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USA’s progressive income tax rates are actually much less progressive due the greater opportunities for wealthier tax payers to understate their incomes and additionally so much of their incomes are legally classified as subject to lesser than tax rates upon “ordinary” incomes.
In many cases higher income taxpayers are paying lesser rates than those earning incomes of much lesser annual amounts.
Rather than reported taxable incomes, consumer purchases are a more accurate indication of individual taxpayers and their dependents' net incomes in proportion to each other.
Although this is not true for commercial purchases, ordinary commercial expenditures are generally passed onto customers or final users.
I believe it that it’s imprudent to attempt replacing all federal taxes upon incomes with revenues based upon a sales tax in a single step. I also believe that it is politically unfeasible to pass and enact such a federal act.
I’m among the proponents for incrementally transferring portions of our federal tax revenues from taxes upon net incomes to a federal sales tax.
Each incremental step would simultaneously:
(1) Reduce all taxes upon “ordinary” individual lowest income bracket’s ordinary income tax rate by a flat Uniform flat percentage of taxable ordinary income (thus other brackets rates would all drop down by the same uniform percentage of ordinary taxable income. A uniform percentage reduction of the “ordinary” taxable income rate is not the same thing as a uniform percentage reduction of all tax rates. As incremental reductions of ordinary income tax rates continue, the advantageous of some favorable treatment of other than “ordinary” incomes will become less favorable or will be completely eliminated.
(2) Similarly reduction of ordinary corporate income rates will also be reduced but the flat uniform rate of reduction upon taxable ordinary corporate net incomes may not necessarily be equal to the reduction upon taxable ordinary individual’s incomes.
(3) Increase the federal sales tax.
(4) Some compensating legislative provision for persons that are not dependents of income tax payers and do not now pay federal taxes upon their incomes. It is possible to draft a sales tax to behave slightly more favorable to lower income families, but basically sales taxes are primarily flat rated taxes.
Other than some type of “negative income tax such as the tax credits for the working poor, the compensating provisions for the lowest income families and individuals cannot be incorporated within the taxing system itself.
The first incremental step should entirely eliminate all employees and employers contributions to FICA taxes on payrolls that are earmarked for programs with individuals’ and/or their family’s benefits not primarily related to the individual’s earnings; half of all other contributions should be eliminated.
Replacing any portion of the FICA payroll taxes with a sales tax would increase federal tax revenues, be economically advantageous to our nation and would be particularly advantageous to our working poor.
The FICA taxes upon payrolls are our most regressive federal taxes.
I believe that after one of the federal sales tax incremental increases, the tax rate will approach an unacceptable rate and further transformation of our major federal tax revenue sources will have to cease.
We will then have a federal sales tax that all enterprises and individuals will pay, and a remaining progressive income tax with a high starting income tax bracket that will only be paid by individuals and corporations of greater incomes.
If I’m incorrect, all federal taxes upon net incomes will be abolished.
I wonder how businesses are able to collect their "taxes" without fraud or abuse? Oh that's right they charge the person actually receiving the service.
#2 doesn't really make sense. If you want fair tax, you really want to eliminate corporate taxes. That money is already taxed when it is realized by the investor. There's no need for double taxation. If we're doing to choose to have double-taxation, we should enable is across the board (tax gains on investments and homes year over year).
A national sales tax, would really hurt the low income people. Remember 47% of all working Americans pay no income taxes as they do not make enough money.
A stupid national sales tax, would put even more people to where they were living in poverty, and the ones that are living in poverty now would see even more people driven to being homeless.
A national sales tax, would really hurt the low income people. Remember 47% of all working Americans pay no income taxes as they do not make enough money.
A stupid national sales tax, would put even more people to where they were living in poverty, and the ones that are living in poverty now would see even more people driven to being homeless.
In addition to this, just take a look at any country with a national sales tax. They ALL have income taxes, too.
As far as the homeless issue goes, homelessness (especially the long term variety) is usually a symptom of other chronic problems (drug abuse, mental illness, criminality, etc.)
USA’s progressive income tax rates are actually much less progressive due the greater opportunities for wealthier tax payers to understate their incomes and additionally so much of their incomes are legally classified as subject to lesser than tax rates upon “ordinary” incomes.
In many cases higher income taxpayers are paying lesser rates than those earning incomes of much lesser annual amounts.
Rather than reported taxable incomes, consumer purchases are a more accurate indication of individual taxpayers and their dependents' net incomes in proportion to each other.
Although this is not true for commercial purchases, ordinary commercial expenditures are generally passed onto customers or final users.
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Renters probably spend, on average, just about the same dollar amount on housing as do homeowners, yet renter median income is only half median homeowner income.
Put another way, renters on average spend about twice as large a proportion of their income on housing as do homeowners.
Spending on housing is a poor indicator of income.
The whole premise of your post (and the fair tax, for that matter) is false. We do, in fact, have a progressive tax system and basically any statistics you look at will show that the folks that make the most money pay the highest % of taxes. It's a fact and is supported by statistics.
Now, for people that are filthy rich like Warren Buffet, etc. that is not the case because they only pay capital gains taxes. But Warren Buffet types are the top 10% of the top 1% of America. If you look at statistics, by income, the top 5% of wealthiest Americans pay the highest rate of taxes and the rate gradually goes down as you make less. Our tax system actually accomplishes exactly what it's meant to do.
Re: the Warren Buffet types, you don't overhaul the tax system based on an exception. If you want to increase capital gains rates for folks that make all their money from passive income, fine, but the fair tax makes no sense at all. It would actually cut taxes for the rich and raise taxes for everyone else. A bunch of blue collar types like to huff and puff about how unfair it is that they pay more than rich people, but the fact of the matter is that is just not true in the overwhelming majority of cases.
If you disagree with a progressive tax system, then maybe it makes sense to support a flat tax. But don't support a flat tax because you think our current tax system is not progressive.
If you disagree with a progressive tax system, then maybe it makes sense to support a flat tax. But don't support a flat tax because you think our current tax system is not progressive.
It brilliantly exploits flat for simplicity sake. If we want a simple tax without loop holes then by all means lets have one. However flat is just flat, not necessarily simple. One could have a flat tax after 1000 deductions etc.
Then of course its obvious progressive taxation helps cut down of the food riots.
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Just another attempt to shift the tax burden from the wealthy to the middle and lower classes.
