Certainly not true in industries where tipping is the norm. In fact, restaurant servers are assumed to have made a certain amount in tips and are taxed on it. This has come up several times in tipping threads where it is pointed out that if you don’t tip someone, they will still have to pay tax on the tip they didn’t get.
How certain are you of the $100 tax on family of four with $40k income? I’d double check that to be sure.
Army’s plan would produce just under $800 in tax. But that family is so close to the cusp of the cutoff point (no taxes paid) that one could easily produce the $100 tax with only minor fiddling (my bolding in the quote below):
You can set the std deduction at any level you want. The one problem with that, is that the nominal cost of living in different parts of the country can be significant, producing some level of unfairness. But any tax code that allows any deductions has the exact same problem.
You can check out the details of HR 1040 at this site.
What, no link to Cecil’s take on income tax?
I’m SHOCKED!
You’re right, I highballed it. According to the 2003 SOTU, “A family of four with an income of 40,000 dollars would see their federal income taxes fall from 1,178 dollars to 45 dollars per year.”
Link.
Just having run some numbers based upon the flat tax scenario you just described, I’m actually even more convinced its a bad idea. For example, according to this site, the median income for a four-person family in the US is $66k and change. Under Armey, that’d be a tax liability of $5,307 (at a 17% rate), vs. a Bush plan (as listed in that site) liability of $4,038 – basically a rollback to pre-2001 tax codes plus a couple hundred bucks.
I concede that there are significant benefits to simplifying the tax code. However, I think tax credits for kids are a good and fair thing. Heck, tax credits for buying a house are a good thing, too.
I’m a single guy making a decent salary. I have no problem paying my fair share of taxes, especially if that allows one of my coworkers a bit of a tax break so that she can save a few bucks to spend on her young twins.
And I’m no expert in taxes and such, but the link to the bill that you gave a moment ago appears to have the standard deduction for a joint return at $23,200, not $35,400, unless I’m reading something wrong.
YOu cant use historical experience, because we have new rules now. In the past, we had a mostly closed economy, so we always had an increasing number of higher paying jobs. With free trade, we dont. More jobs are being exported than being created, something we never had before in america.
Government debt does matter, because we have to pay interest on it. Paying interest on the national debt is one of the biggest items in the federal budget, and this is with record low interest rates. When interest rates rise, it is going to be a huge problem just to service the national debt, and will cause a big rise in the income taxes just to pay interest on past debt.
I dont know why you cant see why our factories and high tech jobs moving to asia has to do with anything. Our wages cannot increase at the same time if we dont have wages, if we dont have the higher paying factory and high tech jobs, what wages are there going to be?
People who are out of work, dont pay income taxes. People who used to make $100,000 in IT work, and who now work at Walmart pay very much less than what they used to pay in taxes. The reason why we have such a huge federal deficit now, and why several states are having financial problems, is because so many millions of people are out of work, and because so many millions more are making very much less than they used to, which means that people are paying less taxes. Businesses are also paying less taxes if they have a factory in asia instead of a factory in america.
If you want our factories and high tech to be in asia, then you must be prepared to pay more taxes if you are still working, to make up for all of the displaced american citizens who no longer have jobs.
Certainly not true in industries where tipping is the norm. In fact, restaurant servers are assumed to have made a certain amount in tips and are taxed on it. This has come up several times in tipping threads where it is pointed out that if you don’t tip someone, they will still have to pay tax on the tip they didn’t get.
Are you sure? I manage a Pizza Hut and I don’t see any indication that they are being taxed on anything close to the full extent of their income. I think they get taxed assuming minimum wage. And drivers I know for certain get taxed only on those tips they report.
I’m going by what dopers have said in other threads, so not a 100% authoritative cite. Here’s one.
I don’t see why either of these are good or fair. Tax credits are welfare - one part of society subsidizing another part. Why should people with fewer than average children subsidize the breeders (yes, I do have children)? Why should the homeless subsidize property owners (and I own a home)?
Heh. Department of the Acronym Maker and Assigner Guy Extraordinaire?
Tax credits for children have been around a long time, and they used to be a high enough percentage of total income that they were the main reason why most families paid no income tax from its inception thru the 1940’s.
We not only need to keep child credits, but we need to make them as high as they used to be as a percentage of income.
Go after the business tax credits, that is where it is unfair to individual citizens.
I think you didn’t add in the deduction for dependents.
At any rate, if you go back to my original post, my main point was simplification, not the actual tax rate or whether or not it was a flat rate.
Deductions for children are somewhat different in that they acknowledge that mouths to feed and bodies to clothe represent an expense that it seems unwise to tax. (I actually disagree with that point, but am willing to concede that it’s unrealistic to expect us to eliminate that deduction in our society.) But all the other deductions, including mortgage, are a shift of the of expense of economic choices from one part of society to another. As soon as you allow one type of deduction along those lines (again, use mortgage deduction as an example) you open the floodgates for every other dedeuction that someone deems “good”.
And I’ll give you one guess as to which economic class is the most able to use these deductions to reduce their overall tax burden. (Hint: the class can be describe by words that start with “r” or “w”.)
Because, as a single guy, I’m going to have far more disposable income that I’m going to spend on beer, Xbox games, and loud rock n roll music, than my coworker who has to buy diapers, baby food, and baby clothes.
I think that it is good, as a matter of national policy, that the Federal government elect to reduce my friend’s taxes so that she and her husband can invest more in their kids so that they can grow up healthy and get a good education, rather than trying to tax me at roughly the same rate as those who are trying to raise children. I really don’t need that much more money to spend on my Animal House lifestyle.
Same thing on the housing front. I’m a renter (not homeless, mind you), and I think that it’s far better for folks to invest in buying a house – what with all the carpentry, durable goods, and property taxes associated with them – than for me to invest in more Matrix DVDs and ultra-premium liquor.
Dammit, amarone, I want you to pay less taxes and I want me to pay more, so just suck it up and deal! 
Right on the first point. I skimmed right over that sentence last night.
Agreed on the second point. (I must note, that sounds awfully close to a “class warfare” type statement coming from someone who is an acknowledged conservative! 
)
I still think that these deductions are more a benefit to lower- and middle-class families than a bad thing for how they can be abused by upper-income folks.
I had a conversation with a lawyer the other day about all these issues, and he pointed out that when he studied tax law, it was presented to him as just a big form of risk management: ie, what are the chances I get dinged by the IRS if I deduct such-and-such, as compared to the benefits of taking that deduction? In his view, one major reason the tax code has gotten so complicated is that the gummit has tried to close loopholes used by these risk-management types, and in writing something specific to close one loophole, it may implicitly open up another one.
Unfortunately, I’m not smart enough to know the solution, but a flat tax just seems to me to make the middle class pay more for the aesthetic improvement of improving the “fairness” of the tax code.
Ah, the old “new rules” trope. Obviously things change: the important question is whether they’ve changed in relevant ways. Nutty people five years ago liked to pretend that there were “new rules” for the “new economy” that magically somehow made the massive overvaluation of the stock market okay. But the old rules hadn’t changed: not EVERY competing company can be a winner at once, and some of the winners in the future will include comapnies that don’t even exist yet.
Cite? First of all, we’ve been quite variable. In the 50s, trade barriers came down like never before, and we seemd to be okay them.
Cite? The fact remains, despite all this movement, we still strangely have a relatively low unemployment rate, which even seems to be improving as we move out of this recession (before it, we had an incredibly low unemployment rate, and we were pretty much just as open to trade then as now)
On this point, there is simply no debate. Interest is simply the trade off we have for not paying the debt today. But we get something for that tradeoff: we retain access to that money TODAY, rather than tommorow, which is itself worth something (which you can see by what would happen if you bought a government bond: the interest you earned would equal the interest paid on the debt, because it’s exactly the same interest). If you really think that money today is no better than money tommorow, then perhaps you’ll lend me 1000$ sans interest, since it’s all the same to you?
Jobs move around all the time. It’s not new, and it’s not bad in the long run, though it certainly causes disruption. It’s called comparative advantage. And it certainly isn’t as large a factor in the economy as you make it out to be.
Wages from other jobs. You could have said the smae thing before there WERE many high tech jobs: where are all the lost factory jobs going to come from!!! They come from the fact that
Again: what’s your evidence? I see little evidence that this is a significant factor in financial woes casued mostly by governments outspending in expectation of eternal boomtime, and then being hti by recession.
Why? Why is it any of my business where people want to put their factories? They aren’t my factories. They aren’t America’s factories. They are owned by those who actually own them.
Acknowledged libertarian (small “l”), if you please.
The wealthy pay the vast majority of income tax, but they also get the juiciest deductions. I personally would have a lot to lose by going to a flatter tax w/ no deductions. But I’m still in favor of what I think is a better and fairer system, even though I’m a big benificiary of the current system.
Hey, let’s cut out the IRS middle-man: you may send your checks direct to me any time.
A thousand pardons. Noted for future reference.
Well, there is a problem with all those “flat tax” plans. Setting aside those that start with an assumption that we’d cut the budget by 50% (OK, I admit there is some Pork & waste in Federal spending. Try to get a majority of voters to agree on anything but say 10% of what IS that “waste” and “pork”. You can’t. We all think something else is waste. For every voter that thinks the NEA is waste, we have one that hates miltiary speding, and then there is another than hates “welfare” and another that woudl cut foriegn aid, and another that wants to get rid of NASA), EVERY SINGL “flat” tax plan has the “wealthy” paying less taxes and the middle class (by which I specifically mean ME) paying much higher taxes. They are all designed to soak the middle class wage earners, and let the Wealthy pay very little.
Go ahead. Find one that is “revenue neutral” amd that the Middle class pays less than they do now. Well, unless you allow for a large family. I am only slightly agrieved by my “breeder” freinds who get large tax breaks- damn those “kids” are expensive! 
But double MY taxes and cut their taxes in half- while the Filthystinkingrich pay nothing, and I get mad. (If I am right, under the Armey plan, you pay no taxes on investments, or gambling on the stock market)
I believe that most of the studies that have been done show that the federal income tax is still progressive…In fact, it is the most progressive tax we have (other than the soon-to-disappear estate tax, which is a relatively small player at any rate) and offsets the regressivity of the payroll taxes and most state taxes (esp. states that raise much of their income through sales taxes). Generally under a flat tax, how the poor and lower middle class make out depend on how it’s structured…It could be better or worse for them. But, the rest of the middle class usually fares worse and the big beneficiaries are the same ones as under the Bush tax cuts, i.e., the wealthy and, most especially, the very wealthy.