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Every flat tax that has been proposed has been merely a way to shift tax burden from the rich to the poor or middle class, combined with a surreptitious attempt to reduce the total amount of taxes the government collects, thereby "starving the beast".
Trust me, the wealthy do NOT want a trustly straight flat tax system.
A straight flat tax eliminates deductions, tax shelters and write offs.
a national sales tax gives consumers another reason not to consume. when income is taxed, the money is taxed and you deal with it. add 15-20% on to that television (or whatever item) and you'll think twice. if you don't want to pay taxes, don't spend. how will the government budget based on retail sales? not to mention it's up to the retailer to collect and transfer money to the treasury. have you ever looked in the paper for retailers that are behind in their sales tax payments to the state? i think of my father. he's a wealthy man. but he would live in a shack and not buy anything if it meant he wouldn't have to pay taxes.
Flat rate tax systems benefit the wealthy and shift the tax burden to the less well off. A flat tax is also regressive (state taxes are a good example - because the wealthy pay less of a proportion relative to their income).
The most common and legitimate economic argument for a progressive tax is diminishing marginal utility - whereby every dollar you earn over a certain point decreases in relative worth and can therefore be taxed at a higher rate - this is all about economic "fairness".
Also, 99% of money in the economy is there wether high earners pay taxes or not - this is the common misunderstanding by bigwigs that think 'they' generate money by paying taxes. If they have a larger share - its partly because of the society they live in and should therefore pay a higher rate back into that society.
a national sales tax gives consumers another reason not to consume. when income is taxed, the money is taxed and you deal with it. add 15-20% on to that television (or whatever item) and you'll think twice. if you don't want to pay taxes, don't spend. how will the government budget based on retail sales? not to mention it's up to the retailer to collect and transfer money to the treasury. have you ever looked in the paper for retailers that are behind in their sales tax payments to the state? i think of my father. he's a wealthy man. but he would live in a shack and not buy anything if it meant he wouldn't have to pay taxes.
The problem as of 2006 was that we had over consumption. For a few years prior to the recession we had savings rates in negative numbers. That kind of consumer spending driving economy is not sustainable. I am going to go out on a limb and say I think it would be a good thing if people thought of a 15-20% tax before opening up lines of credit and buying things with money they don't have.
Last edited by Randomstudent; 06-19-2010 at 10:41 AM..
As I understand it, a flat tax would eliminate the deduction homeowner's are allowed to take on their homes. If that's true, it will never pass.
May I suggest that you go to Boortz on boortz.com and study up on the Fair Tax. I will tell you that the Fair Tax being pushed by Neal Boortz and others is not just a flat tax and therefore, comparing them to each other tells me that the person doing the comparing really doesn't understand the Fair Tax at all. I was against it until I read up on it a little and saw that it would work very well and everybody would benefit from it.
I forgot to tell you that you can scroll to the bottom of Boort's page to see the info about the Fair Tax.
I have heard that the top 5% pay 95% of the taxes. If this is indeed true then a flat tax or fair tax would certainly balance this out and SHIFT the tax burden to where it belongs, to us all!
Also, if only 50% of people pay ANY taxes then the other 50% need to start paying, and maybe they will feel like a contributing member of our society.
A national sales tax is a very bad idea. It amounts to a hidden tax. Since nobody keeps track of every purchase made during a given year, there is no way for anyone to know how much they are paying in taxes. To prove my point, take the current federal consumption tax on gasoline as an example. We all know what the tax is ($0.184/gallon), but no one can tell you in actual dollars how much they paid in federal consumption taxes last year because nobody keeps track of their purchases. If no one knows how much they are paying the federal government in taxes, there can be no way to hold the federal government accountable. If the price of a product increases the consumer will not know if it is the manufacturer increasing their price, or if the federal, state, or local sales tax was increased. All they will know is that they are paying more. Additionally, as ozzie679 pointed out, a sudden increase of 15% to 20% in the cost of products would destroy the economy. Which means that such a tax would have to be gradually increased over time, at the same time we are still paying income taxes. Everyone should know that once a tax is implemented, it is never eliminated. The federal communication tax is a perfect example of that. So we will end up with both an income tax, albeit reduced from current levels, and a national sales tax.
In order to keep taxes to a minimum and hold the government accountable, the taxpayer needs to know precisely how much they are paying in taxes each year. The "in-your-face" income tax may be painful to pay each year, but we know exactly how much we are paying the federal government.
A national sales tax would also require an amendment to the US Constitution, since the federal government does not have the authority to regulate wholly intrastate commerce. Such an amendment would give Congress total control over absolutely everything we consume. Nobody in their right mind would want to give the federal government that much authority. As I said in the beginning, a national sales tax is a very bad idea.
I will suggest that you do some research about the Fair Tax and stop calling it a sales tax. You can do this at Boortz on boortz.com and may well learn something about this tax. Of course, you do know that with the Fair Tax there would be no income tax and no other federal taxes so just think about how much more you would get each month without withholding of income taxes.
As for gasoline we consume at my house, we write down every purchase to keep track of performance and can total the amount and know how much federal tax we paid.
I think you don't know a lot about the Fair Tax but think of it as just another flat tax which it surely isn't. Yes it is a tax on consumption but it also provides rebates to all taxpayers determined by what is needed for them to live. Rebates on food, lodging, clothing, medications etc. It is worth looking at, especially in these days of no tax increases. Whoops that was what candidate Obama promised and is not carrying out.
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