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If income is going to be the basis of providing the taxes necessary to fund the government, then everyone should pay the same percentage of income as tax with no credit, exemptions or deductions, regardless of type of income, marital status, age, or any other factors. Anything other than that is, on its face, unfair to someone. To call that sort of flat tax regressive is absurd.
If you're looking for an interesting adjustment...
try this on for size: ZERO taxes on any EARNED income.
Take that source of taxation (90% of it being the principle tax paid by the lower 70%) off the table altogether.
I'm afraid there is some confusion of terms here arising from the original post.
If you're talking about a flat income tax there is an argument that it is not regressive, although I think it's clear that the various "fair tax" and "flat tax" schemes are actually engineered to put a disproportionate burden on lower income people.
Still, in this case, the original post references a newspaper story in which a local mayor has proposed going from a flat property tax rate to a system in which higher assessed properties are also taxed at a higher rate. Thus, the tax itself is based on the value of the property a taxpayer owns, and not the taxpayer's income.
One can easily see why a flat property tax (or sales tax) could be and probably would be regressive because if the owner of a $200,000 house who makes $100,000 a year and the owner of a $1,000,000 house who makes $5,000,000 a year are both paying the same tax rate on the assessed value of their property it is very likely that the property tax assessed on the lower valued house is probably a much higher percentage of that owner's income than the property tax assessed on the more valuable property.
This is part of why some states have gone to school financing systems that are not based purely on property taxes. Lower income (and lower assessment) towns would have to tax themselves at a much higher rate than richer towns to raise the same amount of money, to the point where they really can't hope to provide equal educational opportunity for their children. Some system that adds consideration of income is one way of equalizing the tax burden on different towns.
I'm afraid there is some confusion of terms here arising from the original post.
Yup. All taxes should be, if not progressive, then adapted to each tier of taxation. But the usual assumption is that's about income tax, and the topic went sideways. Oops on my contribution to that.
ETA: on rereading the OP, I can't really tell what the question is - flat taxes in general, for income or for property tax. He does fail to understand why a linear tax can be regressive without rates rising for the lower tiers and seems to assume it would have to (numerically) be the opposite of a progressive tax. That's wrong.
Quote:
Originally Posted by MrRational
If you're looking for an interesting adjustment... try this on for size: ZERO taxes on any EARNED income.
So the working, non-investment class would get an entirely free ride? Or would sales, property and infrastructure taxes be increased to take up the load?
So the working, non-investment class would get an entirely free ride?
We know better than that!
Some sort of sundown or threshold tripwire would probably be required in any case.
Quote:
Or would sales, property and infrastructure taxes be increased to take up the load?
Among others; whatever it takes.
The idea being -very simply- to not penalize people for working.
80-90% of what gets earned by that lower 70% all gets churned right back into the economy regardless.
I'd rather see that 10-20% put into investments for them than being paid in taxes.
Well, the 10-20% beyond the SS/FICA contribution.
And the 10-20% that a functional one payer health system will need too.
There's no blood left in that turnip to be squeezed out for taxes.
Some sort of sundown or threshold tripwire would probably be required in any case.
Well, all national policies should be thoroughly reviewed at intervals, but the reality is that those that benefit the powerful tend to get cast in concrete while those that benefit others get nibbled away. So instead of adjusting taxes to match socioeconomic reality, we get the cumbersome mess we have, which is given a new coat of patriotic paint every decade or so.
(With perhaps the most egregious example being 227 years old, but it's not tax-related, so never mind that here.)
Quote:
The idea being -very simply- to not penalize people for working.
Ah.
What if they're not "penalized for working," though?
The roots of that idea lie in the widespread notion that "I earned it, and it's mine, and if you take any of it you're just a thief"... a childish Mine!Mine!Mine! which is no less selfish for $10/hour takehome than it is for a $100M investment windfall. Like most other anti-tax rants, which can be almost universally reduced to that childish howl, it assumes that the individual owes nothing back to the social, political and economic structure that let him earn it, or possess it. It's often supported by the "I Never Took Nothin' from Nobody" argument, which upholds the "I Don't Owe Nobody Nothin'" stance, both of which are complete nonsense for pretty much anyone inside the borders of the US.
So if the federal and state governments that provide and protect the means of productive effort that lead to that income are not entitled to share in it... why is that, exactly?
This has nothing to do with the fairness of income taxation overall - hardly anyone thinks it's equitable as currently implemented. But the idea that a whole benefiting class is exempt from paying for those benefits is... childish. All too common, given the 'Murrican insistence on a faulty understanding of independence, but childish and wrong just the same.
I'm afraid there is some confusion of terms here arising from the original post.
If you're talking about a flat income tax there is an argument that it is not regressive, although I think it's clear that the various "fair tax" and "flat tax" schemes are actually engineered to put a disproportionate burden on lower income people.
Still, in this case, the original post references a newspaper story in which a local mayor has proposed going from a flat property tax rate to a system in which higher assessed properties are also taxed at a higher rate. Thus, the tax itself is based on the value of the property a taxpayer owns, and not the taxpayer's income.
One can easily see why a flat property tax (or sales tax) could be and probably would be regressive because if the owner of a $200,000 house who makes $100,000 a year and the owner of a $1,000,000 house who makes $5,000,000 a year are both paying the same tax rate on the assessed value of their property it is very likely that the property tax assessed on the lower valued house is probably a much higher percentage of that owner's income than the property tax assessed on the more valuable property.
This is part of why some states have gone to school financing systems that are not based purely on property taxes. Lower income (and lower assessment) towns would have to tax themselves at a much higher rate than richer towns to raise the same amount of money, to the point where they really can't hope to provide equal educational opportunity for their children. Some system that adds consideration of income is one way of equalizing the tax burden on different towns.
That doesn't make it a regressive tax. It is a tax with a disproportionate impact.
By definition, a regressive tax is the opposite of a progressive tax. It is one where the rate increases as the base to which the rate is applied decreases.
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