I know that and I explicitly said I wasn’t counting things like deductions, exemptions, and credits. Flat tax supporters argue that one of the advantages of their system is that it would be so simple that it could be written on one line. So I took them at their word and used the one-line version.
It’s a bit disingenuous to say “My plan consists of just five words: Everyone’s taxes are twenty-three percent.” and then go on to say “And here’s the twenty volumes of supporting tax code that explain what those five words legally mean.”
That’s true for me. I’ve gone on record as saying we need to raise taxes and cut spending until the deficit is gone. I’ve even been willing to offer specific rates I’d raise taxes to and outline specific programs I’d cut.
You’d think my declared program of higher taxes and less government hand-outs would have my phone ringing off the hook. But surprisingly neither party has called to offer me a nomination.
I think the arguments fail when A is a crappy policy, and is only marginally plausible because of B, which is not at all dependent on A.
So, a flat tax would be great and we could have one if we cut spending… why would it be so great? What is the flat tax plan doing that a progressive plan can’t do?
Cut out deductions and simplify the calculation? You can do that and keep a progressive rate scale.
The only reason to fight so hard for 1 tax rate is to shift tax burden from the very rich to the not-very rich. That is the only significant effect of going from multiple tax rates to a single tax rate.
Not at all. As has already been pointed out, depending on the rate and the exemption, it’s easy to envision a flat tax that in fact reduces the burden on low-earners: i.e. a flat tax proposal of a 50% rate on all income over $50,000 would be dramatically more progressive than our current scheme.
I’m not especially a flat-tax enthusiast, but it’s easy to see why a lot of people find it appealing in contrast to our current system (other than “they’re rich and evil”), which is so byzantine that our own treasury secretary was unable to figure out how much he owed. As you note, of course, one could eliminate the deductions and keep a progressive tax rate; unfortunately, AFAICT, nobody’s really proposing that, for whatever reasons, making it even more of a non-starter, politically, than the flat tax. The President’s debt commission recommended it, and he ignored them.
And, the moment you have an exemption, you don’t have a flat tax. You have a tax with two brackets. 0% and whatever the other bracket is. Granted, a flatter tax. And you are back to one of the same “problems” with our current system - that a large number of people “won’t pay taxes at all.”
No, I don’t see it as a problem at all. To me, it’s pretty obvious that some people can’t afford to pay taxes. (to me, it’s then pretty obvious that some people can afford to pay more than others). However, a huge part of the noise is “xx% of people don’t pay taxes at all,” and at least some of the appeal of flat tax is the misguided belief that this “problem” would go away.
Once you establish that there need to be at least two brackets for fairness, 0% and whatever %, how many brackets there are is really a quibble. We’ve already established that brackets are indeed fair.
Not necessarily. If we taxed poor people and maintained some sort of safety net, we’d have to refund the taxes to a bunch of people in the form of aid. That’s less efficient than just letting them keep the money in the first place.
That assumes you’d maintain some sort of safety net. Which in itself is a question of fairness. I’m liberal and think its the right thing to do, but not everyone agrees that redistribution of wealth is fair.
You’re making an unwarranted (if common) assumption: that the government always screws up.
Private businesses achieve higher efficiency via the economics of scale. So why assume it’s impossible to achieve higher efficiency in social services via the same means? A single entity running a social system for all needy people can theoretically run it more efficiently than that same mass of needy people can as individuals.
Does it always happen that way? Unfortunately no. In the real world, the government rarely works at theoretical peak efficiency and does often screw up. But if we’re in the real world, we have to acknowledge that private individuals also rarely work at peak efficiency and screw up plenty often on their own. So I think it’s an open question as to whether government action or private individual action achieves higher efficiency in real world situations.
Noone is proposing a 50% flat tax rate. Noone who proposes flat taxes ever proposes a tax rate higher than the top marginal rate, it defeats the purpose (of lowering the tax rate of the wealthy). It would also be dramatically more regressive for anyone making between ~100K and ~300K.
Oddly enough our secretary of treasury screwed up a flat tax (the social security/medicare tax). He filed his income taxes just fine.
Then propose getting rid of deductions rather than proposing a flat tax rate, there is nothing that having fewer tax brackets will improve. Because a flat tax is going to have those same complicating deductions as folks try to get a mortgage interst deduction or a special tax rate for capital gains.
As long as the poor are net drains on the public coffers its hard to argue very strongly either way.
The market may allocate resources with relative efficiency but its hard to say it does so equitably. We make tradeoffs between efficiency and equity in the social contract. I think we’ve had just about as much efficiency as we can take.
Its easy to do when you ignore failures in the market. (see 2007-present)
If you compare Bill gates and Steve Jobs with the dingbats at the GSA or the folks at the federal agency that handed out oil drilling licenses in exchange for sex, its becomes an easy comparison to make.
I am in favor of a flat tax, although people are probably right that a flat tax probably would not raise enough income to support the bloated budget unless the rate was set incredibly high. The best idea would be to slash the budget, but that is probably not going to happen.
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.
Is this a parody? Every thing you said is either incorrect or illogical.
Let’s see:
[ol]
[li]The size of the budget is orthogonal to the method of taxation[/li][li]The IRS is a tiny, tiny portion of the budget[/li][li]Having a consumption tax rather than income tax is not a “compromise”, it’s not just getting rid of progressive taxation, it’s instituting a regressive tax policy[/li][li]The fact that 50% of people don’t pay income tax isn’t really that important as all wage earners pay SS and Medicare tax[/li][li]The consumption tax rate would need to be extremly high to be the sole source of government revenue, so much so that it would destroy the economy[/li][li]If people that used more health care could just pay more taxes, then they could just afford to pay for healthcare[/li][/ol]Sometimes I wish that people like you could live to see the results of the inane policies you propose
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.
Yes you could combine a consumption tax with a flat income tax, but you have not produced any good reason for moving to a flat tax in the first place. But you are right about healthcare. It’s one of the great hobbies for many people; get up, get dressed, pay for a taxi to the doctor’s office, read some year old magazines, get a finger stuck up your ass, then take the taxi home. It’s better than watching People’s Court. A staggering amount of the money spent on healthcare is a result of these “medical hobbyists”; I think it’s about 97% (or maybe it was 0.0097%, I’m not that good with numbers).
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.