Can a person be a progressive and advocate a "flat tax"?

[UdoKier]

Can a person be a progressive and advocate a "flat tax" on individual income?







I would have to say emphatically, No.

[PowerToThePeople]

1. Yes, tax corporations 100%

[UdoKier]

3. Cute, make me specify...

And who will hire people when all the corps fold?

[Radical Activist]

2. Maybe if,

they started taxation at a high income level, like only taxing everything a person makes over $100,000.

[UdoKier]

6. Technically that isn't really flat.

That's a two-bracket scheme, one at 0% and one at whatever. It has progressivity, albeit very little...

[nothingshocksmeanymore]

4. No..any tax that takes equally from the poor is not a progressive tax

and therefore unevenly burdens those the least able to shoulder it.

[jobycom]

15. Yours is the correct answer

As always, sis. :-)

[Protagoras]

17. I agree with Jobycom about NSMA :D

right as usual.

[Selatius]

5. It really depends on how you set up a flat tax

For example:

A flat tax: 75%
Exemption: 5,000,000

Your first 5,000,000 comes untaxed. This'll apply to both earned and unearned income. Everything after that is taxed. As one can see, it is aimed pretty much at the top 1% as far as wealth is concerned.

Is this fair? It seems fair to me, but I need to study it more. Would I be pulling in more money before or after this tax is instituted? Or would the amount be roughly the same? The question is important because the tax revenue is what goes towards public education, health care, environmental protections, etc.

[UdoKier]

8. That would leave the gov't broke.

Only a tiny percentage of people earn over $1 mil per year. Even those with a net worth of over $1 mil are only about 5% of the population.

High earners would just find loopholes to get their taxable income under the $5 mil, they would find ways.

[Selatius]

11. I was working under the assumption that the old tax was replaced entirely

If the old tax code was abolished, and this was instituted, then it would stand to reason the loopholes would be wiped out as well.

[UdoKier]

13. They wouldn't need loopholes.

Since only business owners and high-level execs make that kind of money, the execs would have their salaries lowered to the limit and get lavish perks.

Rich business owners would just invest the money back into their businesses.

I really think it would destroy the treasury.

The progressive tax was quite ingenious and works quite well, when it's kept fairly simple.

I don't know why so many people always want to reinvent the wheel (of course in the case of the flat-taxers, most of them are just rich fux who want yet ANOTHER tax cut._

[Selatius]

16. The point of the income tax was wealth redistribution

Rich business owners would just invest the money back into their businesses.

But wouldn't that benefit more than it hurt? Instead of squeezing every last worker of every last dollar he worked hard for, the owner is instead reinvesting back into the company, investing in the workers. Would it not translate into better health care programs, for instance, for the worker or better pension programs? Especially if the owner wanted to classify that money as something other than income? Such as infrastructure and pensions or research and development of new technologies?

At one time, the US income tax at the top brackets went as high as 75%. They disappeared when Reagan cut the taxes.

[UdoKier]

18. It might be good for the company, for profits & employees...

But what about the revenue shortfalls it would cause?

[Selatius]

26. This is why I'm still studying it

Ultimately, the flat tax proposal, while it may hold a vital strategic interest as far as "progressive politics" goes as opposed to "progressive taxes," has the most difficult time answering the question.

Frankly, without the data, I cannot tell you whether such a tax would produce a shortfall or a surplus or no effect on the revenue stream. I could only debate over issues of what is fair, more theoretical aspects of such a tax, but it would be far more difficult to answer the details, but the devil is in the details.

The effective tax rate of some of the larger corporations in the US has been whittled down to essentially 5% or even 0 given the amount of gimmickry found in the existing code. All one has to do is dig up the news of that GAO report issued not long ago.

In it, 60% of all US-based corporations paid 0% income taxes in the years studied (1996 to 2000). Of the corporations that did report taxable income, 94% of them reported a tax liability of 5% or lower. If that does not leave your jaw on the floor, I don't know what will.

Untold scores of billions go untaxed because of this kind of activity. While the middle class and poor in this country would no longer pay earned income taxes under the hypothetical tax I proposed, those billions that go missing now would be reclaimed under such a flat tax.

Ultimately, it may have to be abandoned altogether to a simple theoretical exercise as opposed to studying it to actually try to implement it. There are too many variables for me to try to account for, nevermind the fact that it is not widely accepted anyway given the Republicans have all but torpedoed such exercises by setting it up to screw over the poor automatically.

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=45142

[flaminbats]

27. if all people earned the same income..a flat rate would be progressive

and a progressive tax would be flat. ;)

Idealists believe they are always right, that nothing terrible like 9/11 can ever happen, and they are above the law because the law is always wrong. Realists understand that they are not perfect, attacks like 9/11 do happen and can be prevented, and that laws must be obeyed by everyone..even the rich..to be effective.

[ButterflyBlood]

7. under the condition of a "negative income tax", yes

Negative income tax being a flat tax where everyone also gets a set amount back from the government a year.

Say you have a flat tax of 10% and a $4k return. If so someone making $10k a year pays only $1k in taxes and gets $4k back. A net $3k gain. Someone making $40k a year pays $4k and gets $4k back, so effecitvely no taxes. Someone making $100k pays $10k and gets $4k back, so a $6k payment. Some making a million pays $100k and gets $4k back for a $96 tax. etc.

[Goldmund]

9. No.

This is one of the very few issues that I think is a valid litmus-test for progressivism. Assuming that they've thought about it and know what they're talking about, and that they don't mean tricks like an above poster suggested (75% flat over 5 mil -- I actually think that would be the best of all, except I'd start the flattening somewhere in the range of 200K).

[Old and In the Way]

10. A pure flat tax is regressive.

But I'd be for getting a simplified tax structure that does away with 99% of the loopholes. The code is so complex today, I think it's designed to support the tax accountants/lawyers industries.

[TahitiNut]

19. I want the same deductions corporations get: housing, travel, furniture, .

... meals, training, utilities, groceries, gasoline, telephone, computers, and any money I pay anyone to do anything. Then I want to call my savings account a (tax-free) "reserve" and get additional tax credits for any "research" I do.

[Salviati]

12. I voted no but...

Here's my proposal to shut those flat tax proposers up:

First of all, a decent floor on the tax, the same for everyone, the only variable being # of dependants.

After that, the flat tax hits on ALL income. Not just earned income, not just wages, EVERYTHING. All investment income, all capital gains income, all income in the form of stock options, dividends, inheritance, everything gets hit the same, no loopholes no dedcuctions.

Can't get fairer than that, income is income... of course, they'd howl at the thought...

[The Traveler]

14. Yes, it can be

There is a difference between a "progressive tax" (meaning the rate increases as taxable income increases) and "progressive poltics".

To me, progressive politics is that politics which nurtures the common people and supports their elevation. True progressive politics is concerned with more than economic elevation, though that is certainly one of the objectives. True progressive politics, when successful, results in social progress ... and that requires more than mere economic progress.

Passage of a flat tax would be a strategic move, an attempt to achieve tax code simplicity. If it can be justified in a progressive context, that justification would be based on recognition that complex definitions of "taxable income" result in the privileged classes being able to largely evade taxation. (These complexities in tax code seldom benefit the middle or lower classes.)

I suspect the critical issue is not the development of a single, flat tax bracket ... look out for continued creativity on the part of conservatives when it comes to defining "taxable income". Indeed, with proper definitions of taxable income, a flat tax may well better serve the purposes of progressive politics than a progressive tax.

[flaminbats]

20. one can be an idealist in a perfect world..

in an imperfect world only a realist can recognize problems that must be solved.

In a perfect world the rich would donate all their unspent money to the poor, people would work for the good of other human beings..not for profit, our government would not spend more on the military than every other nation on Earth combined, over $300 billion of our tax dollars would not be wasted yearly just on interest payments, and healthcare would be a right for all who need it..not a privilege.

[smartvoter]

21. I have a story about this that no one will read, but here goes:

I had some young conservatives working for me at a research firm. They were advocating changes in the tax code such as the consumption tax or flat tax, etc. Debates ensued as some of the more liberal minded analysts (mostly fairly young) argued about it.

During a move between office floors, we had downtime while networking and such was being completed, so when we were all in the conference room twiddling our thumbs, I challenged them to find a new tax system.

They went through the consumption tax and figured out that those who are at the lower end would never be able to save or get ahead, so it was quickly ditched when they figured out the rich person would pay almost nothing in taxes while the poor person would take it on the chin.

Afterward, they got into the "flat tax of 10 percent" scenario and figured out that any tax was an unfair burden on the very poor -- enough to make it impossible to live. From there, they set out to determine when the tax should kick in, and decided on principle it should happen at the poverty level. They no sooner came to this conclusion when one of the conservatives figured out this wouldn't work because it would encourage people to remain in poverty, as crossing the tax threshold would drive a decrease in net earnings. It took about five minutes of them arguing over how to adjust the system to allow for graduated taxes in accordance with income before they realized they were essentially creating the system we have now.

The bottom line was everyone agreed that the code could (and should) be simplified, but they all gained an appreciation for the system we have and how it facilitates advancement and the like. And the best part was the conservatives "got it" when they moved past concept and into reality. Of course, these were some fairly smart kids, not church drones, but it was encouraging to see the lights turn on...

[nothingshocksmeanymore]

23. Damn..that's a great story

And I wholeheartedly concur with your last paragraph...hell..I wouldn't even mind all the loopholes many corporations found if we would just quite giving them additional subsidies..while they evade paying taxes

[Old and In the Way]

24. Amazing what some basic calculations on a sheet of paper can

turn up, no? Middle-class conservatives are being "conned" by the top 5% who love 'the American Way'....but not enough to keep it going.

[Qanisqineq]

25. I read it and it was interesting

I don't know the answer to the original post or how to make taxes fair to everyone. It involves too many numbers so I leave it alone :banghead:

[JDPriestly]

22. You could still be very progressive on other issues

and consider yourself a progressive. I think, however, it is unlikely that a progressive would advocate a flat tax because it is unfair and regressive tax. I'm not worried that a flat tax will become a reality in the near future because the very wealthy will oppose it since they would not be able to buy the loopholes they now enjoy -- and more important, certain politicians would not be able to sell those loopholes for campaign cash.

[nemo137]

28. not if one is a progressive with any understanding of economics, no.

You don't even need numbers to see how regressive a tax that is. I convinced my hyper-conservative dad what a bad idea it was with three graphs on a napkin at dinner one night.

[blogbear]

29. How flat? If I can run my car over it I'll think about it..