# A flat tax is a non-starter, stop suggesting it **URL:** \ **Category:** Great Debates\ **Created:** [May 23, 2012, 2:47pm UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834 "2012-05-23T14:47:18Z")\ **Posts on this page:** 10\ **Page:** 6
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [June 2, 2012, 2:48am UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834/101 "2012-06-02T02:48:58Z")
> [@emacknight](#): > > Why is a flat tax preferable? 1. It can mean a much lower tax rate on lower incomes. Right now the progressive system we have kicks in really early and hits people extremely hard making less than $80k. I don’t personally see the point of taxing someone under $34k at 15%, but then again I’m a bit of a liberal when it comes to things like this. Would the budget really change much if we set the first few brackets to 0%? In 2009 70% of the federal budget came from people making more than $112,124. Why not up their rate slightly and set everyone else’s to zero? Make sure you get the math right before you put this into practice. The lower tax brackets apply to everyone. A single person pays [10% on the first $8,700](http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Year_2012_income_brackets_and_tax_rates) they make. You, me, Warren Buffet, everybody. (Is Buffet married filing jointly? Then it’s $17,400.) If you only make $8600, then that’s all you have to worry about. It’s 15% on any money you make from $8,701 to $35,350. And higher percentages at higher amounts. My point is that if you create a 0% bracket up to $112,124, that applies to everyone, too. Someone making $150,000 probably comes out way ahead under your scheme, because they get the first $112,124 tax free. Even if you tax the remaining ~$38,000 at 90%, he’s still paying less than he is now. Which is not to say that the proposal wouldn’t work, but pick your numbers with all that in mind. ---
**Author:** ![Uzi](https://avatars.discourse-cdn.com/v4/letter/u/91b2a8/32.png) [@Uzi](https://boards.straightdope.com/u/Uzi)\ **Post date:** [June 2, 2012, 4:06am UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834/102 "2012-06-02T04:06:00Z")
> [@Jas09](#): > > By defining “fair share” to take into account both marginal utility and the fact that the wealthy have benefited the most from our system of government, generally. And sometimes mixing in a utility argument (the “the rich have the most to lose by a collapse of the government” argument). You do know there are a helluva lot of rich people who got rich in other forms of government? Wealthy Western countries, dirt poor countries, industrialized countries, all sorts of countries have wealthy people who live tremendously better lives than the plebes. Really, just say you want their money because they have more, not that they benefit by giving it to you. They don’t. You benefit by them giving it to you. At least be honest about it when you’ve got a gun to someone’s head. ---
**Author:** ![The\_Second\_Stone](https://avatars.discourse-cdn.com/v4/letter/t/bbe5ce/32.png) [@The\_Second\_Stone](https://boards.straightdope.com/u/The_Second_Stone)\ **Post date:** [June 2, 2012, 4:33am UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834/103 "2012-06-02T04:33:09Z")
Flat taxes are just another way to screw the working poor. They aren’t going to tax capital gains at that rate, they aren’t going to have the payroll tax flat for all incomes, and they aren’t going to give up corporate jets and such as depreciable/deductible expenses. The difference between death and taxes is that death doesn’t get worse for people every time Congress meets. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [June 2, 2012, 4:47am UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834/104 "2012-06-02T04:47:14Z")
> [@Uzi](#): > > You do know there are a helluva lot of rich people who got rich in other forms of government? Wealthy Western countries, dirt poor countries, industrialized countries, all sorts of countries have wealthy people who live tremendously better lives than the plebes. I don’t speak for **Jas09** , of course, but how those people are taxed is a matter between them and their respective governments. Hopefully, those government are striving toward a solution that lets all their citizens prosper. On that scale, the U.S. has had a graduated tax for some time and done rather well for ourselves. > [@](#): > > Really, just say you want their money because they have more, not that they benefit by giving it to you. They don’t. You benefit by them giving it to you. At least be honest about it when you’ve got a gun to someone’s head. They aren’t giving anything to me. We’re both giving money to the government to be spent in ways that make both our lives better. ---
**Author:** ![cosmosdan](https://avatars.discourse-cdn.com/v4/letter/c/a6a055/32.png) [@cosmosdan](https://boards.straightdope.com/u/cosmosdan)\ **Post date:** [June 2, 2012, 12:11pm UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834/105 "2012-06-02T12:11:09Z")
> [@ITR\_champion](#): > > So in short, there are potential advantages to the poor in a flat tax system. Or you could have a far less complicated progressive tax system which would also have no loopholes. ---
**Author:** ![Hentor\_the\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/h/8edcca/32.png) [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)\ **Post date:** [June 2, 2012, 12:42pm UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834/106 "2012-06-02T12:42:46Z")
> [@Robot\_Arm](#): > > Make sure you get the math right before you put this into practice. The lower tax brackets apply to everyone. A single person pays [10% on the first $8,700](http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Year_2012_income_brackets_and_tax_rates) they make. You, me, Warren Buffet, everybody. (Is Buffet married filing jointly? Then it’s $17,400.) If you only make $8600, then that’s all you have to worry about. It’s 15% on any money you make from $8,701 to $35,350. And higher percentages at higher amounts. > > My point is that if you create a 0% bracket up to $112,124, that applies to everyone, too. Someone making $150,000 probably comes out way ahead under your scheme, because they get the first $112,124 tax free. Even if you tax the remaining ~$38,000 at 90%, he’s still paying less than he is now. > > Which is not to say that the proposal wouldn’t work, but pick your numbers with all that in mind. This bears repeating, because much of the argument for a flat tax is based on equity. But we already do each pay the same taxes. It could not be more fair than it is. I pay the same rate on the 50,000 dollar I make as anyone else, and on the 250,000 dollar as anyone else. Flat taxers making this argument aren’t looking to be fair to all people. They’re looking to be fair to each dollar. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 2, 2012, 3:03pm UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834/107 "2012-06-02T15:03:08Z")
> [@Rhaegar](#): > > A consumption tax is hardly a new idea, it has been proposed by many other people and economists before. And a consumption tax need not necessarily completely eliminate income tax, but it could be combined with a low flat rate income tax. And I never said that eliminating the IRS is the only part of slashing the budget, but it is quite significant, especially if you consider the future pension and medical costs that the govt will have to pay for all those federal employees. As for SS and Medicare tax, that is really a small amount compared to what many of us pay in income tax now, and certainly not everyone is a wage earner. And I never said that a tax on health care usage would be the sole revenue stream to pay for health care, but having some disincentive to overuse the health care system for trivial health concerns is always a good thing. Wait so you want a simpler tax system and you want to achieve it by replacing an income tax system we have had for a hundred years with a national sales tax AND and an income tax system (but with fewer brackets? The non-security/military discretionary budget is about 9% of the entire federal budget. If you have convinced yourself that we can fix our problems in any significant way by focusing on government agency costs, then you don’t know what you are talking about. SS and Medicare taxes raise about as much revenue as the income tax. I agree that we can have some sort of sliding scale copay for health care. If only medicare would have something like that… oh wait… [Most Recent Articles](http://www.elderlawanswers.com/Resources/Article.asp?ID=8746) > [@Rhaegar](#): > > The budget for the IRS in 2012 is $13.3 billion, which I assume does not include the costs needed for the retired employee pension and health care plans. Those are not insignificant costs, as the Post Office can certainly tell you. But part of eliminating the IRS is also getting rid of the multitude of tax loopholes which people both wealthy and poor are using the evade paying taxes. Just eliminating those will add untold billions to the coffers. I believe federal pensions are fully funded sop it is part of the payroll cost while the employee is still working. The cost of retiree health care is included in the 13.3 billion and for the most part is supplemental to medicare. > [@Rhaegar](#): > > A flat tax is hardly the impractical concept that people are trying to make it seem. There are many countries in the world which have already been using a flat tax system, among them : > > Hong Kong > Russia > Iceland > Hungary > Albania > Bulgaria > Estonia > Jamaica > Kazakhstan > Latvia > Lithuania > Romania > Serbia > Slovakia > Trinidad and Tobago > Ukraine A) Hong Kong doesn’t have a flat tax. They have an alternative maximum tax. Their lowest marginal rate is 2% their top marginal rate is 20% but your taxes are capped at 16% of your gross income. B) Look at the jurisdictions you are talking about? There is a very specific reason that Estonia has a flat tax rate and it has nothing to do with fairness. > [@](#): > > it is hardly a truth to say that a flat tax can never work anywhere. Noone is saying that flat taxes can’t work, we’re saying its not an improvement to the system we have had for the last 100 years and raises considerable questions of social equity. > [@Rhaegar](#): > > …If the budget could ever be slashed to a reasonable level, which I doubt, then a lot of things would work better… If we could slash the budget enough, all of these problems would disappear. > [@](#): > > My main point is that I feel that a flat tax is the most equitable form of taxation as most everyone will have to pay a reasonable share of tax, and it is a system which can work, if the budget is not excessive. I have no illusions that it will be adopted or implemented in the US anytime soon, given the sway special interest groups have in our govt. In what way is a flat tax more fair than a progressive tax system? Have you ever heard of marginal utility? > [@Rhaegar](#): > > The US may not have as many tax evaders, but as I pointed out in an earlier post and article, only about 50% of people in the US pay any income tax at all. Not all of these people are poor people below the poverty line, many are extremely wealthy individuals who are not paying their fair share through use of various deductions and quirks in the tax code. I would consider them “legal” tax evaders in my book. What wealthy people are paying no taxes? Do they get all their income from municipal bonds? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 2, 2012, 3:45pm UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834/108 "2012-06-02T15:45:22Z")
> [@emacknight](#): > > Was this supposed to be a parody? Do you really not know what a flat tax is? Do you? There are several types of flat tax but the one that people talk about the most if Milton Friedman’s model which is in fact a negative income tax model. An idea that he borrowed from another economist who initially proposed applying a negative income tax to a progressive tax system. There is nothing about the negative income tax model that makes it work better with a single tax rate rather than multiple tax rates. A large enough effectively maintains a progressivity in the tax code but its an awful lot of trouble to go through avoid having multiple brackets. Steve Forbes has another version that exempts investment income and has a relatively small deduction, which effectively just shifts the tax burden downwards. But noone other than Dick Armey and friends takes that system seriously. > [@](#): > > In the interest of fighting ignorance, a flat tax is a progressive tax structure with just two brackets: 0% and X%. You can set X to be anything you want, noting that if you put it to 20% it would **raise** taxes on super rich people like Romney, Buffett, and Obama; while lowering it on professionals including Buffett’s secretary. In the interests of fighting ignorance, you’re wrong. The negative tax system doesn’t have two tax rates, it has one and if your deduction results in a negative taxable income you get the negative tax back in the form of a check from the government. And if you are talking about the Steve Forbes variant, then Buffett would hardly pay any taxes at all. What makes you especially wrong is the 20% number you tossed in there. In order to be revenue neutral (so you can compare apples to apples) that number has to be much higher depending on the exemption amount. > [@](#): > > You also get to set the non-taxable income level at what ever you want. There is no reason we couldn’t have 0% tax on the first $250k and 35% after that. Or set it to $1million and 90%, or $1billion and 99%. You can even decide if you want to balance the budget, run a deficit, or have a surplus. Aren’t taxes fun? > > What you don’t get to do is make shit up and argue against strawmen. All of your rates are too low. We could tax the 250K+ income at 99% and it would not raise the same revenue we have now. If you wanted to tax above $1million only, you would need to tax at about 7000%. So no, you don’t have the sort of flexibility you seem to think. And there is no reason why you couldn’t tweak the brackets in much the same way. We already know how to skin this cat. What makes your way better? > [@](#): > > Why is a flat tax preferable? 1. It can mean a much lower tax rate on lower incomes. Right now the progressive system we have kicks in really early and hits people extremely hard making less than $80k. I don’t personally see the point of taxing someone under $34k at 15%, but then again I’m a bit of a liberal when it comes to things like this. Would the budget really change much if we set the first few brackets to 0%? In 2009 70% of the federal budget came from people making more than $112,124. Why not up their rate slightly and set everyone else’s to zero? The current tax rate on incomes below about 50K is close to ZERO. How much lower do you want it to be? And 70% of the federal budget does not come from people making more than $112,124, the personal income tax maybe but social security and medicare contributions are just as big a part of the federal budget as the personal income tax. Check your sources again. > [@](#): > > 1. Once implemented, it means that has people earn more money they get to keep more of it. A progressive system is designed to take more as people earn more. In a revenue neutral world you can’t reduce taxes on the poor while also reducing taxes on the rich. Those taxes MUST be raised somewhere or you have to admit that your system is only appealing because you intend to run huge deficits in order to tax people less. > [@](#): > > The reality of our current progressive system is that it hits people has they go from low incomes to moderate. That is to say the brackets are totally and completely fucked. Why take progressively more from someone that goes from $30k to $60k to $90k? But then ignores people going from $400k to $400million who will most likely see their effective rate drop. Seems to me that you are arguing for MORE brackets, not less. > [@](#): > > Both you and the OP are wrong, flat-tax isn’t a nonstarter, it’s tax reform that will never ever happen in any meaningful way. Because its mostly unnecessary and stupid. > [@fumster](#): > > That is the first coherent argument for a flat tax that I’ve seen in this thread. You need to raise your standards. Not being retarded doesn’t make an argument coherent. > [@](#): > > Personally, I see no reason to tax capital gains at a lower rate than wages It makes more sense when you have much higher marginal rates. Say you owned IBM stock for 40 years and you sell it for a a gain of a million dollars. Under a more progressive system you might be hit with a tax rate of 40 or 50% for gains you accrued over 40 yearas. If you had accrued 25K in gains in each of the last 40 years your tax rate on those gains would have been closer to 25% for those gains so in an attempt at rough justice we used to exempt 50% of your gain from taxes. This lowered your bracket and reduced the income being taxed. When we flattened the tax rates under Reagan the argument for the capital gains preference got weaker. In fact Reagan raised the capital gains rate from 20% to 28% (after having lowered it from 28 to 20 and figuring out that it doesn’t work). > [@](#): > > nor do I like the byzantine rules that enable the wealthy to shelter income. Those can be eliminated without getting rid of the progressive tax structure, and if they were eliminated then the progressive tax rates could be reduced. Tax simplification is a reasonable goal that makes sense. Agitating for a flat tax rate and then reinserting thing to try and make it progressive again is stupid. > [@](#): > > But if flat tax proponents were proposing something along the lines of what you mentioned, with a relatively large exemption for the first x dollars, then I might well support it. But given that conservatives and libertarians seem hung up on the freeloader issue I do not believe they have in mind what you have proposed. You might like Milton Friedman’s model, which Republicans USED to like (back when they like individual mandates) but there is no reason you can’t have a progressive tax system with the negative income tax mechanism. > [@](#): > > Any tax reform also needs to look at payroll taxes, so the combined tax rate would either need to be substantially higher than 20%, or we would still have low income workers paying approximately the same taxes that they are now. Undercutting the funding mechanism for social security and medicare would be bad for those entitlements. It would turn them more into traditional forms of welfare. > [@Robot\_Arm](#): > > Make sure you get the math right before you put this into practice. … > Which is not to say that the proposal wouldn’t work, but pick your numbers with all that in mind. Its almost impossible to make the numbers work the way they say it will while maintaining revenue neutrality. Flat tax proposals always shift taxes downwards because they are always proposed by folks at the top marginal rate. > [@Uzi](#): > > Really, just say you want their money because they have more, not that they benefit by giving it to you. They don’t. You benefit by them giving it to you. At least be honest about it when you’ve got a gun to someone’s head. Taxes are not extortion. The fact that you think they are probably clouds your ability to think rationally about tax policy. > [@Hentor\_the\_Barbarian](#): > > This bears repeating, because much of the argument for a flat tax is based on equity. But we already do each pay the same taxes. It could not be more fair than it is. I pay the same rate on the 50,000 dollar I make as anyone else, and on the 250,000 dollar as anyone else. > > Flat taxers making this argument aren’t looking to be fair to all people. They’re looking to be fair to each dollar. +1 ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [June 2, 2012, 4:10pm UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834/109 "2012-06-02T16:10:22Z")
> [@fumster](#): > > Stop whining about how the flat tax is not possible and explain why it is preferable to a progressive tax. It’s not simpler, it raises taxes on people at the low end and lowers them on people at the high end. If it has a credit/exemption for the first x dollars of income then it doesn’t even solve your mythical freeloader issue. He’s not whining. He’s debating in good faith, and you are unfairly ascribing motivations to him that may or may not be true. Personally, I find **Rhaegar** ’s contributions to this thread to be the most reasonable and lucid pro-flat-tax discussion I can remember. Most flat taxers do what you accuse him of doing: jabber endlessly about fairness and ignore practical issues. ---
**Author:** ![fumster](https://avatars.discourse-cdn.com/v4/letter/f/e9c0ed/32.png) [@fumster](https://boards.straightdope.com/u/fumster)\ **Post date:** [June 3, 2012, 2:22am UTC](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834/110 "2012-06-03T02:22:24Z")
> [@Really\_Not\_All\_That\_Bright](#): > > He’s not whining. He’s debating in good faith, and you are unfairly ascribing motivations to him that may or may not be true. Personally, I find **Rhaegar** ’s contributions to this thread to be the most reasonable and lucid pro-flat-tax discussion I can remember. Most flat taxers do what you accuse him of doing: jabber endlessly about fairness and ignore practical issues. I think jabbering about fairness and ignoring practical issues is a pretty good summary of this post: > [@](#): > > Getting rid of all tax deductions and implementing a national consumption sales tax would be a possible compromise. The budget could be slashed by eliminating most of the IRS, and those who have more money and spend more money would pay more tax. You could even link it to services used. For example a tax on gas could be used to fund highway improvements and repairs. Those that drive the most would foot the biggest bill. Maybe the same thing on health care usage. Those that use it more, will pay the biggest share. It seems the fairest solution to me as everyone will pay at least some tax. As it is now, most reports cite that only 50% of the people in the US pay any income tax at all, which I think is patently unfair. [Previous page](https://boards.straightdope.com/t/a-flat-tax-is-a-non-starter-stop-suggesting-it/622834.md?page=5)