Since you're making it a "justice" issue, I have to say I find it really hard to justify the current inequalities of incomes based on merit. In other words, Steve Jobs is not worth one million of your average workers.
He's not worth a million workers, but that doesn't mean he doesn't have a right to use the money he earned however he wants to.
I'll rather focus on pointing out the logical and economic inconsistency of your proposal.
OK.
So, you say, those who "can't afford" to pay taxes shouldn't pay any, and everyone else should pay in proportion to income (say 10%). This already indicates that there's a basic problem with pure flat taxation: there are certain people who can't do without this 10% of their income.
I agree with you so far...
Now, where do you draw the line between those who "can afford" paying taxes an those who can't? Is it those who need this 10% to avoid starving? To buy a house? A car? Health insurance (in the US at least)? To pay for their kids' education? If you draw the line at the lower level, I'm not sure you will have done much against poverty. But if you draw it at the upper level, that means you make no difference between the poorest of the poor (who physically can't afford to pay taxes) and the more marginal cases (who could afford to pay taxes, but for whom paying taxes makes a substantial difference in their living standards).
In answer to the first question, of where the line should be drawn, I honestly don't know; this is something that should be decided by an elected legislature, and I think it's enough of an ethical issue that I can't come up with an answer on the spot. Should those who literally cannot afford to pay taxes be forced to pay a rate that they simply cannot provide? No, and I mention that in my post.
See, the problem is that there is not, on one side, "the poor", and on the other side, everybody else. Society is a continuum of living standards, which goes from a starving homeless to Mitt Romney.
I think you could go further in either direction, but on this I can agree.
It does not suddenly become "affordable" to pay a 10% tax.
It's not sudden, as there are shades. But nevertheless, there
is a boundary; there is a certain point at which you are so poor that 'everyone else's' tax rates shouldn't apply to you, and there is beyond that.
Rather, you have levels of affordability ranging from "I'll die if I pay taxes" to virtually no difference at all. And here we come at the very reason why you have progressive taxation: because money does not mean the same thing to everybody. Take a billionaire 10% of his income, and all he'll do is have a bit less money to save (which would have served no purpose apart from further augmenting his wealth).
Really? He could've invested it and created jobs, or contributed it to charity, or in other ways done very useful things with it. Or, alternatively, he could've saved it, which he has the right to do with his money. But I see your point -- he doesn't need it.
Take an upper-middle class person 10% of his income, and he will have to renounce to a flat-screen TV or the last iPad. Take a middle-class person 10% of his income, and he won't be able to pay for his kid's higher education. Take a lower-middle class person 10% of his income, and he won't be able to afford health insurance. Take a working-class person 10% of his income, and he might not be able to pay his rent. Etc... So, as "just" and "fair" as it might look in pure abstraction, flat taxation does not merely maintain the society's inequalities: it increases them.
Countries that actually have a flat tax (like the Czech Republic and the Baltic states) don't actually seem to have such a high income inequality, though...though I will agree this argument is difficult to refute.
Progressive taxation makes sense because it takes into account what concrete difference taking money away from someone makes in its everyday life, beyond your poor/non-poor dichotomy.
But it's still not fair because you're taking someone else's money and giving it to someone. That's the point, ultimately -- it's not fair to say, you have a lot, you have a little, give him your stuff. It's fair to ask society to say, help this person who only has a little.
You might not care about this, since wealth equals merit, and if you don't want to suffer from flat taxation you just have to work harder and make more money.
This idea that right-wing economics means you think wealth=merit is pretty old and pretty untrue. I
don't think wealth=merit.
I think that it is unfair to take another person's things, which they fairly own. This is the key point, and if we can't agree on it there's no use to debating at all. As for the second part of the sentence, we both know that's not necessarily practical.
But here's when things get really interesting. Let's get back to your plan: no tax for the poor (whatever you define as such), 10% for everybody else. Who gets screwed in this scenario? The middle class. The poor don't pay, so they stay the same.
Ah, but if the poor aren't taxed, they require less money from the government to provide basic necessities -- which lessens the amount the middle-class must pay. The poor don't pay,
but because of this they get less stuff. The middle class, being just wealthy enough to be subject to taxation, is the category for which taxation has the most concrete impact. While they might not become outright poor, their standard of living is significantly deteriorated and they have now to focus on their basic needs.
Would it be, at least in the short run in the US, a tax increase on the middle-class? I'm going to admit, yes. Which is why I don't favor immediate adoption (France is still marching on and making it's tax system worse, which is why I brought this up in the first place). But because I think a flat tax would help the economy (trickle-down, laugh all you want), it would ultimately even out.
Well, I've got a scoop for you: this is the best recipe for economic ruin. Every modern, post-industrial economy is based on the middle class for its subsistence. Because the middle class is the category that actually consumes the income it earns. The wealthy only consume a tiny part of their income, the rest being saved.
This is true, basically, though it's not necessarily true the wealthy save everything and only spend a bit of it; some do that, but not all.
And without people to buy stuff, there's no economy. The middle class is what provides the customers without whom no business can thrive. When you're left without a middle class, all you can do is live off export, but that works only as long as other countries have middle classes to buy your products. So, it is not only fairer, but also more economically effective, to tax more heavily those for which money matters the less.
The point is that in the long run the middle-class would be helped...
In short, there is a reason why even the most extreme neoliberals in most places don't advocate for flat taxation: it's a mind-numbingly stupid idea whose sheer unfairness and economically disastrous natures makes it laughed at by any serious economist or social thinker.
You could ask 43 countries and several U.S. states who are doing OK...certainly the idea that nobody takes it seriously is simply incorrect.
http://en.wikipedia.org/wiki/Flat_tax#Around_the_world I don't think I will ever convince you, but, for once, I decided to be optimistic and hope that providing an articulate response to such bullsh*t could not be a complete waste of time. I probably won't be doing that again any time soon.
I don't think either of us will ever convince the other, but it's good to engage in debate -- it forces you to present your own views in a logical manner and debate them with those of the other person. I'll admit you're more knowledgeable on this issue than I am -- it doesn't change my opinion, but I'll say it.
