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I don't understand why people are opposed to a flat tax income system.
0-100K =10% income tax (still keep the earned income tax credit for poor)
100K-250K=15% income tax
$250-500K=20%
500K-1 mil =25%
>1 mil =30%
1. Index the taxes for inflation
2. Eliminate all deductions (housing, retirement, business losses/stock losses etc).
3. Eliminate capital gains taxes (obviously don't allow the hedge fund manages to pay only 15% tax on their income like they have been doing).
4. Eliminate all estate taxes
This seems like the fairest way to generate income. The Dems would be happy since the rich can't circumvent taxes by shielding money in trusts etc.
The rich are happy because their capital gains are taxed free (since they can't deduct losses either). Your retirement funds would be tax free (since it's all considered after tax money anyways)
The middle class should be happy since they won't be paying more than 10% income taxes. This will offset most losses they would incur by losing the property tax deduction. Most of all, this all but eliminates the AMT trap many middle class citizens in high property tax states/high state income tax like New Jersey, NY, California face
The poor still get shielded because the earned income tax credit would still be around. Most would have very little tax liability.
People have to realize, most "rich or uber rich" people barely pay more than 10-15% "effective tax rates". This would make the rich more accountable for their "fair share." But they would still be happy since they wouldn't be taxed on investment gains.
I believe you would generate even more tax revenue this way. Everyone sees where their true tax bracket it.
That's not a flat tax. It's a simplified version of the progressive income tax. A flat tax is, you are taxed, say, 17%, regardless of whether you make $30k or $300k. I am against the flat tax because, if you're making $300k, you have a greater capacity to pay taxes than if you are making $30k, as your system implies.
I'm not terribly familiar with the tax code, and I don't have a very strong opinion on the capital gains tax (though my instinct would be to keep it in some form). But I do agree with your basic principle, that is, to simplify the tax code while maintaining a progressive tax structure.
I don't understand why people are opposed to a flat tax income system.
0-100K =10% income tax (still keep the earned income tax credit for poor)
100K-250K=15% income tax
$250-500K=20%
500K-1 mil =25%
>1 mil =30%
1. Index the taxes for inflation
2. Eliminate all deductions (housing, retirement, business losses/stock losses etc).
3. Eliminate capital gains taxes (obviously don't allow the hedge fund manages to pay only 15% tax on their income like they have been doing).
4. Eliminate all estate taxes
This seems like the fairest way to generate income. The Dems would be happy since the rich can't circumvent taxes by shielding money in trusts etc.
The rich are happy because their capital gains are taxed free (since they can't deduct losses either). Your retirement funds would be tax free (since it's all considered after tax money anyways)
The middle class should be happy since they won't be paying more than 10% income taxes. This will offset most losses they would incur by losing the property tax deduction. Most of all, this all but eliminates the AMT trap many middle class citizens in high property tax states/high state income tax like New Jersey, NY, California face
The poor still get shielded because the earned income tax credit would still be around. Most would have very little tax liability.
People have to realize, most "rich or uber rich" people barely pay more than 10-15% "effective tax rates". This would make the rich more accountable for their "fair share." But they would still be happy since they wouldn't be taxed on investment gains.
I believe you would generate even more tax revenue this way. Everyone sees where their true tax bracket it.
What you have demonstrated is a GRADUATED TAX, not a flat tax. We have a flat tax, the wage tax. Do away with the cap
What you have demonstrated is a GRADUATED TAX, not a flat tax. We have a flat tax, the wage tax. Do away with the cap
Yes I corrected my previous statement on flat tax. It's a graduated tax bracket but much fairer because the first tax bracket covers the vast majority of Americans.
0-100K income essentially covers over over 80% of the US population. We index this for inflation.
Actually, the brackets I used aren't that steep compared to historical tax brackets for the US Income Tax. Additionally, more tax brackets mean a more equitable system if one concedes that the poorer you are, the more a dollar is worth to you. We currently have 6 tax brackets but we used to have 15 which is far more than I included! It's not really that complex, its easy to deal with using modern technology.
Plus, my breakdown makes a bit more sense when you notice that I say we should tax differently. Rather than tax each person using a single rate based on their income, tax their income by bracket. In other words, don't take any taxes on the first 15,000 EVERY person earns. Tax at 5% the next 5 or 10 thousand dollars. Tax at 10% the following.... you get the point?
In economics, Hauser's Law is an empirical observation that, in the United States, federal tax revenues since World War II have always been equal to approximately 19.5% of GDP, regardless of wide fluctuations in the top marginal tax rate.
So, no matter how many whimsical brackets you may like to add to the 6 figure income levels, history tells us that it won't create any additional revenue for us UNLESS we grow our GDP in a sustainable manner (no market bubbles).
There are a few things wrong with our current brackets, but it's nonsensical to re-do the whole thing into neat little "5% every $20k" increments. First of all, why the small increase from 25% to 28%, but the huge jump from 15% to 25%? If anything, lessen the jump for the working class folks to say, 20-23% instead of 25%. Secondly, one might notice that marriage penalties exist in instances when each partner makes about $60k-$80k. There is no reason these should exist. Lastly for now, there is no reason that the AMT shouldn't be indexed for inflation. Not really a tax bracket issue, but it's inexcusably affecting more and more middle-class families every year as inflation takes effect.
I say 25-30% on net income. Everyone..across the board. That is a flat tax and will bring in the money...30% of 20K pays less than 30% of 500K.
Deductions for dependents other then yourself.
Hmmm, yes and no. Depending on the exemption placed, most people would receive a tax cut. I forget what Specter's bill proposed except he had a graduated exemption based on status - head of household, single, married (joint or single file).
The current tax rates (let's go married filing jointly):
Suppose Congress went with the Forbes exemption of $40,000. That would mean that 59% of people currently in the 15% tax bracket, would no longer pay income taxes. Yes, 41% of the current 15% tax bracket would see a 2% increase.
But let's look at it like this. Current income distribution (persons) in the United States is as follows:
Right of the bat, approximately 55% of income earners get to keep all their money. That would leave roughly 16 % of income earners getting the 2% increase...again, this is Forbes plan only. As we rise up the ladder, we get to keep more and more of our own money.
Income-inequality This has some interesting stuff on income distribution.
I don't understand why people are opposed to a flat tax income system.
0-100K =10% income tax (still keep the earned income tax credit for poor)
100K-250K=15% income tax
$250-500K=20%
500K-1 mil =25%
>1 mil =30%
1. Index the taxes for inflation
2. Eliminate all deductions (housing, retirement, business losses/stock losses etc).
3. Eliminate capital gains taxes (obviously don't allow the hedge fund manages to pay only 15% tax on their income like they have been doing).
4. Eliminate all estate taxes
This seems like the fairest way to generate income. The Dems would be happy since the rich can't circumvent taxes by shielding money in trusts etc.
The rich are happy because their capital gains are taxed free (since they can't deduct losses either). Your retirement funds would be tax free (since it's all considered after tax money anyways)
The middle class should be happy since they won't be paying more than 10% income taxes. This will offset most losses they would incur by losing the property tax deduction. Most of all, this all but eliminates the AMT trap many middle class citizens in high property tax states/high state income tax like New Jersey, NY, California face
The poor still get shielded because the earned income tax credit would still be around. Most would have very little tax liability.
People have to realize, most "rich or uber rich" people barely pay more than 10-15% "effective tax rates". This would make the rich more accountable for their "fair share." But they would still be happy since they wouldn't be taxed on investment gains.
I believe you would generate even more tax revenue this way. Everyone sees where their true tax bracket it.
That's not a flat tax. This is an example of a flat tax: 10% income tax to all working Americans, rich and poor. Lets say that I earn $100.00, and you earn $10.00. In this case, I pay a $10.00 tax (ten percent), and you pay a $1.00 tax (ten percent).
The problem of a national sales tax is that it would deal a strong blow to any sector of our economy related to consumer goods. People would naturally turn to investing their earnings instead of consuming, but being that such a large portion of our economy is consumer-driven, we wouldn't have as many options for investment, and the sectors that would ultimately receive investments will experience major bubbles.
Not to mention it's somewhat regressive in nature; people don't get rich by consuming goods.
If I make $90,000 a year, that means I'm always guaranteed to pay $9,000 under the OP's proposed flat tax system. THAT is regressive, because it means no matter what hardships I might have endured, or how my life might have changed, I'm always going to get nailed that $9,000. It also means I have to continue filling out tax forms every year, and I have to keep paying for IRS drones.
Compare that to Fair Tax, where you pay taxes on the goods and services YOU CHOOSE to buy. You keep saying "but people won't spend!!" You don't get it. People will never stop spending. They may curb spending, but spending can't stop.
People need clothes. People need food. People need gas. People want movies. People want games. People want cars. People want boats. People need homes. People want/need phones. The list goes on and on.
The only real argument I've heard against Fair Tax is, "but that means that instead of $2.49 for that loaf of bread it would be over $3.00!!" Meaning they don't like the sticker shock. But so what? You're ending up with more money in your pocket every pay check. Instead of getting a third of what you make taken away from you, you get the FULL check and decide what to do with it. So what if taxes on things go up? You're not getting your INCOME taken away from you, and you CHOOSE to buy what you choose to buy. So learn to be studious with your spending, and your total tax load will be lower. The other thing to consider is that people who don't pay taxes now will be forced to pay taxes because they also have to spend money. Right now they might pay sales tax, but it doesn't go to the coffers. They can also circumvent the system with tax breaks and false reporting. Fair Tax does away with that. And no, I don't want to hear about "the black market".
The real issue is that people have been duped into anticipating a tax refund every year. That's money that you never saw, that should never have left you in the first place.
My bottom line is thus: We already have "Stacking Taxing".
- Property Tax
- State Sales Tax
- State Income Tax
- Federal Tax
- Capital Gains Tax
- Use Tax
- Early Pension Withdrawal Tax
- CA SDI
- SSI
Collectively, having done the math, all of those taxes together (Property Tax is the only one that does not affect me yet) equal roughly a third of what I make every year. That's too much considering the cost of things where I live. There should be one tax...ONE TAX, and it should be no greater than that which I can afford within the year. Looking at all of the tax types the only one eligible to apply that restriction is the sales tax, because it's a given that I'll be spending something almost every day. But it's money I choose to spend, I control its spending, and the amount taken from me is only as large as that which I can spend and still survive (assuming I budget properly). Rather than an arbitrary percentage that doesn't take into any account the true cost of living in the area.
Right now in California, taxes are a burden. If I moved to Colorado, they wouldn't be. But I wouldn't make nearly the same level of income, so even though the income would be right for the cost of living, the taxes would still be a burden.
Last edited by revelated; 04-06-2010 at 10:30 PM..
I don't understand why people are opposed to a flat tax income system.
0-100K =10% income tax (still keep the earned income tax credit for poor)
100K-250K=15% income tax
$250-500K=20%
500K-1 mil =25%
>1 mil =30%
1. Index the taxes for inflation
2. Eliminate all deductions (housing, retirement, business losses/stock losses etc).
3. Eliminate capital gains taxes (obviously don't allow the hedge fund manages to pay only 15% tax on their income like they have been doing).
4. Eliminate all estate taxes
This seems like the fairest way to generate income. The Dems would be happy since the rich can't circumvent taxes by shielding money in trusts etc.
The rich are happy because their capital gains are taxed free (since they can't deduct losses either). Your retirement funds would be tax free (since it's all considered after tax money anyways)
The middle class should be happy since they won't be paying more than 10% income taxes. This will offset most losses they would incur by losing the property tax deduction. Most of all, this all but eliminates the AMT trap many middle class citizens in high property tax states/high state income tax like New Jersey, NY, California face
The poor still get shielded because the earned income tax credit would still be around. Most would have very little tax liability.
People have to realize, most "rich or uber rich" people barely pay more than 10-15% "effective tax rates". This would make the rich more accountable for their "fair share." But they would still be happy since they wouldn't be taxed on investment gains.
I believe you would generate even more tax revenue this way. Everyone sees where their true tax bracket it.
Actually, I'm more of a fair tax fan. No icome tax at all, have a federal tax on purchases that EVRYONE pays. No tax forms, you keep more of your salary.
Fees for services! (Although "flat tax schemes are better then what we have.)
The "fairness" of flat can be seen this way. Imagine going to a store to buy a loaf of bread. While waiting in line to pay you hear the cashier asking people how much money they make. You say to yourself, "That's odd."
You overhear that the gentleman in front saying that he shines shoes for a living and makes only $15,000 a year. The cashier simply says to this man, "the bread is free for you."
Next, is an attractive woman, who explains that she earns $30,000 a year as an employee of the State. The cashier says, "that'll be $2 please."
Now, following the apparent procedure that you have observed, you say, "I made $50,000 last year working construction." The cashier says frowning, "Oh, you are one of them, "That'll be $4 for the likes of you!"
So why is is that some don't pay for their services or products, others pay for what they recieve, and yet others pay for themselves and others? (And many pay for services that they don't even recieve or want!) And what form of collectivist sick humor is it that the slaves who go along with this injustice puff out their chest and praise their freedom?
So there are still masters and slaves in this country. The masters, no matter which group of them you wish to point out, are all the same. They are the ones who recieve not what they pay for, but what is stolen for them by the State from their neighbors. The slaves are the ones who go along with being used as such, as sacrificial animals to the collectivist State.
The dirty little secret is there is no reason for the slaves to obey, nor is there any moral reason to do so, and that they are only being used by those who are evil who know that the slaves are good. The looters or masters, both at the top and bottom of society, simply prey upon the goodness of average people to serve the looter's evil nature.
Voluntary agreement among free people!
Free markets not Government/Business Collusion!
Fees for services!
Live and let live.
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(Although "flat tax schemes are better then what we have.)
