All i see in that entire diatribe is “What if” except this:
What benefits does limited government give us? Really??
I meant to add: If you want a flat tax where everyone pays their fair share, then give us a country where everyone is paid their fair share in the market: **Total economic regulation; **where no one can raise or lower the price of a service without permission; & there is, rather than a high marginal income tax, a hard cap on income, based on the amount one man can possibly earn by the sweat of his own brow.
Me, I’ll gladly take the relatively libertarian approach of a modest regulatory state & progressive income taxes.
No one is suggesting that they want that. What Voyager seems to be suggesting to me is that what we pay is of similar utility. In other words, they guy who makes just enough to get by and save a little for retirement gets more from each additional dollar than the guy earns more each year than he can spend in his lifetime. Lets take a look at four people and the effects of taking an additional $5000 in taxes each year:
[ol]
[li]Earns $20k a year. This would probably bankrupt him. it is three months salary gone from someone who is probably living paycheck to paycheck. Would change from working poor to homeless.[/li][li]Earns 50k. Would hurt quite a bit, but not be fatal. It would mean a significant decrease in discretionary spending and/or savings. Would have a negative effect consumption and economic mobility.[/li][li]Earns $150k. Minor inconvenience. Slight decrease in discretionary spending and/or savings. Would have little in the way of long term effects.[/li][li]Earns 500k. Barely noticeable. Change in spending and savings would be close to noise level.[/li][/ol]
Look, you need to clarify what you think a flat tax will accomplish. Do you want fairness, simplicity, or something else?
If it is fairness, first you have to define what is fair. Everyone pays an equal amount, or everyone pay an equal percent, or everyone pay what they can afford, or everyone pay proportional to the benefits they receive, etc. Then explain why what you propose is more fair than what we have now. You also have to factor in other taxes than just income taxes and explain why it is fair for wages to be taxes at higher rates than capitol gains.
If simplicity is what you are looking for, then you are going in the wrong direction. The tax code is complicated because Congress has been using to implement social and economic policy for a long time. Every deduction has a specific purpose that someone wants in there.
Jonathan
I never said equal power, now did I? Taxing someone who makes $3 million so he has $50K left hurts more than taxing someone who makes $60K so that he makes the same amount. Now, what to try to respond what I actually said. And you might want to leave the Socialist nonsense out of it too. Tossing about accusations of Socialism is an indication of a bankrupt argument.
You do realize that medical inflation has been four times as fast as inflation overall, that family farms were substantially wiped out in the 1980’s, that in fact the private sector underpays people & screws them over?
All the stuff I described has already happened, in fact. But I thought you might appreciate a thought experiment, since this whole thread is a “What if?” question.
Ass.
We don’t have to even argue about the benefits/negatives of government shrinking. Those who are so hot for this might try shrinking government before touching the tax code. (The IRS, of course, is a tiny part of government.) The worst that could happen would be that there is a surplus that would shrink the deficit. On the other hand, if they fail to shrink the government, as always seems to happen, we won’t be left with the gigantic deficits brought about by Reagan, Bush Jr. and their corp of witch doctor economists.
I should say, some people, to be clear. If everyone were equally underpaid, it would be a wash. You underpay some by overpaying others.
I apologize if I came off as an ass. I did not mean to. I was merely trying to tie cohesiveness to MY “what if” without exponentially branching off into a million “what if’s”, if that makes sense.
Smiliar utility is what was being proposed. A percent based tax (say 19%) is what was recently discussed.
19% = 19%
Just because someone makes 3 million and another makes 50k. The utility of the monies is NEVER going to equate the same because some people will invariably change the definition of “utility”. Your definition of utility might be “money for vacation”. Well vacation to me is a stint at the beach (couple thousand dollars), to the rich the vacation might be a private jet to the Swiss Alps. Is it in excess? I don’t think that is for you or I to decide and therein lies the rub.
19% is 19%, to me that is fair. Add in the fact that there will be a lower limit (maybe even as we see it currently) In that the lower paid folks will have other incentives, tax breaks, deductions or what have you in order to feel less pain. That isn’t at all close to what is currently born by the rich though.
2-for-2 
if that’s your definition of “fair” why isn’t it fair to require everyone to be paid the same?
you’re pigeonholing a definition of “fair” to comport with the idea you want to validate.
Actually, the italicized portion is the OPPOSITE of what you are proposing – to eliminate tax breaks (other than a personal exemption) in order to institute a 19% flat tax.
And the bolded portion isn’t clear to me: are you saying you support giving wealthy people a 50% tax break, and increasing the tax burden on the middle class? (See my previous citation – the top ten percent of wage earners pay about 27% of their earnings in Federal taxes.)
Here is an article on the diminishing marginal utility of money. You can see from the second chart that the utility is lot linearly diminishing but exponentially diminishing to some very small slope. What the money is used for is immaterial. As you get more, money stops becoming an issue. A middle class person will factor in costs to his vacation, selecting airfare and hotel at least partially based on it. A very rich person will not.
I don’t know if you have enough money to experience this. It happens for different items more and more as you get more money. But, to reiterate, your misconception is that the marginal utility of money is linear, which it most certainly is not.
I still don’t understand why you think this is “fair,” because I don’t know what you mean by fairness. You have set up the idea that graduated bands for income tax are in some way unfair, because the rich pay a higher percentage tax rate.
However, why is everyone paying a certain percentage “fair”? If we assume for a moment that government benefits all citizens equally (an assumption that isn’t accurate, and we will need to relax later) then why is it fair in your eyes that someone who earns $1 million a year pays 100 times as much for the same benefit as someone who earns $10,000 a year? If a simplistic view of fairness is what is at stake, wouldn’t the fairest system be one where everyone pays the same absolute amount of tax?
Now, I personally think such a system is ridiculous, because it doesn’t include any concept of ability to pay. It also is flawed because how much a person benefits from government is dependent on their income level. In a “pay for benefits” system, the middle classes would arguably bear the brunt of the taxes, as government programs seem to be targetted towards them. But the question I have for you, Kearsen, is why that equal taxation isn’t the fair system? Also, why is your system, 19% or whatever, any fairer than the current one? It still includes a focus on ability to pay, and therefore opens the door for the argument that if ability to pay is important, a graduated system is fairer.
To answer the question, the thread started out as a pro/con and somehow devolved into me defending a position that I just wanted information on.
To answer your question directly is because no one in their right mind would pay the same amount of money for non-equal benefits. I have also been trying to incorporate other people’s ideas into something I could really get behind. For instance, I think starting out as a strict percentage based tax would be a great model to begin anew with. From that building block you could incorporate all kinds of things. Diminishing marginal utility and tax breaks for the poor would probably be a part of any new model.
Like I said, information is where I started, defending is where it has led.
To be fair, I wasn’t led astray it was my own fault.
so you’re admitting you’re going to wind up with a non-uniform percentage of taxation right off the bat…
how is this different than what we have already?
Why?
One of the main differences is the way the Fed runs the tax code. Loopholes would be done away with. No more gaming the system.
Its also hard to look at taxes and fairness and only look at federal income tax - which is progressive on earned income (but long term capital gains is very low - and a lot of rich people make a lot of money on LTCG). Social Security/Medicare taxes are very regressive. Property taxes are something that the rich can choose how much they pay by how much property they choose to own - while often the poor are paying on the roof over their head, they don’t have a choice to downsize to a smaller tax burden or sell the boat. Sales taxes are another…I save 40% of my income - that’s money I don’t pay sales tax on until I spend it. Someone who needs to spend 90% of their income pays a higher proportion in sales tax (especially if they live in a place where food is not exempt).
Its complex - but there are reasons for the complexity. The LTCG tax is low because you have your money tied up for “long term” and the tax rate is lower to try and compensate for time value of money.
Loopholes will not be done away with unless you’ve got some way to get this into law without involving Congress. You can make any proposals you want, but they will be nothing but useless speculation because of this.
How do you propose to make this (or any) proposal loophole-free?