flat tax: good or bad? I say it's good

[mckitterick]

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

Comments

Re: no flat tax

[jamer-31.livejournal.com]

the poor dont pay taxes right now. a job withholding taxes is not paying taxes if you get all of the money back at the end of the tax cycle. if this happens you paid no taxes. the steve forbes tax was to kick in at an income of 30,000 a year for a family. if you didnt make that much you paid no tax unlike the current tax system. a flat tax also got rid of all deductions for everyone(no deductions) no tax shelters. no anything... a postcard with three lines jow much did you make, how much do you owe in taxes, and how would you like to pay. if the flat tax were enacted at around 15% was the number throwen around then the federal gov. would take in more money than they do now as the rich can hide their money where the gov cant get at it(define rich please) on the estate taxes...please get rid of them. my grandfather cant give the farm he got from his dad to my uncle(who has been farming it since the 70's) and being a farmer he cant aford to buy the farm at what a fair market price would be. so when my grandfather dies my uncle will not only lose his father but the family that has been in the family for generations.

Re: no flat tax

[mckitterick.livejournal.com]

Exactly! But it does need to be sensitive to the circumstance: For example, using a graduated system as I suggest above, rich folks would pay this tax (inheriting billion-dollar estates) while poor and middle-income people would pay nothing and very little, respectively. Perhaps the cutoff would be much, much higher.

Chris

Estate Taxes and ties to income tax

[shellyinseattle.livejournal.com]

Your email dealt with two issues, which are both complex. So I'll concentrate this answer on your estate tax issue and try to tie it back into the income tax issue:

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.