Flat tax and the tax burden of the rich

Cecil's Columns/Staff Reports
21

[QUOTE=fireflyz]
The flat tax scheme was a classic example of political misdirection (i.e. deceptively cloaking a benefit to the wealthiest of Americans as a benefit to ordinary taxpayers). Part of the claim of its proponents was that a flat tax would simplify the tax filing process by eliminating pages and pages of complex calculations to determine your tax. They even claimed it would eliminate the need for a vast IRS bureaucracy.

However, calculating your tax under a progressive tax system is just as easy as calculating your tax under a flat tax system – it’s a simple percentage of income. What makes the tax filing process complex is defining taxable income.
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Can I kiss you?

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[QUOTE=Running with Scissors]

One interesting point the Fair tax folks make is their (unsupported) claim of a $1.5 trillion underground economy (mostly of illegal and undocumented workers) that would then be paying into the system. What is not pointed out is that since those workers, who are almost all low income, are not in the system, they would not be receiving the rebates that the legal low-income families would receive, which almost sounds as if it’s a proposed solution to the “illegal immigrant problem”, since these undocumented workers could no longer afford to live here at their current wages.
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Not only that, but it is far easier to sell products in an underground economy than to get paid. With a 28% to 30% sales tax on things, there will be a great incentive for bootleggers. In the East Coast, there has traditionally been a thriving business smuggling cigarettes from low tax states to higher tax states.

Retailers are also not terribly thrilled by this idea. Gigantic price increases are going to play havoc for sales of products with elastic demand, like clothing and automobiles. I don’t care that people are going to make more money - the sticker shock will drive down sales and ruin the economy.

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[QUOTE=Sampiro]

In short, I think we should confiscate a few private fortunes just to make a show of power, starting with those of Limbaugh and Coulter. The money will be spent by me to create jobs and financial opportunities for others by starting my own record label to produce my daily spoken word CDs and podcasts and the enormous statues of myself that will grace the Mississippi and Chattahoochee rivers.
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Please do this. Please.

:cool:

24

I’d like to absolutely clarify one thing:

The ‘Wealthiest’ will NEVER pay their ‘fair share’. They can afford good accountants to render their wealth nontaxable.

The ‘Wealthiest’ can afford to jump through any kind of loophole that is miles out of reach for you or I.

The ‘Wealthiest’ will always get breaks because they are politically connected. They golf with the guys you’d get tasered and thrown into a cell for trying to approach.

The ‘Wealthiest’ can pull up their stakes and go ELSEWHERE. They don’t like the taxes? They can just take their toys and leave. Canada, New Zealand, Australia, a Carribean island, perhaps? Maybe just buy a country to live in. If you have ten million dollars or more, ANY nation will happily make you their citizen.

Therefore, I don’t give a flying crap what effect any given tax system has on the ‘wealthiest’, because NO tax system will EVER have an effect on them.

I’m thinking about tax systems that do something that CRUSHES ME LESS. Heck, how ever can I become ‘rich’ from my own business if most of my income is confiscated by the government to pay to feed and house and give health care to Mexicans?

As for the ‘poorest’, get real. If you already get your home for free and your food for free and your clothes for free, a VAT will not touch you. Most ‘sales tax’ schemes make exceptions for food and various other products already.

If the VAT only applies to NEW goods, anyone who buys second-hand will avoid it completely. Frugal people who live within their means will thrive on the second-hand economy. I am personally well acquainted with Thrift stores, and furnished most of my house with their second-hand products.

Yuppie dumb-asses with excess disposable income who want everything shiny and perfect are the ones ‘hurt’ worst by a VAT, and they’re the sort of people to proudly proclaim how much they paid for some useless bauble, anyway.
Want to jump start the economy in a way that feeble little ‘tax refund’ checks could never accomplish? Tell people they’ll pay more for their consumer toy crap starting April 16th next year, and that their personal income tax will be abolished.

Everyone suddenly gets a net boost of 20%~40% of their expected income, and a VERY valid excuse to shop 'till they drop.

And don’t tell me about ‘inflation’ We already have that out of control, in case you haven’t been to the store since 2005.

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[QUOTE=pingnak]
New Zealand, Australia…
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Heh. That’d help.

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[QUOTE=pingnak]
I’d like to absolutely clarify one thing:

The ‘Wealthiest’ will NEVER pay their ‘fair share’. They can afford good accountants to render their wealth nontaxable.

The ‘Wealthiest’ can afford to jump through any kind of loophole that is miles out of reach for you or I.

The ‘Wealthiest’ will always get breaks because they are politically connected. They golf with the guys you’d get tasered and thrown into a cell for trying to approach.

[/quote]

They don’t actually…they pay quite a lot of taxes"

but they don’t. they want to live here, and are willing to pay for it.

If you really think your taxes are mostly going to that, then you are mistaken.

Maybe, but I don’t know any poor people get all that for free. I’m pretty damn poor these days and I don’t get any of that for free.

Second hand goods are currently taxable. So why would this new tax be any different.

They pay the highest percentage of their income in property tax, not sales tax.

Well…that would jump start the survivalist economy at least. the impending collapse of the government would put the fear of god into them.

then the price of everythign goes up about 70% for this sales tax and everyone making less than 50 grand a year is completely screwed.

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Everyone making less than 50 grand a year is ALREADY screwed.

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Oh, and nice tactic, implying a simple change of revenue policy would destroy civilization. Yeah, realistic.

Make dopes who spend too much on foreign-made crap pay more, that will bring about Armageddon, like, next Tuesday for sure.

As if ‘outsourcing’ all of our nation’s production overseas isn’t doing any damage to us. Yeah, it’s individual corporations (virtually all of them) doing it, but creating conditions where the only thing that makes financial sense is outsourcing overseas is very much our government’s responsibility.

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[QUOTE=pingnak]
Everyone making less than 50 grand a year is ALREADY screwed.
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So why screw us more with higher taxes?

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[QUOTE=pingnak]

Make dopes who spend too much on foreign-made crap pay more, that will bring about Armageddon, like, next Tuesday for sure.

[/quote]

discourage people from buying stuff…yeah, see thats kinda what our economy runs on. Nobody buys anything then nobody has a job to go to.

I agree with you here, but whats that got to do with shifting all the taxes the wealthy are paying over to the poor and middle class.

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Your right, but what we need now is a really good campaign. I’m thinking posters of a crying Steve Forbes in front of his mansion reminiscent of the crying indian from the Keep America Beautiful campaign of the seventies. The ewalthy are wealthier than they have ever been and we should be thankfull because any minute it will trickle down to us. Any minute now.

Motorhead has it right. Eat the Rich

32

Other way around, if anything. An undocumented immigrant working under a SSN that isn’t their own is still going to be paying into the tax system, because their employers would get into a lot of trouble if they weren’t. But since the SSN the immigrants are working under aren’t their own, they’re not going to be able to claim any of the benefits of those taxes. So your health care is actually paid for in part by the government confiscating income from Mexicans.

33

The trouble is that the government has used the tax code for social engineering. Somebody thought that private home ownership was a good idea, and the mortgage interest deduction creates incentives for people to buy their own homes, drastically changing population dynamics. The government decides they have an interest in child care, and we get a child care credit. They get the idea that millions of baby boomers spending their retirement eating dog food is counterproductive, so bang, here comes 401k.

You may disagree with some or all of the deductions, and the motivations behind them are subject to debate, for example, I’ve talked to people that think the child care credit was used to subsidize the entry of women into the work force driving down the cost of labor, but deductions and tax credits are a knob to turn that affects people’s behavior, and that knob has been used to the fullest. Take it away, and people’s behavior is going to change, and it will change fast.

The economic and social changes are going to be hard to predict or affect. If we try to eliminate these deductions and credits we would have to phase them out for stability’s sake.

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[QUOTE=control-z]
I still don’t see what’s so bad about a flat tax. It’s equally fair to everyone.
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When you come up with a universally accepted definition of fair, c’mon back and share it.

The thinking of progressive taxation is that the marginal value of a dollar is less if you have more of them. That’s Economics 101. A rich person can “afford” $10,000 more than a poor person can, it is not as high a burden on them. Therefore, all else being equal, we tax the richer person a higher percentage of their income. Many consider it fair, quite a few don’t, there’s no real way to definitively arbitrate the fairness of it.