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Saw this in an article today: "...right-wing business panaceas ... that Americans have balked at, such as a flat tax on personal and corporate income..."
What makes a flat tax right-wing (or left-wing, for that matter)? Assuming said flat tax has a floor of whatever is considered a livable wage (which is below taxating level in the current, wacked-out system), what's wrong with such a tax?
I could see fiscal libertarians not liking it because it taxes high-income people more -- though the rate is the same -- and fiscal liberals (odd how "liber" is in both...) not liking it because it might prevent middle-income people from getting a lot of the tax breaks they get today -- but surely high-income people find more tax breaks! I can also see the IRS not liking it, because it would put them out of a job! But I doubt many people would cry for them.
So why not do it? I think Steve Forbes was the most recent person to push such an idea, so is it anti-Forbes-ism? Imagine the savings in tax costs (the IRS isn't free, my friends) and pain: You just pay your taxes via your employer and never need to worry about being short at the end of the year.
Where's the devil's advocate here?
Chris
What makes a flat tax right-wing (or left-wing, for that matter)? Assuming said flat tax has a floor of whatever is considered a livable wage (which is below taxating level in the current, wacked-out system), what's wrong with such a tax?
I could see fiscal libertarians not liking it because it taxes high-income people more -- though the rate is the same -- and fiscal liberals (odd how "liber" is in both...) not liking it because it might prevent middle-income people from getting a lot of the tax breaks they get today -- but surely high-income people find more tax breaks! I can also see the IRS not liking it, because it would put them out of a job! But I doubt many people would cry for them.
So why not do it? I think Steve Forbes was the most recent person to push such an idea, so is it anti-Forbes-ism? Imagine the savings in tax costs (the IRS isn't free, my friends) and pain: You just pay your taxes via your employer and never need to worry about being short at the end of the year.
Where's the devil's advocate here?
Chris
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no flat tax
I'm with Gates and Buffet that the rich need to pay more in taxes to help subsidize the living standard. If you look at Europe, they pay even more in taxes and have great health care, public transport, support for the arts, mega-vacation days, etc. Quality of Life, that's what we should strive for. And someone needs to pay for it. I'm also with Buffet that corporations need to pay their taxes too.
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Re: no flat tax
Perhaps a flat tax with an incremental increase? Lower the low- and middle-income taxes, raise the upper? Then just make do with that, no bonuses or breaks?
Which reminds me: Why the hell do we have the IRS? Wouldn't it be much simpler and cheaper to go with an incremented flat-tax? Everyone could get a tax break while raising total tax income...
Chris
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Re: no flat tax
http://www.straightdope.com/classics/a5_139.html
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Re: no flat tax
Business taxes should have a similar structure. What's stopping us?
Chris
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Re: no flat tax
While I'll agree that a simplified tax system would be much easier to manage, and maybe there's some flat graduated system that wouldn't increase the tax rate for the middle class, by eliminating tax breaks, you also eliminate any tax incentives for charity contributions, home ownership, IRA savings, continued education, and scores of other things.
I'm in favor of just working with our current system to adjust it, rather than scrapping it and starting with something else.
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Re: no flat tax
Chris
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Re: no flat tax
From:
Re: no flat tax
Chris
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Estate Taxes and ties to income tax
1. "Currently, only the wealthies 2% of estates pay any tax at all, and the first $1 million per individual ($2 million per couple) is tax free. Of those that pay, the average tax payment is only 20% of the estate."
2. "In 1998, family-owned businesses or farms formed the amjority of the estate in just 1,418 taxable estates out of the approximately 2.3 millin people who died that year, or six out of every 10,000 people who died. (That's 0.06%)"
from www.ombwatch.org
So, if your grandfather's estate will really be taxed when inherited by your uncle, it will be valued at $1 million dollars. That's a rather large farm, and deserves to be taxed when passed on just like any other large business.
My grandfather's farm of 160 acres in MO had no estate taxes on it. However, I did learn quite a bit from him about what is driving the small farmer from doing business and I suspect that if your uncle fails to take over the farm it's for the conomies of scale that are driving farms into agri-business in the first place, not the estate tax.
Without an estate tax on the largest estates we will become more and more like the 19th century which saw wealth concentated in the hands of Robber Barons and the very very richest rather than redistributed into society to help pay for the costs that not only make our country run but also build infrastucture for the future.
This ties into the regular income tax discussion, because Bush and arch-conservatives like him seek to place more and more of the burden on the middle class both by removing estate taxes and decreasing income taxes at the top. They don't believe in government funding for many socially responsible things like research, schools, environmental protections, safety protections, social safety nets, etc. By removing taxes, increasing the deficit, etc., there is less money to use on these items that they disagree with.
But, we are all a part of this nation. And our society is stronger the more we pull up the weakest links by fulling funding health care, by having enough inspectors to ensure public safety and environmental compliance, etc. By taxing the richest people, we can afford to spend more on building a better society for everyone. And even if you don't get deductions on your income tax directly, indirectly you benefit from this subsidy on the roads you drive, the public education you receive, the air and water quality you have, etc.
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Devil's Advocate
"But if there were flat taxes, it would mean we're just giving the poor more money. I wouldn't be able to pay my accountant $250,000 to find creative ways that I can receive subsidy for my ... lifestyle. It wouldn't be fair to me, as I've earned all this money I inherited from my parents, and have spent copius amounts of additional money to not have to pay taxes on it! That's just not right! Besides that, my mass-consumerism of oil and other non-renewable resources is good for the economy, because it means that sooner (rather than later) we'll all have to discover alternative resources, and that will create jobs for people! And lookie, I support the lowest classes of people, I have many illegals working as servants in my home, I provide them with clothes and a roof over their heads. I'm preventing homlessness. So damn you for suggesting a flat tax. It would ruin the economy as we know it! My dollar simply wouldn't go as far in that kind of an economy, so fuck you."
Or so I imagine. :)
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Re: Devil's Advocate
Higher income folks would welcome a flat tax, because they really would save a lot of money. - At the expense of those of us who aren't super wealthy.
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Re: Devil's Advocate
It is true that the very rich get the largest amount of subsidy from the government, whether it be in real estate/business ventures, or in "tax breaks". Percentage wise, they may pay more than middle- or low-class, but they also receive more money back (directly or indirectly).
And it is highly dependent on whether you're figuring *all* taxes, or simply *income* tax. Which is why I can't sort it out. I'm not an economist.
I'm all in favor of Progressive taxes, which would be the fastest way to equalize the economy. Right now, most tax revenue is gained from Regressive taxes, such as sales tax.
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Re: Devil's Advocate
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Re: Devil's Advocate
Buying more than one ticket is pointless because it only increases your chances of winning infinitesimally over buying a single ticket.
Buying one ticket is worthwhile because it increases your chances of winning infinitely over not buying one.
Chris
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Re: Devil's Advocate
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You went there....
While on one hand, there is an elitist streak in me that says that dumb people deserve to lose their money, there's a lot of me that still objects to it. Most of what I object to is the clear and open lying to us by the government. States have huge advertising budgets to tell poor and ignorant people to waste their money on something that won't gain anything. "Here, take the easy way out - and we're from the government, so it's ok. No, really you can win - look at all these people in Luckytown"
I object to the idea that all your problems can be solved by a magic money pill, anyway, but the idea that the government is endorsing this plan is very irritating to me. If you look at lottery winners, many of them end up being miserable or piddling away their money within a couple years. I realize that many of the people who buy tickets are really enjoying a brief fantasy that they might win, but there are still plenty of folks that desperately see winning as the only way out of the conditions/job/whatever they feel trapped in. Rather than spending that lottery money on something beneficial, like, say better education or saving to purchase their home, they're trying for the easy way out.
Lottery tickets are sold disproportionately to the poor and uneducated, most of whom are receiving some form of government assistance, so in many ways, the government is also subsidizing a gambling habit in the lower class. Buy milk for your kids? No, buy a lottery ticket. Use food stamps for the milk.
And then the revenue gained from lottery tickets -much of it is fed back into advertising and administration, but the profit that supposedly goes to some good cause, usually education, is actually displacing the money that was in education to begin with, rather than supplementing it. Kansas hasn't had some awesome jump in education funding since they instituted the lottery, believe me.
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no subject
Hint: the people with the most amount of money can pay to keep legislators from passing laws like that... in fact many of them are legislators...
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no subject
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no subject
Chris
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Flat tax
Also, tax cuts are a way of offering free choice but shaping social behavior at the same time. Gentle nudges in the right direction. Tax reductions can be offered for things like buying your primary place of residence or saving for retirement, which are things that really make society function better for everyone. (increased home ownership reduces crime rates, saving for retirement reduces public spending burdens later, etc) Charitable donation tax deductions certainly play a big role in charity funding, and without it, we could expect to see a lot fewer services available.
Even with a flat tax, the wealthiest Americans would figure out legal ways to shelter their income, such as business cars, business homes, etc.
It may sound unfair on the surface to tax the wealthiest few at a higher rate, but their standard of living doesn't decrease at the same rate as the standard of living would decrease for the poorest few, or even those of middle income. Even flat tax systems look at exempting the poorest from taxes. I say it puts an unfair burden on the middle class.
If the tax money is used in a positive way, it raises the standard of living for everyone - like someone else pointed out, single payer healthcare and universal access to higher education (and better k-12 ed) would really raise the standard for all of us. The wealthiest few benefit from a well educated and healthy workforce. (That is, if we don't have a president in office that uses our tax money to fund the invasion of sovereign nations. grrr. )
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Re: Flat tax
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Re: Flat tax
And the tax-break for homeowners is weird. I'm a beneficiary now, but why not just lower property tax instead? Tax breaks that lead to more taxes which lead to loopholes that provide tax shelters... tangle of snakes.
Chris
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Re: Flat tax
Ok, well I would still like to see taxes on things that we should be using less of anyway. Fuel tax (which should be higher), "sin" taxes, etc. But groceries - groceries we need, and buying them doesn't generally burden society with health problems down the road. Maybe a twinkie tax. :-)
I agree that many middle class folks don't need to itemize - they already have a large enough exemption, but home ownership often puts them over the edge. It did for us. Charitable donations are usually a tax break for the rich in that way, but it still does benefit society to have them make the contributions, and it allows them to choose the charity that benefits, rather than handing it to the government.
Other items, tax credits, are tax breaks for the middle class, whether they itemize or not. Lifelong learning, for example. I believe IRS contributions also benefit you, itemized or no. If you wanted to overhaul the tax code, you could put more of the incentives for the middle class in the tax credits category and leave incentives for the rich in the deductions category.
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no subject
Chris
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no subject
I think the purpose (other than getting "pro family" votes) is to more evenly distribute the tax burden. That $1000 is less of a burden on those without the extra expense of children. Families with children also pay more in sales tax.
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no subject
Chris