RE: Flat tax needs to be revisited?

RE: Flat tax needs to be revisited? (Full Version)

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servantforuse -> RE: Flat tax needs to be revisited? (9/5/2009 6:38:55 PM)
I very much like the idea of a flat tax. Right now 45 % of Americans pay NO federal income tax. With a flat tax everyone would pay their fair share. What could be more fair ?

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 6:42:36 PM)
even with a flat tax, the poverty levels would be exempt.

servantforuse -> RE: Flat tax needs to be revisited? (9/5/2009 6:53:26 PM)
Why can't everyone pay something ? Even the poor I see have money for beer, cigarettes and of course a cell phone,.

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 6:57:42 PM)
lol.. careful of mistakening working poor for someone else. you can get a cell phone for 50 bucks a month (Cricket, SunCom, ect) most dont go out, but they may drink and smoke... less and less are smoking these days, or so it seems. at some point, people aere just too poor to live, let alone pay taxes. between housing, food, utilities, transportation ( even a monthly bus pass here costs 75 dollars a month), there isnt much left for one.. add children.. and its even less, though some of those are eligible for help. its my belief that they shouldnt pay taxes. under the current system, they would regain it back anyways... plus extra, if they have children.

CallaFirestormBW -> RE: Flat tax needs to be revisited? (9/5/2009 6:58:21 PM)
I have to admit that I am keen on the concept of the 'flat tax', and always have been. I -swore- I wasn't going to get myself mired in another one of these discussions, but really, flat-tax makes complete common sense. In a way, it is equivalent to the concept of the 'tithe'. It is reasonable and fair -- everyone pays the same percentage, whether you earn $5 an hour or $500 an hour -- and yet the amount is scaled sensibly, and everyone pays -something-... which is, indubitably, absolutely just. Dame Calla

CallaFirestormBW -> RE: Flat tax needs to be revisited? (9/5/2009 7:00:18 PM)
quote: ORIGINAL: tazzygirl its my belief that they shouldnt pay taxes. under the current system, they would regain it back anyways... plus extra, if they have children. I disagree. I believe that we do not value what we do not pay for -- and that those who value our government services the least tend to be those who use those services and yet contribute nothing towards their use. I believe that -everyone- should pay something towards the communal services that we all use. Dame Calla

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 7:04:56 PM)
My point being they would only get it in other ways. Reduce their income by taxes and they may become more eligible for more benefits.

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 7:06:50 PM)
quote: ORIGINAL: CallaFirestormBW I have to admit that I am keen on the concept of the 'flat tax', and always have been. I -swore- I wasn't going to get myself mired in another one of these discussions, but really, flat-tax makes complete common sense. In a way, it is equivalent to the concept of the 'tithe'. It is reasonable and fair -- everyone pays the same percentage, whether you earn $5 an hour or $500 an hour -- and yet the amount is scaled sensibly, and everyone pays -something-... which is, indubitably, absolutely just. Dame Calla i would love to see a scaling back of the IRS. a retraction of many of the programs, laws and allowances so many use to divert and shelter money. the repeal of the AIG and allow all incoming money to serve as the tax base. no more hiding in off shore funds, the amount and taxes are immediately reported before they are even recieved.

servantforuse -> RE: Flat tax needs to be revisited? (9/5/2009 7:09:05 PM)
How do you reduce income taxes when they don't pay any taxes now?

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 7:21:29 PM)
earned income credit

DomImus -> RE: Flat tax needs to be revisited? (9/5/2009 7:53:41 PM)
quote: ORIGINAL: tazzygirl earned income credit Oh, yeah... those people that rush out in January every year to file their electronic tax return for the refund on the taxes they didn't pay. The best part is they get reamed by the companies that file for them.

Musicmystery -> RE: Flat tax needs to be revisited? (9/5/2009 7:56:55 PM)
quote: What would change should the tax base be based upon all income, not just wages, offset by only investment losses? I'm lost. This makes no sense. Income tax IS based already upon all income, not just wages, offset by investment losses.

WyldHrt -> RE: Flat tax needs to be revisited? (9/5/2009 8:05:22 PM)
quote: Let me try to illustrate one of the problems with an incredibly simplistic model (I don't do this because I don't think you can't understand a more complex model but because my financial expertise doesn't allow me to construct one on the fly)....that said: Picture a population of 100 people. 90 of them make $10,000 per year, 10 of them make $1,000,000. Under a graduated tax system, the lower 90% pay 20% in taxes. The top 10% pay 40% in taxes. This means that the lower 90% will pay $2,000 per year in taxes, leaving them with $8,000 to spend on their own personal living expenses. The upper 10% will pay $400,000, leaving them $600,000 to spend on their own personal living expenses. It will also result in a tax revenue of $4,180,000. Now, under a flat tax, in order to keep that same tax revenue level, every person in that group of 100 people would have to pay $4180 in taxes. This results in the lower 90% paying twice as much in taxes while lowering the amount of taxes that the upper 10% pay by an incredible amount. The end result would be that the lower 90% of taxpayers would be left with less than $6,000 to spend on their living expenses while leaving the top 10% of the taxpayers with $995,480 to spend on their living expenses. Umm... that's simple; it is also completely incorrect. First off $4180 x 100 people = $418,000, not $4,180,000 Secondly, flat tax means the same percentage is paid by each person, not the same amount.You can't really pay $41,800 in taxes when making $10,000 per year after all....

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 8:10:29 PM)
quote: ORIGINAL: Musicmystery quote: What would change should the tax base be based upon all income, not just wages, offset by only investment losses? I'm lost. This makes no sense. Income tax IS based already upon all income, not just wages, offset by investment losses. With the ability to divert funds... sometimes to be taxed later.. health care spending accounts, IRA's, ect... Definition: Adjusted Gross Income (AGI) is income from taxable sources (gross income) less tax deductions that are allowable even if you do not itemize deductions on your tax return. Taxable income can include salaries or other employment income, interest and dividends, and long- and short-term capital gains and losses. The adjustments include certain IRA deductions, moving expenses, and unreimbursed business expenses. Here is a full list of Above-the-Line Deductions. You can figure your AGI on the first page of your federal tax return. Adjusted Gross Income serves as the basis for figuring income tax you owe. Adjustments to Income Adjustments are certain expenses which directly reduce your total income. You do not need to itemize your deductions in order to claim these expenses. Adjustments reduce your total income to arrive at your Adjusted Gross Income (AGI). •Classroom expenses •Qualified performing artists and other professions •IRA deduction •Student loan interest •Tuition and fees deduction •Health savings account deduction •Moving expenses •Self-employment tax deduction •Self-employment health insurance •SEP deduction •Early withdrawal penalty •Alimony paid •Domestic Production Activities Deduction (a new deduction for businesses) http://financialsoft.about.com/od/glossaryindexa/g/AdjGrossInc_def.htm Then there is the capital gains and the situation of shelters, among other things... quote: The point of shelters is precisely to shift income from highly taxed to lowly taxed forms. For example, when lower taxes on capital gains cause an executive to shelter income by switching the form of compensation from wages to stock options (which generate capital gains), revenues from capital gains taxes increase, but tax revenues from wages fall by even more, so overall revenues fall. http://www.brookings.edu/opinions/1997/09taxes_gale.aspx Just seems to me that if we end these options, and people actually are taxed on all income, minus losses.... then wouldnt it be even for all?

Honsoku -> RE: Flat tax needs to be revisited? (9/5/2009 8:54:21 PM)
quote: ORIGINAL: CallaFirestormBW I have to admit that I am keen on the concept of the 'flat tax', and always have been. I -swore- I wasn't going to get myself mired in another one of these discussions, but really, flat-tax makes complete common sense. In a way, it is equivalent to the concept of the 'tithe'. It is reasonable and fair -- everyone pays the same percentage, whether you earn $5 an hour or $500 an hour -- and yet the amount is scaled sensibly, and everyone pays -something-... which is, indubitably, absolutely just. Dame Calla As long as you don't consider long term economic health, the realities of poverty, the nature of money, etc. The fair tax seems perfectly reasonable only if looking at the well being of an individual who is already living comfortably. If you look at the well being of society as a whole, the fair tax is a poor idea. I would wager that, by and large, supporters of a flat tax are either above the 50th percentile in income (and thus are likely looking at tax cut) or don't fully understand the ramifications of what they are supporting. I used to be keen on the idea as well, however that was years ago. Long before I had the grasp of macro economics and social systems that I do now. Do you really want to try to argue that the flat tax is socially just? That it is just to take food out of my mouth to fund programs which are intended to help me? That is so directly counter productive that it is insane. You wouldn't give both a body builder and your grandma 50% of their weight to carry and call that just. The flat tax simply puts the already financially strapped under an even heavier burden and makes them more reliant on those same government programs. quote: I believe that -everyone- should pay something towards the communal services that we all use. Oh, the poor pay for it in a myriad of ways. They pay in time, frustration, and health to name a few. Poverty is a miserable experience. Try it some time before you gripe that the lower rungs aren't paying their 'just' share.

Musicmystery -> RE: Flat tax needs to be revisited? (9/5/2009 8:57:09 PM)
You might have simply said deductions would not be allowed.

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 8:59:46 PM)
oops ~grins your right Master Tim.. sorry

MasterG2kTR -> RE: Flat tax needs to be revisited? (9/5/2009 9:00:23 PM)
It seems to me that everyone is totally missing the base concept of what a Flat Tax truly is. The concept of a Flat Tax does not necessarily mean that everyone pays the exact same percentage of income. Most Flat Tax plans that have ever been conceived or proposed have had graduated percentages based on income brackets. However, the real muscle in a Flat Tax system lies in the fact that it eliminates write-offs, deductions, exemptions, etc., and any other loopholes to reduce tax burden.

tazzygirl -> RE: Flat tax needs to be revisited? (9/5/2009 9:02:34 PM)
thats what i thought. in theory at least. also eliminates the need for audits, tax consultants, tax lawyers, IRS agents (to a degree), ect.

Honsoku -> RE: Flat tax needs to be revisited? (9/5/2009 9:07:34 PM)
quote: ORIGINAL: tazzygirl quote: ORIGINAL: Musicmystery quote: What would change should the tax base be based upon all income, not just wages, offset by only investment losses? I'm lost. This makes no sense. Income tax IS based already upon all income, not just wages, offset by investment losses. With the ability to divert funds... sometimes to be taxed later.. health care spending accounts, IRA's, ect... Definition: Adjusted Gross Income (AGI) is income from taxable sources (gross income) less tax deductions that are allowable even if you do not itemize deductions on your tax return. Taxable income can include salaries or other employment income, interest and dividends, and long- and short-term capital gains and losses. The adjustments include certain IRA deductions, moving expenses, and unreimbursed business expenses. Here is a full list of Above-the-Line Deductions. You can figure your AGI on the first page of your federal tax return. Adjusted Gross Income serves as the basis for figuring income tax you owe. Adjustments to Income Adjustments are certain expenses which directly reduce your total income. You do not need to itemize your deductions in order to claim these expenses. Adjustments reduce your total income to arrive at your Adjusted Gross Income (AGI). •Classroom expenses •Qualified performing artists and other professions •IRA deduction •Student loan interest •Tuition and fees deduction •Health savings account deduction •Moving expenses •Self-employment tax deduction •Self-employment health insurance •SEP deduction •Early withdrawal penalty •Alimony paid •Domestic Production Activities Deduction (a new deduction for businesses) http://financialsoft.about.com/od/glossaryindexa/g/AdjGrossInc_def.htm Then there is the capital gains and the situation of shelters, among other things... quote: The point of shelters is precisely to shift income from highly taxed to lowly taxed forms. For example, when lower taxes on capital gains cause an executive to shelter income by switching the form of compensation from wages to stock options (which generate capital gains), revenues from capital gains taxes increase, but tax revenues from wages fall by even more, so overall revenues fall. http://www.brookings.edu/opinions/1997/09taxes_gale.aspx Just seems to me that if we end these options, and people actually are taxed on all income, minus losses.... then wouldnt it be even for all? Even isn't always reasonable. Just because it is such a good analogy I'll use it twice; I have two people, you and a 300lb bodybuilder, and 500 lbs to move, should I have you both carry 250lbs each? That would be even for all. Just because it is 'even' doesn't mean that the burden is felt equally. As I pointed out earlier, there are ramifications for ending some of those tax deductions. People are getting taxed on all income, just not all income is getting taxed at the same rate. Investments provide a net benefit to society as a whole, so I am perfectly content with capital gains getting taxed at a lower rate than wages. As an aside, all capital gains have already been taxed at least once before being realized.

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