I don’t know enough about taxes to say if this would work or not. But it sounds like crap to me.
Theyshould totally remove all federal taxes and in place put a sales tax on all goods from some calculations i have heard to this it would have to be about a 20% sales tax or for those of you who dont live with sales tax in your state that would be 20 cents to the dollar.
Next they cut nearly all social programs which will be explained later. The social programs account for i believe is 59% of our governments budget thats terrible.
Then every year the government gives every man,woman,and child of every race and pay $6,000 which will allow them to pay for all the things the government pays for now and so the rich people will get money back but not as much as they have given and the poor people will get more money back than they have given.
Now if the poor were smart they would love this plan why you ask say a person makes $10,000 20% of that is $2,000 then he gets 6,000 back so his total income excluding the taxes he payed is $14,000 the guy has come out $4,000 richer than he was before.
Also this would stimulate the economy because what is everyone going to with there $6,000 spend it so there will be that much more and also if they spend all $6,000 they will give $300 back to the government
Also this would allow us to allmost entirely get rid of IRS which everyone is happy about because they dont have to figure anything
I can tell you with the current system of taxes no one really knows how much if you make enough money you can go to 5 differant accountants and will probably get 5 differant amounts you owe to the government that doesnt sound good at all does it.
Since you’ve already reduced the tax base by removing all federal taxes, where do you get the $6,000 to pay everyone?
Now that you’ve cut the social programs, how do those people live, considering a large percentage of them lack the skills to manage their money wisely? After all, you admit a failure in your system by stating, “Now if the poor were smart they would love this plan …” How do they become smart? Big assumption to make!
Placing a sales tax on goods is regressive. Those with the lowest incomes pay a greater proportion of their “income” in taxes compared to the wealthy. Where is the savings?
Okay, I see what you’re saying. This would be a consumption tax version of the negative income tax idea. It could be done - a number of counrties have introduced VAT/ GST systems which featured refundable sales tax credits (although they have been means tested). I seriously doubt whether 20% would do the job - I really doubt whether 20% would do it for income tax, and the consumption tax rate would obviously have to be higher.
This is a version of the flat tax idea, which you posted on recently here. The main problem is the same: even if you protect the poor, the middle faces higher taxes and rates. The main gainers are the rich, in this case, particularly those who currently derive most of their income from capital.
There are practical problems too, to do with communal living and income splitting.
Seeing as that other thread was in GQ, I refrained from commenting on this:
Any tax reform starts from now - from the current, after-tax distribution of income. A flat tax would redistribute income from the middle to the rich.
It won’t “get rid of the IRS”. Here in CA we have the BoE which collects & enforces sales taxes. They are worse than the IRS. Now imagine a BoE at the Federal level. I shudder. However, this would cause a nice boost in the jackboot industry, so “it’s an ill wind…”) :rolleyes:
Next those social programs are to a large extent Social Security. No politician in Wash DC dares even whisper to himself in his dreams any even vague concept of cutting SS. Unless, of coure, he wants to find out how Unemployment works. You would be safer by getting on TV, taking a crap on the steps of the Lincoln Memorial, and then wiping your ass with the Flag. I only slightly exaggerate, and maybe this is truer than I thought.
Maybe a 20% Federal sales tax would do it. But then there would still be the State sales tax- making a 28% tax that would be very prone to enforcement problems. More jackboots. You likely don’t pay anything close to 20% of your gross income in FIT.
Next - most Taxpayers file a 1040 EZ or 1040A. They don’t itemize, they just take the STD deduction. They have no other deductions. You can take THAT return to a thousand different accountants, and 999 of them will give you the exact same tax. (There’s always ONE…). Yes, if the return gets complicated, then you get different answers. But that is not due to the inherant evilness of Income tax- it is due to 50 years of social engineering & special sweetheart deals. The Income tax system could remain basicly the same, with the same graduated “progressive” tax rates, and be as simple as a 1040EZ- or, well, a 1040A.
Then, of course, there would still be State income tax, excise taxse, Corp income tax, FUTA & Fica.
I will allow that since you added in that “negative tax” of $6000/yr, it does get rid of most of the moral objections to a “regressive” tax system. However- Your system has absolutely zero chance of being even discussed by any Congresscritter, and wouldn’t work either. Where would the money come from for that $6000/yr?
Is anyone else going to ask for a cite that 59% of the federal budget goes to social programs? Even figuring social security into it, I doubt it’s that high a percentage.
I also doubt that 20% is a high enough rate for a sales tax that’s replacing all income taxes. The last time I heard this idea being discussed by a group that was recommending it, they gave a figure of 27%. And considering they favored the idea, they probably had a tendency to underestimate the rate.
And finally what’s the point of a universal $6000 payment? People with no other income will not be able to live on that amount. And people with a substantial income don’t need a government windfall.
Well, I’m willing to believe that with Social Security, it might be that high. But, then social security and medicare would probably be most of that 59%. The amount spent on the programs geared specifically to the poor (medicaid, welfare, food stamps, etc) doesn’t really amount to all that much, I believe. One can look these up at the US Federal Budget website you refer to although, as you noted, it is sometimes hard to deconvolve exactly what is what.
As was alluded to by hawthorne, most versions of a flat tax or consumption tax (assuming they have large enough offsets at the bottom to exempt the poor) tend to hit the middle class harder than the current tax system and would hit the rich less hard (which is also the way we are moving under Bush’s plan).
I just asked the person who proposed this plan and they said that under their plan they would not cut Social Security. Social Security would be reduced with Medicare.
I say take the current Federal budget, subtract the amount of money the US is spending on defense, take the rest, divide it by the number of adults in the US who are over the age of 18 and mail 'em a check. That’s just as likely to solve all the budgetary problems as your friend’s suggestion.
You would be safer by getting on TV, taking a crap on the steps of the Lincoln Memorial, and then wiping your ass with the Flag. I only slightly exaggerate, and maybe this is truer than I thought.