US Flat Tax Rate

[Neo Deist]

I have seen the idea of a flat tax tossed around over the years, and I like the idea. This would only be for personal federal income tax. State and local taxes are a different subject, as are corporate taxes.

For example. instead of having different tax brackets based on income, everyone would pay 10%. Using the 10% example, the breakdown is easy. I would advise an exemption clause for any household making under $25,000 per year.

Under $25,000 and pay $0
Make $50,000 and pay $5,000
Make $500,000 and pay $50,000
Make $5,000,000 and pay $500,000
Make $50,000,000 and pay $5,000,000

It does not matter how much you make, the rate is always 10%. Yes the wealthy will pay more in taxes, but they should. They have a MUCH easier life than someone making under $50,000 per year, so they can live off their remaining $45,000,000 after taxes. If they can't live off that, they have some serious issues.

I would see a 15% increase in my paychecks based off my current tax bracket (2017) of $75,900 - $153,100, not including the elimination of the 25% excess tax over $75,900.

 

[tytlyf]

Woohoo, 10% tax rate for eveyone! hahahhaha.

I'd like to see Heritage Foundations approach on this topic.

 

[Quetzal]

I am fine with it but we still have an issue. As long as corporations and high income CEO's have tax havens and loop holes to dodge taxes, it doesn't matter what system you employ. I believe this to be a much larger problem than anything else at the moment. That is billions in tax revenue lost every year.

 

[YmirGF]

I am fine with it but we still have an issue. As long as corporations and high income CEO's have tax havens and loop holes to dodge taxes, it doesn't matter what system you employ. I believe this to be a much larger problem than anything else at the moment. That is billions in tax revenue lost every year.

Exactly right. Bring the tax code into the 21st century and close antiquated loop holes. Once the loop holes are closed, in theory, you would have simplified the tax code already and from there some serious changes could be considered. To arbitrarily change the tax rate without shoring up these holes is short-sighted.

 

[Shadow Wolf]

I am fine with it but we still have an issue. As long as corporations and high income CEO's have tax havens and loop holes to dodge taxes, it doesn't matter what system you employ. I believe this to be a much larger problem than anything else at the moment. That is billions in tax revenue lost every year.

That and the tax breaks and pretty much why major corporations pay very little to nothing, and even often times get mega-huge refunds, and why the tax codes haven't had any serious updates in 30 years. Closing the loop holes and ending tax havens I would think would be an easily enough reached compromise between the Dems and Reps. There could even be enough coming in to give the middle class a brake. But, there are too many in too deep so I doubt it happens.

 

[YmirGF]

That and the tax breaks and pretty much why major corporations pay very little to nothing, and even often times get mega-huge refunds, and why the tax codes haven't had any serious updates in 30 years. Closing the loop holes and ending tax havens I would think would be an easily enough reached compromise between the Dems and Reps. There could even be enough coming in to give the middle class a brake. But, there are too many in too deep so I doubt it happens.

It is interesting and mildly promising that a neo-con can agree wholeheartedly with two people on the liberal left on this topic.
The end is nigh... the end is night....

 

[JerryL]

Flat taxes are inherently regressive.

Let's imagine that the cheapest housing you can get it $4000/yr.
Let's imagine that the lowest possible transportation costs to and from work and the store is $500/year.
Let's imagine that the lowest possible food costs is $1200/yr.
Let's imagine that electricity, water, perhaps a phone is another $1500/yr.
And these are super low numbers.

So $8200/yr.

Now. One person makes $6000, meaning they are -$2200/yr; and you want to take $600 more.
Another makes $10,000 (cool: maybe he can afford to get his tooth fixed, though he can't dream of health insurance); you are taking $1k of his $1,800 for stuff like clothing.

Meanwhile: Mr.$100,000 has $91,800 to spend on upgrading above bare minimum. You are taking $10k of his leaving him with $81,800.

So while it *sounds* like you are taking an equal impact you are not.

It gets worse from there. Let's imagine they need a car.

Poor guy (say our $10k guy you are taking $1k of) has to buy the cheapest car he can find. Let's say $5000. He has to finance it, and lord knows they don't give him a good interest rate (let's say 15%). So he's going to have to pay something like $7500 for his $5k car, and it's going to break a bunch so he'll need to finance longer (and add in repair costs) and maybe he has a $12k cost.

Slightly better off guy buys a certified used car for $10k. He still has to finance, but maybe he pays 5%; so his cost over 5 years is only about $12k, and he dosen't have to worry about added repairs. Also: his insurance costs are likely lower.

Wealthy guy's financing is 0% or 0.9%; he pays no financing costs and also doesn't have repair costs. He can get off cheaper in the long run too as he'll have to replace his cars less often.

In short: The poor person has less of his money for optional things, he gets charged more for the things he does buy (through rent-vs-own and higher interest rates), and they are often long-term more expensive. What it looks like he makes on paper (10k is 1/10 100k) and what he functionally has to work with ($0 vs $90k) is very different.

BTW: Why do you go from 0% to full 10%?
$4,999 pays $0
$5,000 pays $500

This would be a huge tax increase on the poor and middle class. Ask them if they feel their taxes are too low now.

 

[JerryL]

That and the tax breaks and pretty much why major corporations pay very little to nothing, and even often times get mega-huge refunds, and why the tax codes haven't had any serious updates in 30 years. Closing the loop holes and ending tax havens I would think would be an easily enough reached compromise between the Dems and Reps. There could even be enough coming in to give the middle class a brake. But, there are too many in too deep so I doubt it happens.

It's all good until the rubber meets the road. What is an example of a specific tax break you would want to get rid of (I can think of some)?

Like: would you want to get rid of net operating loss? Would you want to change capital gains taxes? How about the tax breaks offered to lure industry in in the first place?

If you want to compete on tax rate: I would remind you that Ireland is charging apple 0.05% or so corporate tax.

 

[Shadow Wolf]

It's all good until the rubber meets the road. What is an example of a specific tax break you would want to get rid of (I can think of some)?

Like: would you want to get rid of net operating loss? Would you want to change capital gains taxes? How about the tax breaks offered to lure industry in in the first place?

If you want to compete on tax rate: I would remind you that Ireland is charging apple 0.05% or so corporate tax.

That was not so much my personal thoughts on it, other than I feel it should be an easy compromise between Reps and Dems. Reps won't see a decrease but taxes aren't increased either, while Dems won't see an increase but will see a decrease in the amount of taxes dodged.
Personally, I am for a progressive tax scale. I don't care for a flat-tax because ultimately it hits the poor the hardest, who feel every cent of their taxes going, versus the ultra-wealthy who just cannot realistically miss or even notice few million. Basically, a flat-tax is a scoop from the poor and a pinch from the rich. A few milliliters is much when it comes from a tiny bottle, but it's nothing more than a few drops next to an ocean.

 

[Nietzsche]

I endorse Eisenhower's tax plans if I'm honest.

 

[Valjean]

The 0% bracket for <$25,000 makes it a graduated tax -- but only barely.
JerryL is right, flat taxes tend to be regressive.
The rich can afford a higher bracket without any loss of prosperity.

From each according to his ability, to each according to his need.

 

[Kemosloby]

If the government just printed the money they needed, it would devalue the currency automatically, and serve as an equally proportioned tax on anybody in the world who used dollars. Why wouldn't that work?

 

[Curious George]

Or we could all pay the same tax on the first 10K, the same tax on the next 10K, the same tax on the next 10K and so on...

 

[Kilgore Trout]

Whatever the levels, if wealthy people paid what they're "supposed to," we would have a plethora of revenue. Simplifying the systrm is a good first step, but it needs to be supported by a process and system which ensures that wealthy people are paying what they actually owe. Unfortunately, any sense of social responsibly among the aristocracy has disappeared over the years, so the implementation and enforcement of any model which compels wealthy people to pay their equivalent share is highly unlikely to be put into place, or even considered.

In a world where we have people worth billions of dollars, wealth is such an abstraction, that their continued pursuit of it points toward a sickness of greed that has no rational or moral basis.

I'm generally libertarian, capitalistic, and free-market oriented in nature, but any closed, circular economic system ultimately relies on a compact of rational responsibility and balance of the wealthy and opportunity and reasonable fairness for the underclasses.

By circumstance, I have known 2nd and 3rd degree connections to some of the wealthiest people in the country. Over time, I have become amazed at the lengths, that I know about, that they will go to to pay as little as possible to the society and government that they operate within, and the vehicles which allow them to do this. Even more disturbingly that they feel fully justified in doing this.

 

[Kemosloby]

Just make the whole thing optional and give out stickers to donors, like they do at the blood bank.

 

[fantome profane]

Unfortunately, any sense of social responsibly among the aristocracy has disappeared over the years,

And if a flat tax would really result in the wealthy paying more, they would oppose it.

 

[fantome profane]

Just make the whole thing optional and give out stickers to donors, like they do at the blood bank.

Fair enough, but if you don't have your "tax sticker" you are not allowed to use public roads, public utilities, public hospitals etc.

 

[Kilgore Trout]

And if a flat tax would really result in the wealthy paying more, they would oppose it.

Exactly.

 

[Kemosloby]

Fair enough, but if you don't have your "tax sticker" you are not allowed to use public roads, public utilities, public hospitals etc.

Where's the fun of that, you get a tax bumper sticker for your car, without one nobody lets you cut in line.

 

[fantome profane]

Where's the fun of that, you get a tax bumper sticker for your car, without one nobody lets you cut in line.

Without one you can only drive on private roads. Most people literally would not be able to leave their driveway.