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Could someone explain the problems that will occur in the U.S if America moved to a flat tax?
America doesn't know how.
A Flat Tax would have to be implemented incrementally over a period of about 8 years or so, but that requires common sense and since Congress has none, it'll never happen.
A Flat Tax would eliminate 95% of the IRS and about 80% of tax accountants and tax attorneys, plus eliminate tax court for the most part.
Implementing the Flat Tax incrementally would allow for the IRS to be reduced by attrition (when someone dies, retires, resigns or transfers -- they're almost never fired -- they are not replaced) and those employees who are eligible can laterally transfer to other government agencies if they desire.
It also would allow tax accountants and attorneys to shift their focus, or if necessary return to school for additional or other training for a new career.
Once it is implemented, the overall affect will be positive, although some groups will benefit more than others.
The Lower Class would benefit the most getting about a 7% increase in disposable income.
The Lower Middle Class would benefit the least, with only 0% to 1% gain in disposable income.
The Middle and Upper Classes would gain about 1% to 2.5% in disposable income, however Upper Class families that had more than 2 children would probably gain another 1%-2%.
In reality, it would probably be a nightmare. There's just way too many chefs with with their fingers in the pie, and they would butcher it beyond belief.
You have "sacred cows" like the mortgage deduction and you can rest assured that the mortgage industry and some homeowners will fight to the death to continue to allow that deduction.
There are many other Special Interest Groups and of course Corporations who would be fighting to maintain certain allowable deductions.
In the end, the Flat Tax would end up looking like Franken-graduated-income-tax-stein only different.
It would probably be more cost effective and faster for the government to hire a public relations company to re-brand the Graduated Income Tax as a Flat Tax and then use the Göbbels Media Machine to ram it down people's throats.
Personally I prefer a VAT, but gain the problems would be Special Interest Groups and Corporations seeking to exempt damn near everything to the point that nothing is taxable (but then maybe that would be good).
It's difficult to imagine a flat tax working unless we cut spending - and a lot of it as it discounts a great deal of income tax that the government - both federal and state - utilize (and well beyond their means)
I can't imagine the government FORFEITING some rights to our $$.
3% federal sales tax except for food, clothing and housing.
Remove the income tax, no filing, no other taxes for revenue.
Replace the 16th amendment with this language issues solved.
3% can not be raised under any circumstances.
3% federal sales tax except for food, clothing and housing.
Remove the income tax, no filing, no other taxes for revenue.
Replace the 16th amendment with this language issues solved.
3% can not be raised under any circumstances.
Yeah, that'd be great- they'd just have to cut government spending by about 80%, since 3% wouldn't come even remotely close to replacing the amount of $$ currently collected.
3% federal sales tax except for food, clothing and housing.
Remove the income tax, no filing, no other taxes for revenue.
Replace the 16th amendment with this language issues solved.
3% can not be raised under any circumstances.
So you're saying that the Federal government, currently spending 20% of the GDP, must scale back to only 3% of the GDP.
Good luck with that.
By the way, an income tax looks less painful than an excise tax on retail transactions.
To illustrate:
If the Federal government wants 20% of everything produced, to do with it as it pleases, it taxes 20% of your income, and you have 80% to spend.
But with a retail tax, guess how much the tax rate has to be for the government to have 20% based on your consumption.
Hint: it's not 20%.
Remember, the GDP measures production - and the government produces nothing that is sold. The vast majority of its activity is 'Sharing the wealth', via entitlements like Welfare, SocSec, Medicaid, Medicare.
For the government to take 20% of the GDP, there's only 80% for you to spend. The government isn't paying any tax on its expenditures!
In other words, if the Federal budget is 1 and the GDP is 5, the ratio is not 1/5.
It is 1/ (5-1).
1/4.
25%
For every dollar you spend, you give up another 0.25.
In this small example, once 4 dollars are spent and taxed, the government has its 1 dollar.
1/5 of the economic pie.
20%
That's why the income tax was more palatable than a straight excise tax.
It looks smaller to tax BEFORE you spend it.
A fair consumption tax is the only truly fair tax, lots of people hate the idea because there's no easy way to hide consumption and get around the tax. There are no loopholes, everyone pays for what they consume.
The problem with a 'fair consumption tax' is that the rich save more of their income then those of middle class and lower. Thus the middle class and below actually pays tax on a higher % of their income vs those with wealth. It's not really a 'fair' tax at all, and can be regressive.
The problem is : why?
Why should YOU pay a tax on your earnings?
How did the government get the power to have first claim on YOUR LABOR?
It's not in the constitution.
It's not in the Declaration of Independence.
Government was instituted to (a) secure rights, and (b) govern those who consent.
What you may not know is that you surrendered your rights, in exchange for government granted (and taxable) privileges to live, work, buy and sell.
That fact is why the "System" has spent decades and billions to "educate" Americans to not ask the basic question: WHERE IS THE DELEGATION OF POWER?
It's not in the organic documents.
Frankly, Americans have to awaken to the fact that they are victims of the world's greatest propaganda ministry, and start reading the law for themselves. Find out the truth and expose the career criminals in the public sector.
And do not "Feed" the government with more revenues - no matter how "egalitarian" the tax.
It would be far better to scale back the federal government by 92 - 95% than suffer imposition of more taxation.
I agree. I do not like the notion that the gov't taxes my own money before it even reaches my hand. And on top of that, I'm taxed additionally on any purchase made. It's a double whammy. Income tax should be illegal imo.
There are two types of "income tax" - the constitutional excise tax (flat rate) on income (derived from usury, or other revenue taxable activities).
And the second, the graduated income tax on wages, via "voluntary" enrollment into national socialism (FICA).
That's why the tax would have to not apply to "essentials", just like many state sales taxes do. In most states, food, clothing, and other essential items are not subject to sales tax, or they're taxed at a lower rate than non-essential items. The same could be done with a national sales tax.
Not apply to anything but stocks and bonds?
Great!
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