A question about the flat tax:

[Lone_Wolf_Moderate]

I have a question for economics experts. I have my own views on tax policy, but I'm curious. What are your thoughts on the flat tax? Why is it a bad idea? Is it a bad idea? Wouldn't it simplify the tax code and encourage growth? The question of a flat tax actually being passed is beside the point. I'm asking: What are your thoughts?

[Sandpiper]

1. The version of the Flat Tax that Repukes want

Is one that taxes wage income only, and doesn't touch capital gains or investment income.

It would basically eliminate taxes for the rich and pass the tax burden on to the working class.

That's my non-expert take on the GOP version of the flat tax.

[Lone_Wolf_Moderate]

2. Right, and corporations would get more tax breaks,

while the middle class pays higher tax rates. I see the scheme, now.

[2Design]

9. exactly - they have no wage income - they make money off

of firing people, stealing their retirement, and other schemes to return middle class to poverty

[papau]

10. True - and not simple as definition of taxable wage vs inv return vs Corp

requires the same auditors.

[TreasonousBastard]

3. If it's a flat percentage on earned income only...

it's a scam.

1)
A flat tax, say 17% on earned income, is regressive. It hits the lower income earners harder than the upper incomes.

2)
Nothing is said about payroll taxes-- Social Security, Medicare, etc. These could become even more regressive, as if they aren't enough already.

3)
Unearned income is how wealth is built. You don't get rich working for wages or commissions. You get rich by investing and speculating. You get rich by properly leveraging debt to make money, not just to spend it. The flat tax proposals being floated without taxing unearned income will simply increase the concentration of wealth.

[OneBlueSky]

4. it's regressive . . .

this country used to have a very progressive tax structure, which has been whittled away over the years . . . net result is the rich keep getting richer, the poor keep getting poorer, and the gap between the two continues to expand . . . soon there will be no middle class -- only the very wealthy, who control everything, and the rest of us, who are essentially no more than subjects . . .

[OneBlueSky]

5. does anyone have access to income tax rates from the 1950s . . .

and 1960s? . . . I'm curious about what the upper tax brackets looked like when we had a progressive system . . . as I recall, they got pretty steep after a certain income level was reached . . .

[Robert Oak]

12. 1945-1950 91% - 88% brackets

http://www.huppi.com/kangaroo/4Inequality.htm

I found this and it's pretty good history of progressive taxes...
quick read.

[OneBlueSky]

13. good info . . . thanks . . . n/t

.

[leftyandproud]

6. Simplify tax code and encourage growth? Yes.

Increase prosperity in general? Probably.

Increase inequality in general? Probably.

There is the problem.

[Harksaw]

7. The very rich have benefited from society to a much greater degree

than the poor. For example, the Waltons, in running WalMart, use public highways for transportation, public police forces to defend their assets, insure their bank accounts with public insurance, employ people educated in public schools, and a host of other services. It makes sense that they pay a higher tax rate than someone who cleans bathrooms for a living.

[FormerDittoHead]

8. Clarification...

The very rich like the Waltons earned UNEARNED income, which is currently taxed at a lower rate, and is excluded from any 'flat tax' inititive being proposted by the Republicans.

Bottom line is that the Waltons, in getting rich (income) have paid a LOWER RATE than the people working at McDonnalds...

Furthermore, there is no Federal WEALTH tax (stocks, property, etc) so they don't need to pay a DIME toward the year to year expenses related to protecting / servicing their wealth...

[papau]

11. Very true

:-)

[B0S0X87]

14. What if the first 20 grand you made was tax free?

So that at a 17% percent flat tax rate, someone making 30,000 dollars would pay $1,700 in taxes.

Another thing that would be nice is that a flat tax rate would eliminate all deductions that rich people use to avoid paying anything.

Of course, the current plan to totally eliminate the captial gains tax is bullshit.

[wkirby]

15. That's part of most plans.

Almost, but not all flat tax plans begin at a certain income level other than zero. I've heard figures ranging from 15-30k per year wouldn't be taxed under a flat tax system.

I must admit, One Blue Sky, I find the comment that eventually there would be no middle class to be quite silly. I'd be interested to see how you would back a statement up like that since we live in a society where Middle Class consumption is much higher than it was in the "glory days" of the 50's and 60's you refrenced.

Before i'm flamed for my statements - I did vote for John Kerry ;-)

-Will
The Kirby File

[umass1993]

16. Your flat tax overtaxes rich people

we should make a real "flat" tax and tax everybody the same amount of money.... in ABSOLUTE terms.

If Joe pays $3654 then so should Mike. No matter that Mike is a billionaire and Joe is a pauper. They get equal services (actually Joe gets more services) so they should pay equal amounts. That is REAL flat tax.

Anything else is unfair.

Or, maybe this whole flat tax thing is stupid because it arbitrarily assumes that the percentage is what should be flat.

In other words LoneWolf, your view is narrow-minded. There are many ways to arrive at a "flat" tax, none of which are the same.

flat arithmetic
flat geometric
flat logarithmic
flat asymtopic
flat hyperbolic

See my posts on the other thread about this topic.