewhat more than the poor/middle/wealthy who pay somewhat more than the really wealthy.

Go that way if you want, but we'll be talking revolution long before we talk about a balanced budget.
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Old 05-27-2011, 08:56 AM
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What is the fascination with comparing the relative levels of one type of taxation for one level of the government as proof that certain segments of society don't carry their weight? Every level of government is necessary for the successful management of this country, and they are funded by a number of different types of taxes.

Once you factor in ALL taxes to fund ALL government it's a hell of a lot flatter than the federal income tax alone. It's basically, the dirt poor pay somewhat less than the poor/middle/wealthy who pay somewhat less than the really wealthy.

Flatten out one tax rate for one segment of government and it will rapidly become, dirt poor pay somewhat more than the poor/middle/wealthy who pay somewhat more than the really wealthy.

Go that way if you want, but we'll be talking revolution long before we talk about a balanced budget.
Maybe so, but Col Mustard in his OP talked about income tax in the title of the thread, so I've tried to focus on that.

Not sure what you mean by 'levels of government'.
  #56  
Old 05-27-2011, 09:11 AM
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Federal, State, Local. Three levels of government funded different ways. State and Local are hard to avoid and are much flatter than Federal, even regressive at times. While I appreciate following the OP's lead, he is misguided in focusing on Federal Income Tax alone, as are all the folks complaining these days about free riding poor and illegal immigrants. Those people pay taxes, even though they have little to begin with.
  #57  
Old 05-27-2011, 12:22 PM
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By the way, how much income tax is that McDonalds worker paying, anyway, Lemur?
The term you're looking for is lucky duckies.

The Wall Street Journal wrote some ill-advised editorials in 2002 and 2003. They were talking about tax laws and described how a person earning $12,000 a year would pay a very low tax rate and referred to such a person as a "lucky duckie" because his taxes were so low.

Their intent was to generate sympathy for the people (such as their readers) who had to pay higher tax rates. But it blew up in their face. It turned out there was not a lot of popular support for rich people whining about how other people are too poor to owe as much taxes as they did.
  #58  
Old 05-27-2011, 12:46 PM
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The term you're looking for is lucky duckies.

The Wall Street Journal wrote some ill-advised editorials in 2002 and 2003. They were talking about tax laws and described how a person earning $12,000 a year would pay a very low tax rate and referred to such a person as a "lucky duckie" because his taxes were so low.

Their intent was to generate sympathy for the people (such as their readers) who had to pay higher tax rates. But it blew up in their face. It turned out there was not a lot of popular support for rich people whining about how other people are too poor to owe as much taxes as they did.
No, I was responding to Lemur's foolishness, with regard to the topic of the OP. Not threadjacking, and not trying to generate any sympathy for sure. Let's look at what Lemur said, in his rant against advantaged-tax policies for dividends

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So why can't the kid working at a McDonalds structure his income as McDonalds dividends? Because there's one set of tax rules for the rich, and another for everyone else, of course.
Since we're only talking about income taxes in the OP's title, my question is a fair one: how much tax is that McDonalds kid paying? Answer of course: probably none. In fact, depending on circumstances, he may very well be getting money back through the EITC. Yet the eternally aggrieved among the liberati and class warriors on this board always think the rich are getting away with murder, and not paying their 'fair share'.
  #59  
Old 05-27-2011, 01:23 PM
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"The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread. " --Anatole France
I was thinking of that quote since the beginning of the thread, and couldn't remember the precise wording. Well done.
  #60  
Old 05-27-2011, 01:30 PM
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Since we're only talking about income taxes in the OP's title, my question is a fair one: how much tax is that McDonalds kid paying? Answer of course: probably none.
My question is a fair one as well: What relevance does a person's federal income tax rate have when it is only one of many sources of government funding?
  #61  
Old 05-27-2011, 02:24 PM
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Maybe I'm not grasping your idea. But aren't you basically describing the existing tax rate system?

A person in the 35% bracket doesn't pay 35% of all of his income. He pays 35% of his income above $373,651. His income below $373,651 is taxed at a lower rate.
Yes and no.
While this system is progressive similar to ours, it is greatly simplified by excluding deductions, exemptions etc. Everyone making the same amount would pay the exact same tax which could be calculated within seconds. Unless you are hiding income, there would be little opportunity for tax fraud or excessively awesome tax planning necessitating AMT.
  #62  
Old 05-27-2011, 02:34 PM
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Since we're only talking about income taxes in the OP's title, my question is a fair one: how much tax is that McDonalds kid paying? Answer of course: probably none. In fact, depending on circumstances, he may very well be getting money back through the EITC. Yet the eternally aggrieved among the liberati and class warriors on this board always think the rich are getting away with murder, and not paying their 'fair share'.
That's pretty much a text-book example of what I was talking about. You're acting like a McDonalds worker is somehow privileged because he's too poor to pay a lot of income tax.

It's foolish to say that McDonalds working isn't paying any taxes. Of course he is. What do you think happens when he goes to the store? He tells them, "Don't charge me sales tax. I'm poor."?

The rich aren't paying their fair share. The means by which the wealthy earn money are taxed at lower rates than the means by which poor people earn money. A point that's been repeatedly in this thread and which you keep ignoring.
  #63  
Old 05-27-2011, 03:43 PM
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Yes and no.
While this system is progressive similar to ours, it is greatly simplified by excluding deductions, exemptions etc. Everyone making the same amount would pay the exact same tax which could be calculated within seconds. Unless you are hiding income, there would be little opportunity for tax fraud or excessively awesome tax planning necessitating AMT.
That is the way it works now. Everybody who makes the same amount pays the same amount of federal income tax. But how much you make is the tricky part. It may take an army of accountants to figure out exactly how much money you made during a year.

If you want to simplify deductions, exemptions, etc., you could do that and leave the rate structure alone. That's where all the complications are. Anybody who says they want to change the rates to make things simpler is blowing smoke.

Has the OP been back to this thread? I like to get his opinion on exactly what counts as "imcome".
  #64  
Old 05-27-2011, 04:53 PM
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To be fair, anyone suggesting a reduction of deductions/credits while remaining revenue neutral will need to reduce rates as well. That is there was recent proposal to raise tax revenue by lowering rates but closing deductions.
  #65  
Old 05-27-2011, 06:05 PM
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One thing that modern computing can do is to improve the standard deductions/exemptions figure. Someone living in a "rich" suburb of St. Paul MN, or in San Francisco or Manhattan, is going to be paying substantially more in "fixed" costs -- property taxes, rent/mortgage, heating expenses, etc., than someone living in Cleveland TN or Brunswick GA. By taking number of dependents and zip code, a taxpayer-specific standard deduction (including exemptions) could be generated with ease. If income tax were figured on a flat rate of all income above your personalikzed standard deduction, this would not be so bad. Everyone needs cost-of-dwelling, utilities, phone, food, necessary household and personal-care expenses, medicines, etc. These are the household equivalent of a business's overhead expenses, and come off gross income. Taxing net income after overhead as we do of businesses would make sense.
  #66  
Old 05-27-2011, 10:01 PM
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Flat rate taxation would be a helluva lot better than what we have now. The Fair Tax would be the best solution.

However, Congress will fight both of them tooth and nail because if either plan came about, Congress couldn't play games with the tax code to reward its cronies.
  #67  
Old 05-27-2011, 10:44 PM
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Flat rate taxation would be a helluva lot better than what we have now. The Fair Tax would be the best solution.
You like plans to cut taxes for the rich, and raise them for most other people. Color me surprised!
  #68  
Old 05-28-2011, 01:27 AM
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Yes and no.
While this system is progressive similar to ours, it is greatly simplified by excluding deductions, exemptions etc. Everyone making the same amount would pay the exact same tax which could be calculated within seconds. Unless you are hiding income, there would be little opportunity for tax fraud or excessively awesome tax planning necessitating AMT.
Within seconds? Really? If you own a rental can you deduct the cost of the building? Do you deduct it all the first year? How about the cost of painting, and plumber visits, and property taxes? If I make a large repair like replacing the roof can I deduct that? All in the first year or spread out? Can I deduct the cost of heat and electricity? How about if I live in one of the units, do I still get to deduct all the above or do I have to prorate it? Do I prorate based on sq ft or on the percentage of the cost of my unit to the whole building?

Taxes are hard because it's difficult to figure out what is and is not income. Dealing with brackets and standard deductions is a snap.
  #69  
Old 05-28-2011, 12:40 PM
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Flat rate taxation would be a helluva lot better than what we have now. The Fair Tax would be the best solution.

However, Congress will fight both of them tooth and nail because if either plan came about, Congress couldn't play games with the tax code to reward its cronies.
If the flat tax were enacted, the cronies would have won and there would be no more need for them to play games.

I exaggerate of course. The fact that the wealthy want a flat tax on top of all their other tax breaks shows that they'll never figure they have enough. If the flat tax were enacted, the wealthy would start a campaign for a Thatcher-style head tax.
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Old 05-28-2011, 01:32 PM
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Flat rate taxation would be a helluva lot better than what we have now. The Fair Tax would be the best solution.

However, Congress will fight both of them tooth and nail because if either plan came about, Congress couldn't play games with the tax code to reward its cronies.
Exactly what the Flat Tax would be "a tax game to reward their cronies", but in this case it'd be GOP cronies.
  #71  
Old 05-28-2011, 01:35 PM
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Flat rate taxation would be a helluva lot better than what we have now. The Fair Tax would be the best solution.
Why? Could you explain it? Because that statement highly suggests you or I don't understand the issue.

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However, Congress will fight both of them tooth and nail because if either plan came about, Congress couldn't play games with the tax code to reward its cronies.
A flat tax would reward the richest people in America.
  #72  
Old 05-28-2011, 10:01 PM
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You like plans to cut taxes for the rich, and raise them for most other people. Color me surprised!
Color yourself foolish. I said neither of those things.
  #73  
Old 05-28-2011, 10:07 PM
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Which part are you denying, the part where you advocated for a flat tax or that a flat tax necesarily would decrease the taxes on the rich and hence necesarily raise them on others?
  #74  
Old 05-28-2011, 10:42 PM
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Color yourself foolish. I said neither of those things.
I'm confused then. If you go to a flat tax you pretty much have to do at least one of these. The current income tax rate varies from ten to thirty-five percent. A flat tax would have one rate for everyone. So if you raise taxes to a flat rate of thirty-five percent, you're raising taxes for most people. If you lower them to a flat rate of ten percent, you're cutting taxes for the wealthy. And if you go with a middle rate, like say twenty-seven percent, then you'll be both raising taxes for most people and lowering taxes for the wealthy.

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  #75  
Old 05-28-2011, 10:51 PM
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Yes and no.
While this system is progressive similar to ours, it is greatly simplified by excluding deductions, exemptions etc. Everyone making the same amount would pay the exact same tax which could be calculated within seconds. Unless you are hiding income, there would be little opportunity for tax fraud or excessively awesome tax planning necessitating AMT.
You also loose the ability to encourage and discourage behavior through taxes.

The mortgage interest deduction is a big one. In encourages people to buy homes. When they are younger and make less money, a bigger percentage of their mortgage payment goes to interest and can be written off. As they get older, they presumably make more and see less benefit. But they are able to buy a house sooner. The government sees home ownership as desirable - it creates more stable communities and communities with higher home ownership have less crime. It also encourages taxpayers to build wealth. (Granted those are the traditional benefits of home ownership to the government, the real estate bust has created a different reality, at least in the short term).

Charitable contributions are another big one.

But the real power is in the short term tax credits - "for this year only! Put in energy efficient windows and get a tax break!" These incentives can kick start industries, get people to spend money, give people in disaster areas breaks, and throw more money into the economy during a downturn. Giving them up costs the government a useful tool in tuning the economy.
  #76  
Old 05-30-2011, 05:30 PM
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That's pretty much a text-book example of what I was talking about. You're acting like a McDonalds worker is somehow privileged because he's too poor to pay a lot of income tax.
I guess I'm not explaining it well enough for you to understand.

I'm NOT saying that the kid is 'priveleged'.... I'm saying that taxing dividend income as normal income, which is what I've been saying all along, won't help or hurt the kid.... AND HE PROBABLY PAYS NOTHING IN INCOME TAX ALREADY (do I need to repeat that?)


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It's foolish to say that McDonalds working isn't paying any taxes. Of course he is. What do you think happens when he goes to the store? He tells them, "Don't charge me sales tax. I'm poor."?
I am NOT saying that he doesn't pay any taxes at all. I'm simply responding to the OP. I swear, why do lefties always need to introduce strawmen, Marley being the poster child for that technique - argue the question at hand, or start a new thread about sales taxes. This one has 'income' in the title, for chrissakes.

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The rich aren't paying their fair share. The means by which the wealthy earn money are taxed at lower rates than the means by which poor people earn money. A point that's been repeatedly in this thread and which you keep ignoring.
You tell me where I've ignored the fact that the rich have a lower tax rate on dividend income. I've only mentioned it, oh I don't know, every time I've posted in this thread.

Try another argument, please.

Last edited by Mr Smashy; 05-30-2011 at 05:31 PM.
  #77  
Old 05-30-2011, 07:33 PM
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I guess I'm not explaining it well enough for you to understand.

I'm NOT saying that the kid is 'priveleged'.... I'm saying that taxing dividend income as normal income, which is what I've been saying all along, won't help or hurt the kid.... AND HE PROBABLY PAYS NOTHING IN INCOME TAX ALREADY (do I need to repeat that?)

I am NOT saying that he doesn't pay any taxes at all. I'm simply responding to the OP. I swear, why do lefties always need to introduce strawmen, Marley being the poster child for that technique - argue the question at hand, or start a new thread about sales taxes. This one has 'income' in the title, for chrissakes.

You tell me where I've ignored the fact that the rich have a lower tax rate on dividend income. I've only mentioned it, oh I don't know, every time I've posted in this thread.

Try another argument, please.
There's lots of problems with the tax system. But guess whose problems are most likely to get addressed?

Notice that this thread isn't asking "should we raise the divided tax rate?" or "should we eliminate tax deductions for second homes?" No, the issue that gets raised is lowering the top marginal rate on income tax. Somehow I suspect that if that problem were "fixed" the spirit of tax reform would disappear very suddenly.
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Old 05-30-2011, 08:38 PM
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I'm confused then. If you go to a flat tax you pretty much have to do at least one of these. The current income tax rate varies from ten to thirty-five percent. A flat tax would have one rate for everyone. So if you raise taxes to a flat rate of thirty-five percent, you're raising taxes for most people. If you lower them to a flat rate of ten percent, you're cutting taxes for the wealthy. And if you go with a middle rate, like say twenty-seven percent, then you'll be both raising taxes for most people and lowering taxes for the wealthy.
If we go to a flat tax rate *with no deductions or exemptions*, then the rich folks wind up paying taxes that they now duck through loopholes and avoid. And we could put in a lower limit, such as no tax paid on the first XX thousand dollars earned.

The Fair Tax handles both ends by design.

ETA: Of course, discussing either change is nothing more than mental masturbation if the change is not tied to Constitutional Amendments that 1) repeal the 16th Amendment and 2) mandate a balanced budget from Congress.

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Old 05-30-2011, 09:07 PM
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I see no point in a flat tax. Since the recession of 1974 gross income in the United States has become increasingly unequal. A flat tax would increase that. Also, it would probably raise taxes for most Americans. I do not see how it would lead to more economic growth.
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Old 05-30-2011, 09:44 PM
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If we go to a flat tax rate *with no deductions or exemptions*, then the rich folks wind up paying taxes that they now duck through loopholes and avoid. And we could put in a lower limit, such as no tax paid on the first XX thousand dollars earned.

The Fair Tax handles both ends by design.
So where would you fix the rate? At ten percent? Thirty-five percent? Somewhere in between? And what would be the untaxed minimum?
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ETA: Of course, discussing either change is nothing more than mental masturbation if the change is not tied to Constitutional Amendments that 1) repeal the 16th Amendment and 2) mandate a balanced budget from Congress.
Why abolish income tax? What would you substitute in its place? Individual income tax is the largest revenue source of federal income - about 42%. The next two biggest sources are various employment taxes like social security taxes (about 40%) and corporate income tax (9%). What are we going to substitue for that - a fifty dollar a gallon excise tax on gas?

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Old 05-31-2011, 12:53 AM
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I apologize for not joining this thread earlier. It sure looks like you're having fun here.

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... Lemur's foolishness, ... Not threadjacking, ... in his rant against advantaged-tax policies for dividends

... Yet the eternally aggrieved among the liberati and class warriors on this board always think the rich are getting away with murder, and not paying their 'fair share'.
Do you have a cite for progressives discussing tax "fairness"? I think it's the other side that invokes that notion. ("It's not fair that I help finance public schools; my kids go to private schools." "It's not fair that I have to pay a larger share for defense; McDonald's workers also want bin Laden dead." "It's not fair that I pay taxes on dividends; those profits were already taxed." "It's not fair that Welfare Mama won the lottery; she bought her ticket with my tax dollar.")

Both sides need to take a deep breath, accept that life isn't fair, and taxes aren't supposed to be "fair" either.

We should tax the rich for the same reason Willie Sutton robbed banks: that's where the money is.

And contrary to right-wing doctrine (oh, excuse me -- libertarian "thought" ), sane tax policies yield better outcomes than insane policies. The ultra-high tax Eisenhower Administration was a time of high prosperity. Even the modest tax hike under Clinton ushered in a boom.

Hope this helps ... but doubtful.
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Old 05-31-2011, 01:21 AM
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If we go to a flat tax rate *with no deductions or exemptions*, then the rich folks wind up paying taxes that they now duck through loopholes and avoid. And we could put in a lower limit, such as no tax paid on the first XX thousand dollars earned.

The Fair Tax handles both ends by design.

ETA: Of course, discussing either change is nothing more than mental masturbation if the change is not tied to Constitutional Amendments that 1) repeal the 16th Amendment and 2) mandate a balanced budget from Congress.
Actualy, many Flat taxes do not, as some of the plan exempt all but Earned income from Taxation. Many millionaires would pay nothing, no matter how flat the tax is. Also the super rich can simply move their money out of the USA.

You do know that a repeal of the 16th Ad would mean that the Flat Tax would be unconstitutional? Or actually, it appears you don't know that, which means you have no idea of what the fuck you are talking about as regards taxes.

And actually a Balanced Budget is a bad thing. What you want is a small amount of deficit spending about = to the % growth in GDP. Try Econ 101.
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Old 05-31-2011, 02:32 AM
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Do you have a cite for progressives discussing tax "fairness"? I think it's the other side that invokes that notion. ("It's not fair that I help finance public schools; my kids go to private schools." "It's not fair that I have to pay a larger share for defense; McDonald's workers also want bin Laden dead." "It's not fair that I pay taxes on dividends; those profits were already taxed." "It's not fair that Welfare Mama won the lottery; she bought her ticket with my tax dollar.")

Both sides need to take a deep breath, accept that life isn't fair, and taxes aren't supposed to be "fair" either.

We should tax the rich for the same reason Willie Sutton robbed banks: that's where the money is.

And contrary to right-wing doctrine (oh, excuse me -- libertarian "thought" ), sane tax policies yield better outcomes than insane policies. The ultra-high tax Eisenhower Administration was a time of high prosperity. Even the modest tax hike under Clinton ushered in a boom.

Hope this helps ... but doubtful.
You can read my off-the-cuff tax plan here.
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Old 05-31-2011, 04:21 AM
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You can read my off-the-cuff tax plan here.
I largely approve of your plan. Two comments:

(1) We could generate a HUGE amount of additional tax revenue without pushing the top rate to anywhere near 70%. (Yes, "HUGE" isn't very exact; I calculated an exact number for an earlier thread -- it was in the Hundreds of Billions of dollars -- and one of our right-wing experts informed us that that was "chump change." That if hundreds of billions were all my tax proposal would yield, it would be better to leave the tax on the rich where it was.

(2) I do have some sympathy for the notion that dividends represent income that would be taxed twice. But multiple taxation is the rule, not the exception. And, unlike businessmen, lawyers, etc., wage-earners do not get to deduct the expenses (clothing, automobile) they need for their job.
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Old 05-31-2011, 08:22 AM
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Actualy, many Flat taxes do not, as some of the plan exempt all but Earned income from Taxation. Many millionaires would pay nothing, no matter how flat the tax is.
Tell us again how a "millionaire" (who clearly only got that way through exploitation of the poor, probably minorities mostly) would pay nothing?

Unless you are referring to net worth instead of income. In which case... um... how is that any different from now?
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Old 05-31-2011, 08:31 AM
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Quote:
Originally Posted by Mr Smashy View Post
Tell us again how a "millionaire" (who clearly only got that way through exploitation of the poor, probably minorities mostly) would pay nothing?

Unless you are referring to net worth instead of income. In which case... um... how is that any different from now?
If you define "income" as "earned income" you don't pay tax on capital gains or dividends. Only on salary.

So if I run a business that I make $4million a year on profit, and pay myself a $30,000 salary to be CEO of the business - calling the rest "dividends," I'm taxed on $30k, not on $4m. If I make my living off stock investments, I pay nothing at all. Now, I'll pay corporate tax on those dividends (the hue and cry on double taxation), but if I simultaneously manage to lower or get rid of the corporate income tax (which many conservatives argue for - and frankly, isn't a horrible idea as a stand alone idea), I pocket $4M in profit without the government seeing a dime of it.
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Old 05-31-2011, 10:11 AM
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Quote:
Originally Posted by Dangerosa View Post
If you define "income" as "earned income" you don't pay tax on capital gains or dividends. Only on salary.
Alas, my mission to educate continues unabated...

The current tax on dividends, unless you're a real lowballer, is 15%, not nothing. So, yes, you do pay tax on it. Same with capital gains.

Quote:
So if I run a business that I make $4million a year on profit, and pay myself a $30,000 salary to be CEO of the business - calling the rest "dividends," I'm taxed on $30k, not on $4m. If I make my living off stock investments, I pay nothing at all. Now, I'll pay corporate tax on those dividends (the hue and cry on double taxation), but if I simultaneously manage to lower or get rid of the corporate income tax (which many conservatives argue for - and frankly, isn't a horrible idea as a stand alone idea), I pocket $4M in profit without the government seeing a dime of it.
Without seeing a dime, eh? Don't thank me, pay it forward.
  #88  
Old 05-31-2011, 10:43 AM
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Quote:
Originally Posted by DrDeth View Post
Actualy, many Flat taxes do not, as some of the plan exempt all but Earned income from Taxation. Many millionaires would pay nothing, no matter how flat the tax is.
Quote:
Originally Posted by Mr Smashy View Post
Alas, my mission to educate continues unabated...

The current tax on dividends, unless you're a real lowballer, is 15%, not nothing. So, yes, you do pay tax on it.
You were under the impression that DrDeth was talking about current tax on dividends?
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Old 05-31-2011, 10:51 AM
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Quote:
Originally Posted by Mr Smashy View Post
Alas, my mission to educate continues unabated...

The current tax on dividends, unless you're a real lowballer, is 15%, not nothing. So, yes, you do pay tax on it. Same with capital gains.



Without seeing a dime, eh? Don't thank me, pay it forward.
I'm sorry Mr. Smashy, we misunderstood each other. If you do a flat tax where you only tax earned income, you wouldn't tax interest, capital gains or dividends which are considered unearned income.

(I do have an accounting degree and worked in tax for five years. I do know that capital gains and dividends are taxed. But thanks for the patronization. I'll make sure to pay it forward).
  #90  
Old 05-31-2011, 12:23 PM
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OK, I guess I must point out for the 10th time in this thread:

I am not in favor of allowing dividend income to be taxed at anything lower than whatever the marginal tax rate would be. Nor are many very smart people, even on the right, like Samuelson. As I've posted before IN THIS SAME THREAD.

So in my example: yes, a millionaire (defined by income, however he gets it) would pay at the flat tax/marginal rate.

Got it? Is it really that hard to understand?
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Old 05-31-2011, 01:16 PM
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[QUOTE=Little Nemo;13861304]So where would you fix the rate? At ten percent? Thirty-five percent? Somewhere in between? And what would be the untaxed minimum?
[quote]
This is why I advocate the Fair Tax as being preferable to the flat tax.

Quote:
Why abolish income tax? What would you substitute in its place? Individual income tax is the largest revenue source of federal income - about 42%. The next two biggest sources are various employment taxes like social security taxes (about 40%) and corporate income tax (9%). What are we going to substitue for that - a fifty dollar a gallon excise tax on gas?
Sorry, I should have said that the income tax would have to be abolished if the Fair Tax came into play. We damn sure don't want to have Congress taxing income AND final sales at the same time.
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Old 05-31-2011, 01:17 PM
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Originally Posted by DrDeth View Post
You do know that a repeal of the 16th Ad would mean that the Flat Tax would be unconstitutional? Or actually, it appears you don't know that, which means you have no idea of what the fuck you are talking about as regards taxes.
As I mentioned earlier, I should have said that the 16th would have to go only if the Fair Tax were implemented. My bad.
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Old 05-31-2011, 02:03 PM
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In general, a flat tax creates greater economic drag and even deadweight loss across more sectors than a progressive tax. Taxpayers who have to give up necessities due to lower after-tax income not only hurt themselves, but the suppliers of those necessities. For maximum macroeconomic utility, taxes should be moderately redistributive, with progressive rates & a negative income tax.
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Old 05-31-2011, 02:05 PM
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Quote:
Originally Posted by Clothahump View Post
This is why I advocate the Fair Tax as being preferable to the flat tax.
Okay, I misunderstood you. I thought the Fair Tax was just another name for the flat tax.

A national sales tax has its points. Taxing sales makes it difficult to evade. The system is in place to collect it. It would encourage savings and investment.

But I think 23% is an unrealistically low rate. I know most tax reformers also want spending cuts but I think that has to be treated as a separate issue to fairly compare the merits of various tax proposals - you have to compare them on a level revenue field.
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Old 05-31-2011, 02:15 PM
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Originally Posted by Little Nemo View Post
A national sales tax has its points. Taxing sales makes it difficult to evade. The system is in place to collect it. It would encourage savings and investment.
Yeah, nothing promotes investment like a drop in demand. "Hey, let's build a new plant to sell widgets. It's a good time because 75% of the people pay more taxes and the widgets will cost the consumer more even though we won't see any of that revenue".
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Old 05-31-2011, 02:18 PM
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Quote:
Originally Posted by Mr Smashy View Post
OK, I guess I must point out for the 10th time in this thread:

I am not in favor of allowing dividend income to be taxed at anything lower than whatever the marginal tax rate would be. Nor are many very smart people, even on the right, like Samuelson. As I've posted before IN THIS SAME THREAD.

So in my example: yes, a millionaire (defined by income, however he gets it) would pay at the flat tax/marginal rate.

Got it? Is it really that hard to understand?
Sure- under YOUR idea of what a Flat Tax is/would be, which differs radically from some of the proposed plans. Some of the proposed plans only tax "Earned Income". My post was quite clear "Actualy, many Flat taxes do not, as some of the plans exempt all but Earned income from Taxation. Many millionaires would pay nothing, no matter how flat the tax is. "

So, we are not restricting ourselves to whatever Flat Tax scheme you are debating, esp as you are not the OP. If you have a Flat Tax scheme you think might work, feel free to link to it. Otherwise lines like "Alas, my mission to educate continues unabated..." come off as pretty silly, as you are not the OP, you have not posted a link to your Flat Tax scheme, and there is no reason for the rest of us to limit our posts to debating whatever Flat tax scheme you are thinking about.

Especially as I wasn't even replying to your post, I was replying to Clothahump's post.
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Old 05-31-2011, 02:20 PM
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Quote:
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But I think 23% is an unrealistically low rate.
The Fair Tax folks rebut all these points. Their arguments aren't persuasive to my mind, but they do attempt to address them.

For example, the 23% figure, while technically valid, is a tax-inclusive figure. In other words, if I wanted to buy a $1 candy bar, I would pay $1.30 at the counter. The $0.30 is 23% of the total $1.30 figure, even if it's 30% of the retail price of the candy bar. So, it becomes less unrealistically low (although a figure of 35%-40% tax-exclusive is probably more realistic). And they don't really deny the 23%/30% thing (though, they don't exactly advertise it heavily, either).

Since any such proposal will probably keep the lower tax rates for investments to get passed, we again need a higher figure for non-investment purchases to bring revenue back up to snuff. They do have a rebuttal for this, but, again, it's not a very persuasive argument to my mind.
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Old 05-31-2011, 02:22 PM
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Quote:
Originally Posted by Clothahump View Post
As I mentioned earlier, I should have said that the 16th would have to go only if the Fair Tax were implemented. My bad.
Umm, perhaps still no. Read what the 16th Ad does. wiki

The Sixteenth Amendment (Amendment XVI) to the United States Constitution allows the Congress to levy an income tax without apportioning it among the states or basing it on Census results. This amendment exempted income taxes from the constitutional requirements regarding direct taxes, after income taxes on rents, dividends, and interest were ruled to be direct taxes in Pollock v. Farmers' Loan & Trust Co. (1895). It was ratified on February 3, 1913.

And, you can't argue the Fair Tax (which is a national sales tax, and is promulgated by loons and other crazies) in a debate about a Flat Tax.
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Old 05-31-2011, 02:24 PM
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Quote:
Originally Posted by Great Antibob View Post
The Fair Tax folks rebut all these points. Their arguments aren't persuasive to my mind, but they do attempt to address them.

.
Can we not get into a hijack about a National Sales Tax to replace the Income Tax? the Op is asking about a Flat Tax.
  #100  
Old 06-06-2011, 02:27 PM
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One thing's for sure, the administrative overhead of non-flat taxes is outrageous, as are the cleverly defined loopholes. Whatever else, a flat tax would be administrated with perhaps as few as a hundredth or a thousandth of the staff. Tax returns would be single side single page, or smaller. I like that aspect! I think a deductible threshold could be properly placed such that the median tax amount of the middle class stays fixed before and after the intro of the tax. Then the middle class would pay roughly the same, and, if anything, the poor would pay less (i.e. generally nothing). Would the rich really pay less? Not too likely. None of my wealthy friends have to pay as much as their middle-class counterparts in the end, as it's very easy to shelter income under the current rat's nest of a system.

Last edited by evol; 06-06-2011 at 02:28 PM.
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