Are Flat Taxes really Regressive Taxes?

[verybadgnome]

I have seen this idea in one article after another, but it still makes no sense to me given the definition of a progressive tax. I would think a true regressive tax would, in the case of income, have higher tax rates for lower income brackets. I guess what is meant is that a flat tax is "regressive" only in reference to the effects of a progressive tax, i.e. it is less good than the preferred scenario of ascending tax rates. Still a property tax at 2% of assessed value is a flat tax, where it to be regressive lower value properties would be taxed at higher rates. My take is once again certain folks are intentionally misinterpreting mathematics as a means of promoting various policies which is funny because I actually support progressive income taxes.

[Quietude]

A flat tax can be effectively regressive because even if it is a flat rate across the spread, it disproportionately affects those in the lower brackets.

The confusion and counter arguments come in when the other factors are simplified and it's assumed that a dollar is the same to someone in a low bracket as it is to someone higher.

[MrRational]

Originally Posted by verybadgnome

Are Flat Taxes really Regressive Taxes?

Yes. Yes they are.

But any of these discussions needs to address ALL of the means methods and sources of taxes
as received by all the various government entities that we (well, many of us) pay them to.

Attempting to dig down into any one without FIRST addressing how it fits in with the rest?
It won't yield any sort of useful data or even good conversation.

[TaxPhd]

Originally Posted by verybadgnome

I have seen this idea in one article after another, but it still makes no sense to me given the definition of a progressive tax. I would think a true regressive tax would, in the case of income, have higher tax rates for lower income brackets. I guess what is meant is that a flat tax is "regressive" only in reference to the effects of a progressive tax, i.e. it is less good than the preferred scenario of ascending tax rates. Still a property tax at 2% of assessed value is a flat tax, where it to be regressive lower value properties would be taxed at higher rates. My take is once again certain folks are intentionally misinterpreting mathematics as a means of promoting various policies which is funny because I actually support progressive income taxes.

That's the definition of a regressive tax.

[TaxPhd]

Originally Posted by Quietude

A flat tax can be effectively regressive because even if it is a flat rate across the spread, it disproportionately affects those in the lower brackets.

The confusion and counter arguments come in when the other factors are simplified and it's assumed that a dollar is the same to someone in a low bracket as it is to someone higher.

This is an interesting case of definition creep. A regressive tax is as defined in the previous post. What is highlighted above isn't regressivity, but rather (as you noted), a disparate or differential impact.

I don't know why we see this morphing definition, but it has become rather common.

[Quietude]

Originally Posted by MrRational

It won't yield any sort of useful data or even good conversation.

But it will generate plenty of hard numbers to argue about.

I'm a big fan of 53, 8.4% and 224:1, myself.

[TaxPhd]

Originally Posted by MrRational

Yes. Yes they are.

But any of these discussions needs to address ALL of the means methods and sources of taxes
as received by all the various government entities that we (well, many of us) pay them to.

Attempting to dig down into any one without FIRST addressing how it fits in with the rest?
It won't yield any sort of useful data or even good conversation.

Why?

[Endoplasmic]

No

[jnojr]

Originally Posted by Quietude

A flat tax can be effectively regressive because even if it is a flat rate across the spread, it disproportionately affects those in the lower brackets.

How so?

Let's take an income tax. Let's say you make $100K per year, and I make $50K, and we have a 10% flat tax. You pay $10K and have $90K left. I pay $5K and have $45K left. How, precisely, am I "disproportionately affected"... other than my envy and resentment of the fact that you still have twice as much as me, despite your paying twice as much in taxes?

[Quietude]

Originally Posted by jnojr

How so?

Let's take an income tax. Let's say you make $100K per year, and I make $50K, and we have a 10% flat tax. You pay $10K and have $90K left. I pay $5K and have $45K left. How, precisely, am I "disproportionately affected"... other than my envy and resentment of the fact that you still have twice as much as me, despite your paying twice as much in taxes?

Mr R put it better than me - I'll restate it as that you can't judge things like this as a single narrow continuum or in some kind of vacuum. We're beyond Econ 101 here, where all problems fit on a whiteboard.

The other mistake in this kind of debate is insisting that it's only about the raw numbers. It's not.

Your post disappears inside both arbitrary limits. Arguing for a flat tax is the sign of a drunken economist - look up original quote about "a little learning."