Is It Time For A Flat Tax...

[Steely_Dan]

...or am I being naive?

It seems to me that a no-nonsense flat tax with carefully designed incentives towards social needs may have reached a point of acceptance. How could the RW argue against a flat tax? It is simle for them to understand.

Am I missing something?

-P

[zipplewrath]

1. The most regressive tax there is

Depending upon the particulars, there is no more regressive tax than a "flat tax". Short of it being on all accumulated wealth, I don't particularly see how a flat tax can avoid being regressive.

[doc03]

20. At the present time a large percentage of people don't pay any

(income tax) because their income is low enough to be offset by their deductions. It could be run exactly like it is now say you have a 15% flat tax the people making under a certain amount wouldn't be taxed at all.

[zipplewrath]

25. Tax cut for the rich

That'd be a huge tax cut for the rich, considering that they will hopefully headed back to about the 39% tax bracket. Yes, there are ways to make a flat tax less regressive. That won't particularly make in more progressive.

[Statistical]

49. Hardly 39% bracket doesn't mean 39% paid in taxes.

First of all it is graduated.

0% on the first $a
then 10% on the next $b
then 15% on the next $c
then 28% on the next $d
then 35% on the next $e
finally 39$ on the rest

Nobody pays 39% on their income in federal income tax. Nobody. As in not a single person in the US.

When you consider capital gains & dividends are taxed at much lower rate the reality become much starker.

[dkf]

45. Half don't pay and many receive funds instead of paying.

It begins to make sense why republicans want a flat tax. Under that system everyone pays and no one receives.

[notesdev]

30. Easy to think of a more regressive one

I can think of several.

For starters, Social Security is a flat tax with a cap, so by design it hits the poor/middle class worse than a straight flat tax would.

Then there are things like gas taxes which operates in much the same way, the poor man is going to pay a far higher percentage of income in such a tax than would a rich man.

And then there are sin taxes, which are almost exclusively aimed at the habits of the poor.

When we take a look at what we have now, it is an obscenity of regression. The wealthier you are, the more deductions you can wrangle, the more loopholes you can find, the more exceptions apply to you. So you end up with shit like Warren Buffett paying, on a percentage basis, 1/3rd of what his middle-class secretary pays.

You can get a lot more regressive than a flat tax. By definition, a flat tax isn't either progressive nor regressive, it is simply flat. What makes a tax regressive is that it disproportionately hits the poor. The same percentage on everyone would be precisely in proportion, assuming the tax code didn't again get riddled with exceptions and loopholes like the current code.

[Steely_Dan]

34. Yeah...I was thinking...

about all of the other taxes that hurt the poor.

[notesdev]

41. Most taxes do

and if not targeted at the poor, then they are targeted at the middle class.

Every time a tax is passed under the guise of "tax the rich", the rich buy themselves loopholes and it ends up hitting the middle class the worst.

We've woven quite the tangled web, where the situation won't change as long as the rich can buy laws favorable to them, and they stay rich as a result of the un-level playing field that thus results.

[zipplewrath]

63. I see where you're coming from

It wasn't clear whether the OP was talking about a flat income tax, or a sales tax (VAT). Either way that tends to take the vast majority of the lower class income. Alcohol, tobacco, and fuel taxes don't quite reach those levels. So it comes down to a bit of a definition of how one decides the relatively regressiveness of a tax.

The Social security is a bit of a bugger. It is relatively regressive on the taxing side, but more progressive on the benefit side. There is a cap on the tax, but also on the benefits. Conversely, there are minimum benefits, and no limit to how long they are paid (as long as one is alive anyway). The most regressive nature is that the income from capital gains has no FICA tax at all, and hedge fund managers are paid almost exclusively in salaries that are considered capital gains.

[Indydem]

The right wing wants a flat tax.

A flat tax is regressive. You won't find many supporters here.

[Common Sense Party]

2. It's the rightwingers who are pushing the flat tax.

Only rightwingers believe everyone should pay the same tax rate.

[Steely_Dan]

5. So Help Me Out Here...

I'm learning.

How is a flat tax regressive...Sorry, I'm not that knowledgeable on economic issues?

Didn't Jerry Brown run on a flat tax platform...?

-P

[Common Sense Party]

14. I don't know about Jerry Brown

The way the federal income tax is now, if you earn just a little ($8K to $34k), your tax rate is 10 or 15%.

If you earn a bit more, your TOP tax rate (on the highest band of income) is higher...say 25% or 28%.

If you earn a lot (over $373K), your top marginal tax rate is 35%.

A flat tax would say that EVERYONE pays the same percentage. Let's say they choose 20% as the flat tax rate. That means poorer people will have to pay HIGHER taxes than before, and wealthy people will pay LOWER taxes.

[Steely_Dan]

16. Got it....Thanks

[doc03]

44. What would be wrong with everyone having basic

exemptions for each dependant and exemptions for a base level of sales and other taxes. That way you don't pay any taxes up until you pass a certain level and just like today you pay the tax on the amount over that level. Think of the money it would save this country if everyone didn't have to go out and hire someone to fill out their forms and how about the thousands so of federal employees they have with no function other than making the code so complicated nobody can under stand it.

[rfranklin]

59. Income exempt up to $100,000, 50% flat tax above that...

Seems fair to me.

[doc03]

62. I don't know what tax rate it would require but it makes

sense to me. The present system is just ridiculous, I filed my own tax forms all my life. Never had a problem until a couple years ago when they made it possible to deduct real estate taxes on the short form. Just by pure luck I overheard someone say he saved several hundred dollars from that deduction. I said I do the short form and couldn't get that deduction and here I found out I could and I had to file an amended return. This last year I had my taxes filled out and ready to mail and someone asked if I took the Obama deduction. I missed that one too and had to start over again. That was the last time I will ever do the taxes myself, they have just made it so complicated the average person can't fill them out any longer. They need to scrap the whole tax code and start over.

[Common Sense Party]

73. I think that's crap. Effectively, you'd have about 5% of the population

paying for everything and everyone. 95% of us would just be going along for the free ride. If you have no skin in the game, you won't care much how it's played. I think everyone should pay SOME income taxes.

[Ezlivin]

3. It's time for a Fat Cat Tax

Those are the fuckers who need to be righteously taxed.

[xchrom]

4. I am a progressive tax proponent.

Flat taxes just means the rich get more.

[Mz Pip]

6. I certainly agree that

the tax codes need to be reformed but I don't think that a flat tax is the way to do it. There are so many loopholes for the rich that need to be closed. I'd like to see that done before we talk about taxing poor people more.

[kentuck]

7. A flat FICA tax

and a progressive income tax.

[AlinPA]

8. Steve Forbes always pushes a flat tax.

[bkozumplik]

39. transitive property

Steve Forbes pushes for flat tax
flat tax is a douchebag idea
Steve Forbes is a douchebag.

Q.E.D.


(yes, the logic is a joke, although I do mean that he is a douchebag)

[prolesunited]

9. Yes you are

Definitely do more research on this.

[Steely_Dan]

13. Thanks...I will

I didn't realize that it is considered regressive...

[Raine1967]

23. Please look at the links I posted farther down thread.

I appreciate you questioning things. I do not think this is the solution, not by a long shot.

[hfojvt]

21. here's a table I made

when DU was running ads for a flat tax

http://journals.democraticunderground.com/hfojvt/69

essentially a 17% flat tax would be a $112 billion tax cut for the top 10%. If it was revenue neutral that would mean the bottom 90% would be paying $112 billion more in taxes.

[doc03]

10. Oh my you can't have a flat tax it would eliminate

thousands of government jobs and the political parties couldn't manipulate taxes to fit their political goals.

[slackmaster]

11. I think it should be even stricter - an under-inflation tax

Most people drive with under-inflated tires most of the time.

Why wait until someone has a full-blown flat before assessing a tax?

[hfojvt]

12. you are missing a lot of somethings

that a flat tax would be an increase on the poor and a huge cut for the rich (maybe not so much now because Reagan and Bush Jr already flattened things from the way they were and the way they ought to be.)

No, it is time to bring back (the tax rates of) the 60s and 70s. Or, as I call them, the good old days.

[HughBeaumont]

15. See this thread for many MANY reasons why it's a bad idea.

Championed by people like Neal Boortz, Mike Huckabee and Steve Forbes. The idle rich especially love it. What you're missing is that there would never be any talk of "incentives towards social needs" if it were instituted. That's kind of the appeal it has to "hate-the-poor" TeaDouchers.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=5860668

[Steely_Dan]

18. Thank you...

I will read the thread.

[HughBeaumont]

42. A couple sentence example . . .

If the poor/working/middle are taxed the same as the rich, you're going to have massive deficits since the ultra rich don't pay the full top marginal tax rates anyway and there aren't enough of them to make a significant difference. Who will that shortfall have to be made up by? The answer is "not the rich".

[KansasVoter]

17. John Boehner? Is that you??? You must be joking!

[Steely_Dan]

19. Okay...Be Nice...

I meant well. LOLOLOL

[KansasVoter]

69. I was just kidding. Sorry. I would trust you implementing it. Not congress!!

[harun]

37. Boehner's slummin it in DU:GD.

[Raine1967]

22. Yes, you are.

Lot's of good info here: http://www.factcheck.org/taxes/unspinning_the_fairtax.html

and there is also this:

http://uswgo.com/fair-tax-would-be-a-nightmare-and-would-destroy-americas-economy.htm

[Steely_Dan]

24. Thanks...I'll Start Studying n/t

[deaniac21]

26. My tires are so old the last thing I need is a flat tax.

[SCantiGOP]

27. There is a "modified progressive flat tax"

Just to throw some numbers out, you start by eliminating all deductions (why should those who can afford to own get a deduction but renters don't?), then no tax on the first $25,000; 10% on $25-50,000; 20% on $50-100,000; 30% on $100,000 to $1million; and on up the scale, with the top rate not kicking in until somewhere between $5 and 10 million and the top tax rate stopping at 50%. You could play with the numbers until they worked out to the revenue needed. The only way to do this would be to have the Democrats holding the White House and both houses of Congress with filibuster and Blue Dog-proof majorities. The biggest advantage would be that the super rich would not be able to take advantage of accounting tricks and offshore accounts to escape taxation. I do not think there was anything fundamentally wrong with Reagan's sound bite of being able to file your taxes on a postcard, but it wouldn't be a burden to extend that to a single sheet of paper so that the CEO of Exxon and the guy working the drive through at McDonalds aren't paying the same rate. In fact, Nixon proposed a "negative income tax," where the working poor would get a payment at tax time, perhaps to bring everyone up to the $25,000 threshold.

[doc03]

51. I am not sure but didn't the earned income tax credit come from

Nixon?

[wtmusic]

28. Basic living expenses make up a much larger percentage

of take-home pay for lower wage earners. Nowadays, many can't even afford the basics - rent, food, healthcare, etc. Do we let those people starve? Put them all on welfare? At the very least we can cut them some slack on taxes, especially since the tax progression is flatter now than it ever has been in history.

[doc03]

55. I see you have a (no coal) icon, wouldn't a Cap and

Trade tax be regressive?

[wtmusic]

68. In most scenarios, that's correct.

Cap-and-trade is not the best way to reduce atmospheric carbon, however. Fee and dividend is a much more promising solution which is not only more effective but creates a progressive tax structure. In this scheme, a fee is levied on carbon at the source: the wellhead, the mine, the port when it enters the country. At the end of each year the proceeds are divided equally and every citizen receives a dividend.

"Myth #4: It (Fee and Dividend) will unfairly hurt poor people because they pay a greater percentage of their income for energy prices.

Exactly the opposite is true. Percentages don’t matter. As long as rich people use more energy than poor people, poor people will always benefit from fee-and-dividend. Fee-and-dividend is the only solution that is progressive and will help the economy. Suppose we have two residents: a rich person and a poor person. The rich person makes $100K/yr and pays out $100 per year in the fee because he has a big house and a private jet. Our poor person makes $1,000/yr and pays $10 per year in the extra fee since the poor person uses less energy than the rich person. What happens is that each person gets a $55 rebate. So the poor person doesn’t pay more for energy under this plan…he actually makes money! So instead of paying out $10, the poor person is now $45 a year richer. So the people who can least afford higher energy prices are always better off in a fee-and-dividend scheme."

http://bravenewclimate.com/2009/11/09/fee-and-dividend-better/

[doc03]

74. I see a major flaw there, the poor are stuck driving

those old gas guzzler land yachts, while people with the money are the ones that can go out and buy one of those $40000 Volt cars or a $30,000 plus Hybrid vehicle. Poor people have old homes built back when energy conservation was of no concern while people with money are able to build a new energy efficient home with geothermal or solar heating. I know people with homes three times the size of mine that pay less for heating and cooling than I do.

[wtmusic]

80. A fifteen-year-old Toyota Tercel beats the carbon pants off any land yacht

and is cheaper to own, too. There's no reason anyone has to drive a pollution pig anymore.

Most lower-income people will get a refund, and in British Columbia where it's been around for a few years they sweeten the deal with tax incentives.

"B.C.'s carbon tax is looking like a winner

<>

Perhaps even more significantly, for the average taxpayer, the carbon tax shift has been an economic boon. During 2008 and 2009, the tax raised $846 million. However, the province tied the carbon tax to reductions in personal and corporate income taxes, as well as tax credits to offset impacts on low-income individuals. The total value of these offsetting cuts was nearly $1.1 billion over those two years, meaning a net tax reduction for B.C. taxpayers of about $230 million."

http://www.ottawacitizen.com/technology/carbon%20looking%20like%20winner/3325855/story.html

[w4rma]

29. The payroll tax IS a flat tax. Except it's only on the first ~$80,000 of wealth. So, we already have

one. It just needs to be extended to the rest of wealth and it needs to be applied to capitol gains.

[doc03]

54. The payroll tax goes over $100,000 today. The reason it stops

there is after you pay up to the cutoff you no longer gain SS benefits. If you tax all of peoples income over that amount it then becomes a welfare program and I guarantee the rich will kill SS in a New York minute.

[Kurt_and_Hunter]

31. Hopelesly regressive

And the amount of tinkering nessecary to make a flat tax just would mean it was not longer flat and would be as complex as the status quo.

[closeupready]

32. RWer's make it sound simple, and come up with snappy ways of

making a flat tax sound 'fair' when in fact it is the least fair tax there is.

[Winterblues]

33. Couldn't we just eliminate all tax for those earning more than $200,000 a year?

Just think how much those wealthy people would immediately dump back into the economy and make America's economy just soar.....The hiring they would do would be phenomenal. The ONLY chance for America is to make the wealthy completely tax exempt and then everyone else can pay a flat tax..:shrug:

[harun]

38. LOL

[closeupready]

66. Yes, LOL. You nailed it.

That will be one of the planks in the GOP's 2012 platform, no doubt. :rofl:

[bkozumplik]

35. *facepalm*

If you are a democrat, read up on progressive vs regressive taxation, and put down your ron paul revolution book. If you arent informed enough about tax policy to see "flat tax" for the republican rich plot that it is, then you need to read some more other stuff before you read any more Ron paul.

All of you dem flat taxers have been had. You are all being taken for a republican party ride.

[Steely_Dan]

43. Thanks...

No need to be snippy. I made a mistake. Now, back to reading Ronald Reagan's Memoirs.

-P

[harun]

36. If RW'rs vote for a real Public Option I would say give em their flat tax in return.

[blondeatlast]

40. Holy lolapalooza hell fucking no. Others on this thread have provided

more than enough reasons why; I just despise the notion so much I have to once more get it in writing.

[WinkyDink]

46. NEVER time for a "Flat" Tax. 10% off $100 hurts a LOT MORE than 10% off $100,000.

[avaistheone1]

48. That explains it well.

:thumbsup:

[Steely_Dan]

50. Well Put...

Thanks for the "flat" explanation.

[Steely_Dan]

47. Just To Clarify...

I recall that Jerry Brown ran for President touting a flat tax initiative stating that you could "do your taxes on the back of an envelope." I'm a big Jerry Brown fan and consider him quite Progressive. I really didn't think things through before posting.

Having said that...I did state that a flat tax would have to have some social incentives...but then, I guess it would no longer be considered "flat."

I meant well.

-P

[wiggs]

56. No...it's a good question worth asking and getting clarification on. That's a meme

that's going around now...progressive taxation is socialism...tax increases increase revenue....etc.

I have a friend who won't entertain meaningful discussions about solving fiscal problems because the answer to every question is...well, taxing income is unconstitutional. Can't get past it. This is an important discussion...thanks for bringing it up in a forum where the issue can be discussed.

[closeupready]

67. Easy to be fooled by their smooth talk. Even I have fallen for it on other issues.

No worries. :hi:

[4lbs]

52. A Republican, Steve Forbes, pushes the flat tax as mentioned.

When a staunch Republican, who is also a billionaire, pushes a flat tax, then it's a bad idea for progressives and liberals.

His flat tax idea was a 10% income tax on everyone.

This would help out the rich much, much, more than it would the poor.

First of all, the poor often require financial assistance. Most of the rich are paying income taxes above 28%, and the super-rich marginal rates near 36%.

A flat tax of 10% would allow the very wealthy (those with more than a million dollars) to pay even less in taxes.

Then, what happens? The federal government would get much less revenue annually. That means it has less to work with. It would have less to help out the poor. It would have less to pay off the deficit. What would the federal government have to do? Cut spending drastically.

Because it wouldn't cut defense spending, what would the federal government have to cut? Social services like food stamps, unemployment assistance, Social Security, Medicare/Medicaid, and the various regulatory departments like the EPA/FDA/CDC/NIH.

All of these would disproportionately hurt the poor and only help the very wealthy, who don't really need any of those services.

[Greyhound]

53. No. The reich-wing has ruined the term and perverted the concept so much

that even the mention of it is met with suspicion and derision. H. Ross Perot explained why it was a bad idea when Steve Forbes was running on it in 1992.

Now, a modified* flat tax would be great for the lower 60% but require that the entire tax U.S. tax code be thrown out and then replaced with a simple, and very short new law that would eliminate the mechanism for stealing hundreds of billions from us every year. We couldn't even get the idea that every citizen has a right to health care through the morass of evil and corruption that is "our" government, so something that would hurt the parasitic "campaign contributors" that own Congress this badly has no chance of even being discussed, let alone passed.

*Flat tax on all income over a set minimum required to live, say $30,000 p/adult.

[wiggs]

57. Flat tax on income not right. But we used to rely on tariffs, which seems to me

to address more than one issue.

Also...is there an argument why we couldn't raise money by taxing consumption more than we do? Instead of loophole-ridden income tax, wouldn't a consumption tax end up easier on low-spending groups and high-consuming brackets would pay the lion's share, as appropriate?

Could use help evaluating pros and cons of sales/service tax....thanks

[Stevenmarc]

58. I don't think naive is quite the word I would call it.

[kentuck]

60. I think we could sell a flat tax on Social Security FICA taxes...

It would be interesting to watch the Repubs squirm on that issue. :-)

[dmallind]

61. It's possible to get a non-regressive flat tax

Here's how I would do it.

1) Exempt everybody's income - minimum wage earner, me, Warren Buffett, everybody - up to some predetermined level roughly equivalent to poverty level. There will be winners and losers here relatively speaking based on local cost of living, but that's a controllable variable anyway.


2) No deductions. None. I have a mortgage, I pay property taxes, etc. So do a lot of people, but if you do it for the tax deduction alone you're an idiot, and even then taxing everybody and letting them make their own choices on spending means the tax rate is lower for everyone than it would be if some or most people got deductions.


3) Tax rate is applied equally to EVERY source of income. Wages, interest, business net profits, capital gains, inheritance, gambling. If you get a dollar you pay X cents. No exceptions or variations.


The single tax rate then should very quickly become well known and a major political lodestar. Let's say it would be 17.23%. I have no idea obviously - some serious math needs to be done before we get to that point. But let's pretend. Then political ads could become very focused. "Isn't it worth paying 17.25% to get X....." or "Don't you wish we would cut Y and pay only 17.15%? Vote for me and I'll submit that bill every session".


It would end up not being regressive because of the exemption, lack of deductions, and the inclusion of non-wage income, both of which lead to taxing the rich higher than the poor even with a flat rate.

[zipplewrath]

64. It would still be regressive

It would be less regressive the higher that exemption goes. Quite honestly to knock the stuffing out of the most regressive parts it would have to be somewhere in the 50K region.

Most flat tax calculation place the necessary rate somewhere in the 20 - 25% category, and that presumes that there are truly no deductions or exemptions beyond the minimum income. I consider that stipulation pretty politically absurd.

[Hello_Kitty]

65. We'd have to redefine poverty level upward dramatically.

Current FPL isn't enough to keep a person living in their car.

[Hannah Bell]

70. no. you're being naive. about half the population currently doesn't pay much in the way of income

tax.

flat tax = wingers' wet dream. same for vat.

[Xenotime]

71. No. It's time for more tax on investments, 401ks and repeal the mortgage interest deduction

A flat tax only hurts the poor.

[Orsino]

72. Taxation in America is too flat already. n/t

[Buns_of_Fire]

75. IF such a tax could be made somewhat equitable (I think it could); and

IF Congress would pass such a bill, eliminating ALL deductions, and coming in at five pages max; and IF a President were to openly say he'd sign such a bill as soon as it hits his desk; and IF all parties could be brought "on board" with the concept;

The current crowd in Congress would STILL find a way to screw it up for the poor and middle-class and reward their rich buddies. It's what they do, and they do it very well.

[Chemical Bill]

76. NFW! n/t

[bobbolink]

77. Of course. Finish off poor people once and for all.

Why do you hate us?

[marmar]

78. no.

[kenny blankenship]

79. A "flat tax" taxes the rich at the same rate a poor worker can survive on.

Basically the threshold beyond which a poor person cannot be squeezed anymore becomes the top rate at which you can tax income - even for the very rich who could afford much higher tax rates. Not only would the RW not be against that idea, they are overwhelmingly FOR it.

Also, as your own pitch for the flat tax indicates, it could never really be flat. You propose "carefully designed incentives towards social needs", right from the start. Even if you hadn't proposed it, it's a given that there will be deductions as there are with the current progressive tax code. Where there is one exception made there will always be another. And another and another. There would be non-stop wrangling in Congress over what "carefully designed incentives" should be added to the tax code next, just as there is today. The game would never stop. All you would accomplish by instituting a "flat tax" is to push a reset button on the game, and then the game will simply resume at a new baseline. Since poor people can't pay more in taxes than they already do, a baseline "flat tax" on income must lower the income tax rate for the rich to the same level that minimum wage workers can survive on. No more marginal brackets. And who will get the new carefully designed incentives? Well, who do you know that can lobby Congress for incentives and loopholes right now? Not poor people. Which is why rich people like Stephen Forbes are so often in favor the "flat tax". They know they will only get even richer under any flat tax scheme. They'll start a new game at a new lower level (thanks po folks!) and then begin chiseling away at that with fresh "incentives", aka loopholes. Not only is that not fair, it won't be revenue neutral either unless you established the new baseline somewhere between the current top bracket and the bottom, charging the havenots a steeper rate than they pay now to make up for the elimination of upper brackets. More likely you would see the difference made up by more so-called "fair" taxes on consumption. The more you consume the more federal consumption taxes you will pay. That's only fair, right? No one is forcing you to consume stuff (except there's that new federal law that forces you to buy a health policy from the Insurance Cartel.) But poorer people already spend every dime they earn on consumption. It's not forced (except for the insurance extortion racket) but it's not very downwardly elastic either. A consumption tax isn't likely to make savers out of people who presently can't save or invest. SO their tax rate would be higher than those wealthier people who don't need to consume such a high percentage of their income to satisfy their needs and wants.

The flat tax is just a bad, bad idea. People are looking for a shortcut to something there, and will only find the route to an even worse situation.

The fact that this prick has pushed the flat tax idea for decades, and the fact that this one down here
has actually written books about it and introduced legislation in the US House to try to convert the income tax to a "no-nonsense flat tax", should clue people in as to how poisonous the flat tax idea is.

Look at the progressive tax code structure as instituting a permanent tax cut for the non-rich. Work from that and try to improve its fairness by closing loopholes exploited by the rich.