What does everyone here think about a Flat Tax?
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  What does everyone here think about a Flat Tax?
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Author Topic: What does everyone here think about a Flat Tax?  (Read 1174 times)
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HoffmanJohn
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« on: April 16, 2010, 09:40:12 AM »

what are its pros and cons?

If anyone is familiar with the income tax they will realize that the idea came from the Bottom up, and not the top down.
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Southern Senator North Carolina Yankee
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« Reply #1 on: April 16, 2010, 03:10:35 PM »

Well in my opinion I think its better because you don't engage in class welfare but you still have wealth redistribution. 20% of 500,000 is $100,000, 20% of 50,000 is 10,000. So the wealthy will still pay more by a factor of 10. It would make it easy to comply with and reduce the tax gap, as well as reduce the burden and cost of compliance on small businesses which can then be reinvested and used to create jobs and expand.

I would be fine with"flatter" taxes. With fewer brackets, Three at most.

40,000-74,999 15%
75,000-174,999 25%
175,000- and up 32%

First $39,999 a person earns is tax free for people making less then $175,000.

It also has an extremely positive effect on the economy and depending the rest of the tax code (do you encourage debt and speculation or investment and productivity) and other policies (energy, education, etc) you would see tremendous economic growth.
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Torie
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« Reply #2 on: April 16, 2010, 08:13:59 PM »

No. It is ludicrous. I favor progressive taxation, but obviously not as much as Opebo does. Smiley
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Mr.Phips
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« Reply #3 on: April 16, 2010, 08:53:24 PM »

The only way we could have a flat tax without causing national riots would be if there was an automatic $50,000 exemption. 
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jfern
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« Reply #4 on: April 16, 2010, 11:20:23 PM »

We should keep our progressive taxation, but I would be a fan of reducing deductions. See the 5 worst deductions here. Although there has to be some other deduction worse than health insurance.

http://www.sodahead.com/united-states/5-worst-tax-laws-and-why-they-wont-change/blog-301295/
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Evilmexicandictator
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« Reply #5 on: April 17, 2010, 12:40:30 AM »

It's a terrible, terrible idea.
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snowguy716
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« Reply #6 on: April 17, 2010, 01:58:09 AM »

In the absence of all other taxes and with a significant exemption, it would be okay.  Otherwise we need to make the income tax steeply progressive so that the rich are paying a significantly higher amount of income  as taxes. 

The federal income tax brackets should be determined after all other federal, state, and local taxes are figured in in order to assure that they remain progressive.

Also, close any foreign loopholes.  Unless a person is living more than half the year overseas, they pay full taxes here in the U.S.
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Torie
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« Reply #7 on: April 17, 2010, 10:55:26 AM »

In the absence of all other taxes and with a significant exemption, it would be okay.  Otherwise we need to make the income tax steeply progressive so that the rich are paying a significantly higher amount of income  as taxes. 

The federal income tax brackets should be determined after all other federal, state, and local taxes are figured in in order to assure that they remain progressive.

Also, close any foreign loopholes.  Unless a person is living more than half the year overseas, they pay full taxes here in the U.S.

Everybody who is a US citizen pays US taxes even if they live abroad. They get a foreign tax credit for the taxes they pay abroad, and they do get to exclude something like $75,000 from income as I recall. It is only certain kinds of income of corporate subsidiaries based abroad, that is not taxed in the US until repatriated.
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« Reply #8 on: April 17, 2010, 01:22:44 PM »

Well in my opinion I think its better because you don't engage in class welfare but you still have wealth redistribution. 20% of 500,000 is $100,000, 20% of 50,000 is 10,000. So the wealthy will still pay more by a factor of 10.

You really don't understand the way things work, do you?
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Southern Senator North Carolina Yankee
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« Reply #9 on: April 17, 2010, 02:31:28 PM »

Well in my opinion I think its better because you don't engage in class welfare but you still have wealth redistribution. 20% of 500,000 is $100,000, 20% of 50,000 is 10,000. So the wealthy will still pay more by a factor of 10.

You really don't understand the way things work, do you?

Yes I do understand the way your form of "Progressive Taxation" works. I choose to not give it any merit. You would still have the rich paying more with a flat tax, however 10x is not enough it needs to be 30x and 40x and even 100x to satisfy you people. I think it makes perfect sense that if a person makes 10 times as much they should pay 10 times as much and a flat tax does that. The current punitive tax code is class warfare on steroids and easily taken advantage of by the special interests who can carve out exemptions and special deals for there favored interests.

We should keep our progressive taxation, but I would be a fan of reducing deductions. See the 5 worst deductions here. Although there has to be some other deduction worse than health insurance.

http://www.sodahead.com/united-states/5-worst-tax-laws-and-why-they-wont-change/blog-301295/

I agree with the second part of your statement. A lot of the deductions, exemptions, credits, etc shouldn't be there. We should remove them and use the saved money to drop the overall rates.

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phk
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« Reply #10 on: April 17, 2010, 05:04:06 PM »

Flatter taxes without any deductions can probably get the same result as the current progressive taxation system.
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opebo
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« Reply #11 on: April 17, 2010, 05:48:09 PM »

Well, we already have a flat tax, don't we, overall? 
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Ronnie
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« Reply #12 on: April 18, 2010, 12:25:49 PM »

No. It is ludicrous. I favor progressive taxation, but obviously not as much as Opebo does. Smiley

I guess this is another place that I disagree with Torie.  Sad

Our tax system is way out of wack and we really need to simplify the tax code.  I think the flat tax can help, but it obviously is not perfect.

Pros:
Much more efficient than our current tax system.  You won't need to follow long lists of rules.

Cons:

Dissolution of the IRS.  I disagree with most of the GOP that this will be a good thing.  So many people work for the IRS, and so many will lose their jobs.
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Gustaf
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« Reply #13 on: April 18, 2010, 12:37:02 PM »

The marginal utility of money falls with higher incomes and that is the basic case for progressive taxation.

Taxing people with the lowest incomes the same as everyone else would force the tax-rate to be extremely low, which would mean a lot of problems.

Besides, from what I've seen, the distorsion effects of progressive income tax aren't really that high. IIRC, the US system is probably too complicated though. The Swedish system only has two brackets (well, formally 3 but the third is so high up it doesn't really matter) and that's fine.

There are other issues to deal with, basically.
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shua
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« Reply #14 on: April 20, 2010, 11:25:00 PM »

a flat tax may simplify the system somewhat, but I don't think it really touches the issue of the burden and complexity of taxes.
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Cubby
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« Reply #15 on: April 21, 2010, 03:09:57 AM »

I would be opposed to a flat tax. It hurts the poor and helps the rich (i.e. I support progressive taxation).

30% of the income of a low wage worker could mean slipping closer to poverty. 30% of the income of a millionaire is will not cause any hardship in their living standards
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John Dibble
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« Reply #16 on: April 21, 2010, 09:06:17 AM »

I support a much "flatter" tax, though not an absolute flat tax. Here's the type of system I'd support:

A certain amount of everyone's income would be exempt from tax - let's say the first $25,000. (not necessarily the number that it should be, so don't read into it) All income after that is taxed at a certain rate, let's say 18%. (again, not necessarily the rate it should be, just an example) So if you make $25,001 a year, you pay 18 cents in income taxes.

A few factors could increase your exemption, such as having children or other dependents, disabilities, disasters (house burns down, death of a family member whose funeral you have to pay for, large amounts of out of pocket medical expenses, etc.) - basically things that everyday people have to deal with, not things that give large exemptions to the wealthy.

Things like capital gains wouldn't be included in this system, and would be taxed separately.


I think this kind of system doesn't favor the rich, as the really poor aren't going to be paying anything and the rich will have a greater percentage of their income taxed than most people. It's also a very simple system that would reduce much of the complexities in our tax code.
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