that is what a flat tax discussion all about. but there are people who doesn't understand the nuance of the flat tax system throwing in extraneous factors to obfuscate the discussion.
u do understand that "applying a progressive income tax properly" is oxymoronic u just do get it every one pays the same flat tax rate
I "doesn't" understand huh? Problem is I do. Eliminating most (or maybe even all) deductions/loopholes is something I might support because that is the reason our income tax is ridiculously complicated. Progressive taxation is not the reason. If all deductions/loopholes are eliminated and 3-5 brackets remain, a person's income taxes could be done on a 4 x 6 inch index card. adoo, I don't know exactly what your problem is, but not agreeing with you lockstep doesn't mean someone lacks understanding. I haven't discussed it much on this forum, but I've advocated tax simplification for over 20 years and debated people about it. Your juvenile responses to people don't help your case.
I know, but some of us believe that getting rid of 99% of the complexity is good enough and going the extra 1% is a bad idea. Most people think progressive taxation is good and should be retained despite the small amount of complexity that it creates. Perhaps you could think of it as an incremental step towards your ultimate goal. Not to derail things too much, but what is your opinion on eliminating the income tax completely and replacing it with a consumption tax? This way, "people only pay as much tax as they want to". This is simplicity to the uttermost, right?
Someone correct me, but the only way to have a successful Flat Tax policy is for the US Federal government to severely cut back its budgets much in the spirit of smaller government. If this is the case, why are we ignoring that with smaller government will come a smaller safety net for those who lose in globalization and a decreased military capability. We would essentially be giving up our place as a military hegemon because we could no longer afford our current level of force projection. I think there is a reason why over 80% of economists believe that a progressive tax bracket is the best option available. (Klein et al. 2004)
i am against a consumption tax. a consumption tax system places disproportinate tax burden on young families with children and favors empty-nesters. and in such a system, you'll see skyrocketing black-market activities.
I thought the point of flat tax is to eliminate deductions. So your entire income will be your taxable income.
This is the way I think we should go. Doing so gives us the ability to... Easily tax vices Increase the savings rate Increase tax transparency Reduce the tax preparation burden on the people Reduce the IRS and its power dramatically Eventually reduce or eliminate Social Security A consumption tax, with a standard exemption to reduce the regressive nature of sales taxes, would be the fairest method of taxation and would tax one of the things that makes us the most hated throughout the world: our consumption.
I think that either a flat tax or a consumption tax could help the politicians to severely cut back budgets. If we actually tied the tax rate to our expenditures, have the rate adjust up or down depending on how much we spent the previous year, people would feel it in their pocketbook every time the government goes on a spending spree.
Put in an exemption of $5000 for each adult and $2500 for each child and the system would be much fairer for families.
I think that would be appropriate, but there should be a factor included for inflation. If a person buys a stocks for $100 and sells it 20 years later for $200, he must pay tax on the full $100, but in reality the person lost money when you take into account inflation.
I agree with you but the "underground economy" thrives right now and has for decades. A consumption tax would push more goods and services that direction.
Perhaps I misunderstood - you want to eliminate the payroll tax? If so, 18% is not going to be anywhere close to a high enough rate to generate the revenue we currently generate. Even if you taxed every single dollar of GDP, an 18% rate would barely generate the revenues we currently generate. Once you take out $30,000 from everyone's income as you suggested, you're going to come out way short. And once you get into the low-to-mid-20's rate, you're no longer benefiting every class of people as you had originally claimed it out.
I would create an intentional non taxed market in used goods by not taxing their sale. If someone wants to avoid paying tax, they can buy pre-owned goods and not run afoul of the law. I just don't think most companies are going to risk legal action for willfully selling their goods outside the tax framework. There will be some black market activity, but I suspect it would be far less than the current system that allows people to avoid taxation legally.
What are the logistics of a consumption tax with an exemption? Do you pay the tax at the time of sale? If so, how is an exemption made for your first amount of spending?
That's a very good point. I think the original purpose of a capital gains tax being lower than income tax was to spur entrepreneurship and investment. Certainly would want the value to be calculated in real dollars (date purchased versus date sold) and we would have to be careful to structure it in a way to not stifle investment.
Like it or not, the American economic system is dependent on encouraging consumption. Imposing consumption taxes would fundamentally change the assumptions and send a chill though the system that could make this recession look mild by comparison. If we aren't making cars that need replacing every 100,000 miles or building new 4 bedroom houses in ever expanding sprawl, where will the jobs come from?
