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A flat tax works.

post #1 of 57
Thread Starter 
Good for Vlad Putin. Maybe we could learn athing or two from the Russians now.

<a href="http://story.news.yahoo.com/news?tmpl=story&u=/ap/20020413/ap_on_re_eu/russia_tax_revolution_1" target="_blank">http://story.news.yahoo.com/news?tmpl=story&u=/ap/20020413/ap_on_re_eu/russia_tax_revolution_1</a>

Russia's Flat Tax Rakes in the Cash
Sat Apr 13, 1:47 AM ET
By ERIC ENGLEMAN, Associated Press Writer

MOSCOW - Like many Russians, Nellie dreads her annual visits to the local tax office, with its long lines, surly officials, and Byzantine tax forms. But recently, the 66-year-old grandmother, who supplements her meager pension by cleaning apartments, had a pleasant surprise.


"My taxes were three times lower," she said. "They must have understood they were too high before."

Nellie is not alone. The government says more Russians are paying income tax, thanks to an innovation that should hearten flat-tax advocates.

Last year, President Vladimir Putin (news - web sites) introduced a flat tax on income of 13 percent — the lowest rate in Europe — designed to draw more Russians out of the "shadow economy" and make them honest taxpayers.

The results have been dramatic. Revenue from personal income tax shot up nearly 47 percent last year, and tax revenue overall rose 50 percent, according to government figures. Early results from 2002 look even better.

"We expect the number of people filling out income tax forms to increase substantially," said Dmitri Mikulich, deputy head of the Tax Ministry's individual income tax department.

For a society with a long history of distrusting the government and hiding cash at home, the taxpaying boom marks something of a revolution. But many analysts say it's too early to declare victory.

"So far, so good," said Alexander Morozov, a senior economist at the World Bank (news - web sites) in Moscow. "There are signs that more people are paying personal income tax, but the process of moving from shadow to light has only just started. There's a long way to go."

Small- and medium-sized Russian businesses complain they still face an insuperable array of taxes.

The worst culprit, many say, is the "social tax" of up to 35.6 percent on salaries, the equivalent of U.S. Social Security (news - web sites).

There's also a 5 percent sales tax, a 20 percent value-added tax, a 5 percent advertising tax, a 2 percent property tax, a 1 percent road tax, plus a 24 percent tax on net profits after most other taxes, not to mention various registration fees.

"There's a sea of taxes," said Slava, 40, who owns a travel agency in Moscow and declined to give his last name.

Like many other business owners, Slava operates under a dual salary system. He slips his four employees an envelope of dollars every month, but for the tax inspectors he keeps another set of records on his books, showing much lower wages in rubles.

The gap between real and "official" salaries is striking. Slava's employees make between $100 and $300 per month, while on paper they earn a mere 500 to 1,300 rubles, equivalent to $16 and $42.

Most tax inspectors are willing to set aside their doubts for a "gift," like a bottle of liquor, Slava said with a shrug. Only through this sort of routine deception, he said, can he keep his business from going under.

"If the government makes it a 13 percent tax for business, just like for individuals, then I'm ready to pay it, but right now there's no way," he said. "You'd have to turn over all your profits."

Putin has promised to change that. Last month, he proposed a tax reform package for small businesses, that he said would be "no less revolutionary" than the flat tax on income.

The reforms would eliminate many taxes for small businesses, and give them the option of paying a 20 percent tax on profit or 8 percent on revenues.

Morozov of the World Bank says it's important to make the taxpaying process less bureaucratic as well.

"The tax burden is not just the amount of tax, but the time and effort it takes to fill out all the forms," he said. "Unless it's simplified, it will be difficult for businesses to stay afloat."
post #2 of 57
No.
post #3 of 57
As much as I'd like to see flat tax here in the States it will never happen. Why? Because the IRS doesn't want to be downsized.
post #4 of 57
Thread Starter 
a flat no on the flat tax from Burke?!?!
post #5 of 57
Call, do you know that right now you pay more taxes than Exxon-Mobil? Something similar to this was being discussed on Crossfire yesterday. Personal taxes have been going up as buisness taxes go down, I agree that we should pay less...but if we do someone has to pay more.
post #6 of 57
I think the article demonstrates what can come from a flat tax...more people actually paying what they owe in taxes. The way the system is currently, everyone is looking for the next loophole or deduction so they don't have to pay, or pay as little tax as possible. If you change to a flat tax, as in everyone pays the same flat rate, then you eliminate the 40-page forms, and hundreds of pages tax guide, and perhaps you actually end up getting as much, if maybe not more, in taxes than you receive currently. Maybe because John Q. Actor is now paying 13% of the 10 million dollars he made last year, instead of his creative accountant working it so he only pays about 5% of his total income. Isn't that the biggest complaint from people who oppose cutting taxes? That "the rich" don't pay enough? Take away all those shelters that government provides and force them to pay the same percent as everyone else, and there's nothing to complain about.

That said, I think it will be a cold day in Hell before the US Government would allow that to happen. There are too many high-power groups that would potentially lose a lot of "business" if you actually made the tax a straight line percentage, and didn't need a freaking genius to do your taxes if they're the slightest bit complicated. If a flat tax in this country was set, the way our politicians handle things, it would start with incomes of $75,000 or more, and be a flat rate of 75%.
post #7 of 57
This is a great topic, I think, for chipping away at how America really works from each person's perspective. What the hay, I'll drop some madness:

1) The power in America is held by the wealthy
2) The people with power have the ability to influence the politicians
3) The politicians can influence legislation

Now, Capitalism is a complicated thing, but let's try this on for size.

1) In a capitalistic society everything must have a value.
2) For something to be worth a lot of money, something must also be worth almost nothing.
3) In order for there to be wealthy people there must also be poor people.

Long story short, let's say a pack of gum costs 50 cents. You give everybody in America $1,000,000. Ten minutes later a pack of gum in this country will cost $1,000,000 (and 50 cents).

Now, with this system of value a flat tax goes against the basic concepts this country is based on. You don't earn any tax shelter, nor do you rise to the occasion and figure out how to slip through a loophole. You just pay a flat tax, and where's the challenge in that? Not very American, is it? Its a cliche that "the rich stay rich and the poor stay poor" and our tax system is one of the defense lines that helps make that cliche of a dream a reality.

Anybody who can afford a good accountant can get around a lot of this, but you have to have a lot of money to have a good accountant. The IRS isn't doing anything to run itself out of business, either. Personally, I think you have to be evil to work there, but if I was employed there or anywhere else I wouldn't want to lose my job. A flat tax would all but eliminte the agency.

Before I go on and on, I'll go ahead and open the floor to how crazy this is.

BTW: I totally support a flat tax. TOTALLY.
post #8 of 57
Quote:
3) In order for there to be wealthy people there must also be poor people.
This is the biggest of the incorrect assumptions. If you assume that the American economy is a zero-sum game then yes, this might be true.

But since the Federal Reserve continually prints more and more money you don't have to take from one to give to another. This is also the big lie regarding taxation.

There doesn't have to be poor people. Sure, not everybody is going to have the skill or the cosmic fortune to become wealthy. That said, we're never going to be without poor people. But taxing wealthy people won't make poor people any better off. In fact, to tax wealthy people to give to poor people is counterproductive...as well as being penal to those who have worked hard to get where they are.
post #9 of 57
Okay, okay. I see you're point, and I'll agree a little. You say this:

"Sure, not everybody is going to have the skill or the cosmic fortune to become wealthy. That said, we're never going to be without poor people."

But let me ask this: Why do you think that really is? Do you think there are not mechinations in place that help to keep the working class the working class? What about funding for education? Based on taxes, right?

You say: "If you assume that the American economy is a zero-sum game then yes, this might be true."

I'm not going to say that it is a "zero-sum" game, but it is regulated. And it isn't my thinking that we should take away from the rich to give to the poor. I'm saying that a flat tax would be both fair to the poor and to the rich. The resource required to get a tax break in most cases is money, which poor people don't have. What we have now is the opposite of fair. I really don't see it as much different from anything else in out society, though.
post #10 of 57
Oh I agree, flat tax is more equitable. I have supported any call for flat tax ever since I heard of it. In fact way back in High School when I first had to file a tax form I thought "why isn't this simply a straight-up percentage"? Of course the answers came to me in the form of economic theory and teacherbabble when I posed the question.
post #11 of 57
You say there are other incorrect assumptions in my original post? Please, elaborate. Could you lay down the technobabble in layman's terms?

I only took one economics class in college, so I'm a little weak on the particulars.
post #12 of 57
1) The power in America is held by the wealthy
For the most part, yes.

2) The people with power have the ability to influence the politicians
Almost always

3) The politicians can influence legislation
So can consumer groups, political action committees, environmental activists, etc. In fact, many politicians are in the back pocket of these groups...and many individuals in these groups are not wealthy. Ergo, part of the above assumption regarding power is incorrect.

Now, Capitalism is a complicated thing, but let's try this on for size.

1) In a capitalistic society everything must have a value.
Everything on Earth has value to someone. In a capitalistic society we assign a monetary number or trade value. True assumption.

2) For something to be worth a lot of money, something must also be worth almost nothing.
This statement is unclear therefore taken out of the equation.

3) In order for there to be wealthy people there must also be poor people.
Once something is possesed it is assigned a value either intrinsic or othewise. If two people have nothing then one gets something he is considered as having more than the other. If the one who obtained something did so in the absence of the other, not taking from the other, has he done something to hold the other down in some way? No. He has worked at obtaining that which he has.

If the other can work to obtain the same thing then he has improved his life to the same extent as the other.

But of the other does nothing to improve his life circumstances he is still considered poor. Why? I don't know.
post #13 of 57
Quote:
So can consumer groups, political action committees, environmental activists, etc. In fact, many politicians are in the back pocket of these groups...and many individuals in these groups are not wealthy. Ergo, part of the above assumption regarding power is incorrect.
By and large money runs politics. Environmental groups on the whole do not have "politicians in their back pockets"... being in someone's back pocket costs money.

While Dick Cheney was working on energy policy - he consulted all of the big oil corporations (hey they gave a lot of money, so they get in the door). He talked with them in personal meetings for months as a matter of fact. What happened to all the environmental groups that supposedly have so much power? They had 48 hours to submit their recommendations to Cheney. 48 hours I think most people understand that money is power in politics in almost all cases.

Enron was a huge contributor to the Bush Administration. Guess What? They had many meetings on their energy ideas. Hell, they had many employees "promoted" to governmental positions. Example? look at the Secretary of the Army: an Enron exec.

this isn't on-topic - but this just needed to be said.

Cheers!
Joram
post #14 of 57
*ahem* California is rife with politicians who are in the back pockets of groups such as Sierra Club, People For The American Way, etc. And many members of these groups are not wealthy.

The Califonia legislature is also populated by politicians who are under the desks of bankers.

Things have always been this way.
post #15 of 57
Tax should be function of income. If one taxes flat at, say 10%, the poor are hit far harder than the rich. It is an inherently unfair system with potentially negative latent economic effects.

Think about it. Is ten percent a significant portion of one's income, in relation to living costs, if one earns 400,000 per anum? 40,000 is certainly a significant sum. The difference between a Porche and Ferrari. But the subtraction of such a dividend from one's income is not substantial relative to the static price material goods—cars, gasoline, food, water, furniture, and so on, all cost the same, regardless of who's buying. Three thousand, on the other hand, is a significant portion of a 30, 000 per anum income. A new fridge, the ability to make the payments on a suitable home.

Furthermore, the success of such a system in a country like Russia, where most of the economy is black market, is superficial at best. What Putin is doing is a good idea. In Russia.

Finally, if the wealthy are left to there vices, and allowed to accumulate wealth, they may be less encouraged to be innovative—they already have a yacht, thanks to flat tax, and don't Need to work anymore. Granted, some are driven irrelevant, but there are vast numbers of economic drivers who will be satisfied with a healthy bank account—something easily achieved under the flat tax system.

I could go on.
post #16 of 57
Don't know how feasible this one is, but I've also heard talk of a goods tax. Where basically there is no income tax at all, just a tax on what you buy, which might be higher than it is now. So the more you consume, the more you are taxed. I thought it was interesting, but I don't know much about it. Anyone heard of this tax proposal?
post #17 of 57
Quote:
piranhapictures:
Don't know how feasible this one is, but I've also heard talk of a goods tax. Where basically there is no income tax at all, just a tax on what you buy, which might be higher than it is now. So the more you consume, the more you are taxed. I thought it was interesting, but I don't know much about it. Anyone heard of this tax proposal?
We discussed this a long time ago, that tax would be regressive. It would screw the poor and benefit the rich. If someone makes $15,000 a year they have to consume most of there income to stay alive, they would end up getting taxed on almost there entire income....and they have really no choice. On the otherhand if someone made $100,000 a year they may only consume $50,000 so they are taxed on only half there income.

I agree that the tax system should be reformed. I just dont think it would be so easy as a flat tax.
post #18 of 57
Okay some California politicians are in the back pocket of these groups? Which politicians? Give me some names. Prove to me the connection.

More importantly give me the names of politicians who are in the pockets of environmental groups that are in the Bush Administration, i.e., the politicians that are making energy policy for the United States now.

Joram
post #19 of 57
Quote:
The Califonia legislature is also populated by politicians who are under the desks of bankers.
Start with the Governor and go down. His favorite contributors are Paine-Webber(banking and finance) or ROBINSON CALCAGNIE & ROBINSON(an envornonmental law firm).

post #20 of 57
We shouldn't be paying income tax period.

But thanks to the Japanese, I now have to fork over almost 45% of my income.
post #21 of 57
Quote:
kronos:
Quote:
The Califonia legislature is also populated by politicians who are under the desks of bankers.
Start with the Governor and go down. His favorite contributors are Paine-Webber(banking and finance) or ROBINSON CALCAGNIE & ROBINSON(an envornonmental law firm).
To my best knowledge the Governor is not a member of the legislature...
post #22 of 57
And list off some of those Bush Administration people that are swimming in environmental money.

Joram
post #23 of 57
Quote:
Ned Fats:
Quote:
kronos:
Quote:
The Califonia legislature is also populated by politicians who are under the desks of bankers.
Start with the Governor and go down. His favorite contributors are Paine-Webber(banking and finance) or ROBINSON CALCAGNIE & ROBINSON(an envornonmental law firm).
To my best knowledge the Governor is not a member of the legislature...
I said "start with". I'm making the point that if you research any and all politicians you will find PAC and special interest money. Since I don't have the time and am not paid to research these things -which I could do but have not the time- I am leaving the legwork to you -if you're able to do such things.

Look at the contributions to Bill Simon versus Gray Davis. You'll find more special interest money in Davis' column than you will in Simon's column. In fact, you'll find Simon contributes more to his own campaign than anyone else.

And I expect you to find this on your own. Be adult about it though. I'm not here to hold your hand while showing you facts and figures. If you want 'em, find 'em. I already know how and where.
post #24 of 57
Quote:
Ned Fats:
Quote:
piranhapictures:
Don't know how feasible this one is, but I've also heard talk of a goods tax. Where basically there is no income tax at all, just a tax on what you buy, which might be higher than it is now. So the more you consume, the more you are taxed. I thought it was interesting, but I don't know much about it. Anyone heard of this tax proposal?
We discussed this a long time ago, that tax would be regressive. It would screw the poor and benefit the rich. If someone makes $15,000 a year they have to consume most of there income to stay alive, they would end up getting taxed on almost there entire income....and they have really no choice. On the otherhand if someone made $100,000 a year they may only consume $50,000 so they are taxed on only half there income.

I agree that the tax system should be reformed. I just dont think it would be so easy as a flat tax.
The above post is possibly THE single most misinformed post in the history of CHUD. A consumption tax, as proposed, would put into place a 17 1/2% National sales tax, which would be collected by the same merchants who now collect and submit state sales tax. There are exemptions for food and housing for low income people.

Imagine taking your entire pay for the week or the month and owing not one penny of tax on it, unless YOU decie you want to purcase something. If you save, why you pay no tax and if you invest in a compny, why you pay NO tax. If you donate money, you pay no tax on that money. There would be no more deductions. No deductions for businesses, charities, churches or anybody else.

Right now, criminals pay NO, repeat, NO income taxes. Drug dealers pay NO income taxes. Churches pay no income taxes. Most large corportions pay little to no taxes. Very wealthy individuals pay little to NO income tax.

You are now taxed on what you earn. It stiffles your productivity. Each of us probaly know someone who will not work, the last part of the year, because any more income would put them into a higher bracket and simply cause them to be working for nothing. THAT is represive.

A national sales tax? When drug dealers wanted to buy homes, boats, cars, clothes, they would wind up paying their part of out taxes, through a consumption tax. For the firsttime. Corporations too! You decide to buy, you pay your fair share.

The more you have, the more you spend. The more you spend, the more taxes you pay.

The flat tax doesn't do that. It does hit poorer groups much harder than a national sales tax. PLUS, with a flat tax,you WILL get a value added tax. Ask those from Europe what they thik of he VAT. It sucks and it will destroy their economy. Its why everything costs so damned much in Europe.

Imagine people saving their money. Now we save less than 2% of our income. With a natonal sales tax,we would probably hit 25% savings. What happens to that money? It gets invested in busines,and R and D and other things that increase the productivity of our country.

Look into the Consmption tax. The more you know, the better it looks. Also guess what happens to the IRS, the single largest government agency? THAT'S RIGHT! There woul be no returns, no April the 15th. Enforcement would be minimal and we, our government that is, would have a greatly reduced amount of enforcement duties. Just a fraction of the IRS's budget would be needed.

Figured out, taking all fctors I have seen into view, everything would wind up costing less not more.

post #25 of 57
Quote:
Will:
Quote:
Ned Fats:
Quote:
piranhapictures:
Don't know how feasible this one is, but I've also heard talk of a goods tax. Where basically there is no income tax at all, just a tax on what you buy, which might be higher than it is now. So the more you consume, the more you are taxed. I thought it was interesting, but I don't know much about it. Anyone heard of this tax proposal?
We discussed this a long time ago, that tax would be regressive. It would screw the poor and benefit the rich. If someone makes $15,000 a year they have to consume most of there income to stay alive, they would end up getting taxed on almost there entire income....and they have really no choice. On the otherhand if someone made $100,000 a year they may only consume $50,000 so they are taxed on only half there income.

I agree that the tax system should be reformed. I just dont think it would be so easy as a flat tax.
The above post is possibly THE single most misinformed post in the history of CHUD. A consumption tax, as proposed, would put into place a 17 1/2% National sales tax, which would be collected by the same merchants who now collect and submit state sales tax. There are exemptions for food and housing for low income people.

Imagine taking your entire pay for the week or the month and owing not one penny of tax on it, unless YOU decie you want to purcase something. If you save, why you pay no tax and if you invest in a compny, why you pay NO tax. If you donate money, you pay no tax on that money. There would be no more deductions. No deductions for businesses, charities, churches or anybody else.

Right now, criminals pay NO, repeat, NO income taxes. Drug dealers pay NO income taxes. Churches pay no income taxes. Most large corportions pay little to no taxes. Very wealthy individuals pay little to NO income tax.

You are now taxed on what you earn. It stiffles your productivity. Each of us probaly know someone who will not work, the last part of the year, because any more income would put them into a higher bracket and simply cause them to be working for nothing. THAT is represive.

A national sales tax? When drug dealers wanted to buy homes, boats, cars, clothes, they would wind up paying their part of out taxes, through a consumption tax. For the firsttime. Corporations too! You decide to buy, you pay your fair share.

The more you have, the more you spend. The more you spend, the more taxes you pay.

The flat tax doesn't do that. It does hit poorer groups much harder than a national sales tax. PLUS, with a flat tax,you WILL get a value added tax. Ask those from Europe what they thik of he VAT. It sucks and it will destroy their economy. Its why everything costs so damned much in Europe.

Imagine people saving their money. Now we save less than 2% of our income. With a natonal sales tax,we would probably hit 25% savings. What happens to that money? It gets invested in busines,and R and D and other things that increase the productivity of our country.

Look into the Consmption tax. The more you know, the better it looks. Also guess what happens to the IRS, the single largest government agency? THAT'S RIGHT! There woul be no returns, no April the 15th. Enforcement would be minimal and we, our government that is, would have a greatly reduced amount of enforcement duties. Just a fraction of the IRS's budget would be needed.

Figured out, taking all fctors I have seen into view, everything would wind up costing less not more.
It's basic economics. I am not going to go over this again, if you want to hear my argument find the old thread. Maybe you should think about enrolling in the local community college and taking ECON 2105 and 2106, they are very informative.
post #26 of 57
Quote:
It's basic economics. I am not going to go over this again, if you want to hear my argument find the old thread. Maybe you should think about enrolling in the local community college and taking ECON 2105 and 2106, they are very informative.
You're advising a man who made a hundred million dollars just in the 90's to take an Economics course?

Faaaascinating...
post #27 of 57
Quote:
Kronos:
Quote:
It's basic economics. I am not going to go over this again, if you want to hear my argument find the old thread. Maybe you should think about enrolling in the local community college and taking ECON 2105 and 2106, they are very informative.
You're advising a man who made a hundred million dollars just in the 90's to take an Economics course?

Faaaascinating...
I dont want to get into what you are saying but if I'm asked I will. A flat tax being regressive is a very simple economic concept. Prove me wrong. If I am right then maybe he should take an economics course.
post #28 of 57
Here is an article that pretty much sums of the situation. This is a simple concept.

A Flat Tax for Fat Cats
By Marc Lee and Seth Klein
The latest mantra of the tax cut crusaders is "flat tax."

"Flat: usually has a negative connotation--like flat tires or flat beer--but somehow in the context of taxes the term appeals to conservatives. What could be more fair than taxing everyone's income at the same rate? It turns out there is lot more to this seemingly simple proposition than meets the eye.

While the idea hasn't generated much interest in the U.S. (witness Steve Forbes's poor presidential showing), Canada's neo-conservatives have embraced it. The 1999 Alberta budget announced that the province will move next year to a flat income tax of 11%. Now the flat tax is being touted for the federal level by the party formerly known as CCRAP (maybe the party should choose a symbol that denotes something flat, like a pancake, or a flat earth).

The flat tax represents a huge windfall for upper-income earners, since it removes progressivity from the income tax system (that is, the notion that tax rates should increase along with one's ability to pay).

Yet, even in Alberta, home of Canada's cowboy capitalism, polling reveals little appetite for tax cuts for the well-off. Thus, to make the flat tax more politically palatable, the government came up with a shrewd political maneuver. In addition to the flat tax, the basic threshold at which people begin to pay income tax will also be raised. This will lift 78,000 low-income people off the tax rolls, claims the government.

While raising the tax threshold is admirable, it acts as camouflage for the real objective: lowering taxes for upper-income earners. When this policy move is questioned, the tax cutters simply respond: but what about the 78,000? In a nutshell, 78,000 people are being used as a battering ram to push through tax cuts for those who need them least.

One argument advanced by the flat taxers is that the current system is somehow "punishing success" and "chasing away our entrepreneurs." But this idea is just plain wrong. Top marginal income tax rates were well over 80% in the 1950s and 1960s, the decades of the past century with the highest levels of GDP, income and productivity growth.

The flat tax of 17% being proposed by the new federal party would be of little benefit to the majority of Canadians, most of whom already pay only 17% (a majority of Canadian taxpayers make less than $30,000, the income at which the current second tax bracket kicks in). Moreover, in order to finance what amounts to a huge tax cut for Canada's wealthiest income earners, the flat tax would put many of the public programs Canadians cherish at serious risk.

Progressive taxation recognizes that the market, left to its own devices, does a poor job of distributing incomes. Given the fact that the market is producing more and more inequality, we need a progressive tax system to mitigate the growing gap between society's haves and have-nots more than ever before.

While dreams of flat taxes have conservatives frolicking with joy, something has been missed in the discussion so far. Research suggests that, when all taxes are considered, Canada already has a virtual flat tax. Most taxes other than income taxes are regressive in nature, meaning low-income people pay a greater share of their income than higher-income people. When sales, property, and payroll taxes are added to income taxes, Canadians at all income levels pay about the same share of their income in total taxes.

Any progressivity in the tax system stems from the structure of federal income taxes. Policy changes that move us toward a flat income tax would actually make the overall tax system regressive in nature, and would increase inequality. When all is said and done, the flat tax has one overall effect--it transfers more wealth and power to the already wealthy and powerful.

-- 30 --
Marc Lee is research economist with the BC office of the Canadian Centre for Policy Alternatives, and Seth Klein is the CCPA's BC director.

Canadian Centre for Policy Alternatives
<a href="http://www.policyalternatives.ca" target="_blank">http://www.policyalternatives.ca</a>
post #29 of 57
One more just for the hell of it. I can post these all day:

Flat Wrong
By Robert S. McIntyre

"The one thing I will not do is shift the tax burden from the super rich to the middle class," Bob Dole told a GOP audience on Jan. 20 in New Hampshire. "You won't tolerate that and I won't tolerate it and it's not going to happen."

Suppose we, too, can agree that halving the top income tax rate on the rich, wiping out taxes on interest, dividends, capital gains and inheritances, and raising taxes on the vast majority of Americans--i.e., the "flat tax"--is a very bad idea. What then? Is there anything at all to like about the flat tax idea? Or should the direction of tax reform be something completely different?

With the notable exception of Dole, GOP presidential candidates are falling over each other to endorse some version of a "flat tax"--and to attack, often viciously, the others' versions. (Malcolm S. Forbes, Jr.'s flat tax plan "looks like it was cooked up at the yacht basin," complains GOP rival Pat Buchanan, who has his own, undefined flat tax plan.) The various GOP flat-tax plans do have some notable differences, but all have one item in common. They would compress the current, graduated tax rates into a single rate.

But progressive rates are one thing about the current income tax system that the vast majority of voters should love. Because the richest people pay the highest rates, middle-income families pay less--and low-income people pay no income tax at all. (Indeed, low- and moderate-income working families actually get an income tax rebate under the current system, as a way to offset their social security payroll taxes.) No change at all looks better than losing this critical feature of our current system.

The stakes for most people are far from trivial. A recent Treasury analysis of House Majority Leader Richard Armey's flat-tax plan conservatively found that under Armey's proposed 20 percent tax rate (for its first two years), taxes would go up by an average of close to $1,000 a year or more for families in every income group except those earning more than $200,000. Even so, at a 20 percent rate the plan loses at least $30 billion a year in revenues--because the tax cuts in the highest income group are gargantuan.

This fundamental problem is not solved by adding back a few of the deductions that Armey would repeal, as some flat taxers propose. The truth is that virtually any flat-rate tax plan that adds up must, by simple arithmetic, produce huge tax cuts for those with the highest incomes and therefore big tax increases on almost everyone else.

Many flat taxers try to fudge this issue by proposing a ridiculously low tax rate coupled with impossibly large family exemptions. Armey with his 17 percent tax rate starting in the third year, Forbes with a 17 percent rate and even larger exemptions right away, Sen. Phil Gramm (R-Tex.), who tries to one-up Forbes with a 16 percent rate, and the Kemp Commission with an unspecified rate and exemptions, but a plethora of deductions, face budget-busting revenue losses ranging from $140 billion a year to upwards of $300 billion annually. (That compares to about $750 billion in income and estate tax receipts under current law.) Their preposterous responses to these enormous revenue shortfalls are either to call vaguely for closing down much of the government or to rely on fatuous supply-side predictions of a doubling or tripling in the economic growth rate.

The hook that flat taxers are trying to snag us with is "simplification." But there is nothing simpler about a single tax rate versus several rates. After all, which is easier: multiplying your taxable income by, say, 21 percent or looking your taxes up in a table where the arithmetic has already been done for you?

That leaves how we define what's taxed. Many people believe that the current income tax system is so ridden with loopholes that the rich get away tax-free, or close to it. There's more than a grain of truth in that feeling, but it's vastly overstated. Although some very high-income people (and some big, profitable corporations) use loopholes to pay far less than they should, on average the top earners pay a higher share of their total income in income taxes than do ordinary families.

That's why the current income tax--both personal and corporate-- while far from perfect, is the central progressive element of our overall tax system. Almost all the other taxes we face--payroll, excise, sales, etc.--are regressive, hitting low- and middle-income people much harder than the wealthy.

And that's why the flat-tax tribunes for the rich--or in Malcolm S. Forbes, Jr.'s case, the rich himself--want to keep all those regressive taxes while converting the progressive income tax into a regressive wage tax or a sales tax (including new taxes on employee fringe benefits). As GOP presidential candidate Richard Lugar (R-Ind.) says about his proposed flat-rate sales tax: "I admit that if the point of taxation is progressivity or so-called fairness and redistribution, then my plan will not be your cup of tea."

For most of the flat taxers--who generally have never seen an upper-income tax break they didn't like--the "simple" answer to the loophole problem is to consolidate the existing tax dodges for corporations and the wealthy into one all-encompassing loophole. Leading flat-tax plans from Forbes, Armey and the Kemp Commission would exempt capital income--interest, dividends, capital gains, etc.--from personal income tax entirely, and repeal the federal estate tax on the very largest estates to boot.

But lowering the taxable income of the rich is hardly what most people mean when they say they want a simpler tax code. On the contrary, the real answer to tax avoidance by the rich is to close the loopholes that make it possible. That entails cracking down on excessive "depreciation" write-offs, ending preferential treatment of capital gains, curbing multinational tax abuses and so forth. Reforms like these may or may not make the tax code simpler--often rules that are too simple are the easiest for lawyers and accountants to get around--but they would address most people's real concern about complexity: that the rich aren't paying their fair share.

What about itemized deductions, the major "complication" in income tax filing that large numbers of ordinary families actually face? Most of these tax breaks are popular because they're intended to help ordinary people--not to give unfair advantage to a favored few. In fact, you can make a good case that deductions for state and local taxes, extraordinary health costs and charitable contributions make the tax laws fairer. And, of course, mortgage interest deductions can be pretty important to homeowners struggling to make ends meet. That doesn't mean we have to keep every itemized deduction, but it is suspicious that the flat-tax "reformers" generally target some or all of these mainly middle-class deductions for elimination while vastly expanding other loopholes for those at the top of the income scale.

If we really want a simpler tax system, we don't have to throw fairness or fiscal responsibility out the window. Instead, we need to broaden the tax base by removing unwarranted loopholes. House Minority Leader Richard Gephardt (R-Mo.) proposes closing about $50 billion a year in corporate loopholes and eliminating all itemized deductions except mortgage interest. That allows him to increase standard deductions and personal exemptions and put three out of four families in a 10% income tax bracket or less--but with higher rates on those who make the most.

The Gephardt plan reduces average taxes for every income group except those making more than $200,000 a year. The plan adds up because those at the very top would pay higher taxes. The Gephardt plan may not be perfect, but unlike the flat tax, it's a reasonable starting ground for debating real tax reform.

Robert S. McIntyre is director of Citizens for Tax Justice.
post #30 of 57
Thread Starter 
The original point of this topic is being completely ignored.
The flat tax has been instituted by a very large and powerful nation, AND IT IS WORKING

post #31 of 57
Actually, this thread has stayed marvelously on-topic.

The fact that a flat income tax works better than whatever post-perestroika nonsense the Russians used before is irrelevant. Most of the Russian econemy is black market, and most income undeclared. People buy milk straight from the tanker trucks, vendors sell undeclared wares from Chinese 'manufacturers,' and so on.

Putin is trying to get the quasi-legitimate businesses in Moscow, St. Petersberg, Volgograd, and Omsk to declare their employee income. This a small percentage of(albeit key) money-makers. Most Russians are not employed in the 'western' sense.

What may work in Russia has no baring in North America. The economic and administrative systems are so completely different.

post #32 of 57
Quote:
call:
The original point of this topic is being completely ignored.
The flat tax has been instituted by a very large and powerful nation, AND IT IS WORKING
I am not arguing whether it works. My point is that in our society it would benefit the rich over everyone else.
post #33 of 57
Kronos: You're wasting your time. The man is an idiot. Take a quick look at my post and tell me where I ever advocated a flat tax. I never have. His Community College level education must have skipped reading because it obvious he is having a hard time understanding my grade school writing.

He is also a "I get a full refund of what little I paid" kind of guy. That means he earns little to nothing and pays no tax.

Perhaps he is somewhat educated, but still worthless. Damn it! Nobody recognizes just how valuable he is and is willing to pay him what he secretly thinks he is worth.

This type of ding-a-ling thinks people who can honestly earn real money must be crooks because he is so incapable.

Taking tax system advise from this person is like taking sex education from a Eunuch.

Save you breath for one who at least can read and has some type of real world experience. That is NOT this guy.
post #34 of 57
Quote:
Nasty Ol' Will:
Kronos: You're wasting your time. The man is an idiot. Take a quick look at my post and tell me where I ever advocated a flat tax. I never have. His Community College level education must have skipped reading because it obvious he is having a hard time understanding my grade school writing.

He is also a "I get a full refund of what little I paid" kind of guy. That means he earns little to nothing and pays no tax.

Perhaps he is somewhat educated, but still worthless. Damn it! Nobody recognizes just how valuable he is and is willing to pay him what he secretly thinks he is worth.

This type of ding-a-ling thinks people who can honestly earn real money must be crooks because he is so incapable.

Taking tax system advise from this person is like taking sex education from a Eunuch.

Save you breath for one who at least can read and has some type of real world experience. That is NOT this guy.
I am an idiot, for arguing with you. I should take Mikah's advice.

"Look into the Consmption tax. The more you know, the better it looks. Also guess what happens to the IRS, the single largest government agency? THAT'S RIGHT! There woul be no returns, no April the 15th. Enforcement would be minimal and we, our government that is, would have a greatly reduced amount of enforcement duties. Just a fraction of the IRS's budget would be needed."

No....thats not advocating anything...

You know what? All I have really said is that a Flat Tax is regressive, a basic economic concept. You can turn me into whatever you want me to be, but that is still the case.

Can you refute that fact? Can you explain how you are somehow above economics? No, but you did try to tell everyone who I am. Well....you were wrong. I am happy that you made me sound older...I always thought my posts made me sound my age.
post #35 of 57
Thread Starter 
[quote]Ned Fats:
Quote:
My point is that in our society it would benefit the rich over everyone else.
I would love to have ONE conversation about taxes in this nation without someone pulling out the single biggest lie and cliche out there.
post #36 of 57
Maybe I should say this then instead. If we had a regressive tax, Bill Gates would pay less a percantage of taxes on his income than you do.

Why would people who are more wealthier advocate a Flat Tax? Just because it is simple? I dont think so...it is because it would benefit them.

You know whats funny Call? You were able to pick out that quote right, but are you able to argue the fact that these taxes are regressive? And if you do understand that, would that not make them more benefitting to the rich than the rest of society?
post #37 of 57
NedFats, I've usually found that people who make a lot of money/and/or pay tons of taxes (like moi) will in one way or another advocate for a flat tax or a consumption tax.

I personally advocate for the comsumption tax.

But my parents who hardly pay few taxes and don't make much to begni with, advocate against it. They get most of what they paid back, so they're happy.

Will consumption tax work if ever instituted? I don't know. But I do that *I* will save more and buy more suff than I currently do.

(btw, is there any nation that has comsumption tax instead of income tax?).
post #38 of 57
A society functions for the whole, not the individual. Taxes which are not proportional to income invariably benefit certain individuals. Whether benefiting these individuals will be beneficial to the society(will such taxes boost the econemy; stimulate jobs; raise the median income; build hospitals, highways, and parks; not broaden the wage gap, and so on) becomes the question.

I say no.
post #39 of 57
Quote:
...increase along with one's ability to pay...
Always the words ability or need(not used in this instance but seemingly always invoked).

The rich have the abilty to pay so make them pay proportionally more, is that it? Punish those who achieve.
post #40 of 57
Quote:
Adam Warren:
A society functions for the whole, not the individual. Taxes which are not proportional to income invariably benefit certain individuals. Whether benefiting these individuals will be beneficial to the society(will such taxes boost the econemy; stimulate jobs; raise the median income; build hospitals, highways, and parks; not broaden the wage gap, and so on) becomes the question.

I say no.
Have you ever handed a check to the federal government for $17,000 on April 15th? I have, and it ain't the most pleasant thing in the world. See, *some people* think that I made too much, so come 4-15, they tell me: "you made too much money. You gotta give more!" After nearly taking half my salary every 2 weeks, they have the balls to ask for more? Why, so some lazy-ass mom could keep on fucking and having more kids so her welfare checks amount grows? So that kids that don't want to learn go to school to school and just stare at the ceiling all day. You say public services? The highways/road in Massachusetts and the Northeast are some of the worst in the country. Apparently the money isn't going there. I could go on and on...

Come to think of it, how did this country survive without income tax before 1942?

It's easy to say no-to-this, no-to-that, when you pay little or no taxes and get most --if not all--of it back.
post #41 of 57
Im just going to start another argument, screw it.

post #42 of 57
Aww come on! You can defend the practice of wealth re-distribution, can't you?

post #43 of 57
[quote]nelson:
Quote:
Why, so some lazy-ass mom could keep on fucking and having more kids so her welfare checks amount grows? So that kids that don't want to learn go to school to school and just stare at the ceiling all day.
*snore*
post #44 of 57
Quote:
Kronos:
Aww come on! You can defend the practice of wealth re-distribution, can't you?
Can you attack it?

This isn't 1955. The modern society is as it is because of this redistribution(in limited forms). Economics, society, the world, indeed life as we know cannot be reduced simple concepts such as "punishing the rich" or "social equality." We've created an extraordinarily complex social hierarchy. One whose problems require, fortunately or not, complicated solutions.

Can the the rich achieve 'modern' success(a Cadillac which requires a specialist mechanic to diagnose air contitioning problems, a computer(with progrms) which relies on hundreds individuals with entirely different, compartmentalized, skills, modern life-spans, and the such) largley because of modern society—which allows them such things as skilled workers(for computers), stability(so they don't have to build a castle in which to hoarde their fortune), and a strong middle class to buy goods(created, initially, in part, by re-distribution of wealth). It seems natural that those who benefit from society put the most back in; they can afford to.

I'll address your points as you raise them. This is a difficult iussue to summarize in two paragraphs.

post #45 of 57
Nelson, awkward collections of non-sequiturs, half-truths, and assumptions are hardly copacetic with intelligent discourse. Your taxes are not the result of dead-beat mothers.
post #46 of 57
And that's one spiffy paper route you have.
post #47 of 57
I've had years where my tax bill was three times nelson's. I cannot look at the amounts I had left those years and consider myself to have been punished in any way.

I think an absolute flat tax punishes the poor for reasons that have been explained already, and I seriously doubt a consumption tax would generate enough revenue to support either national infrastructure even if it were the perfect tax system. To be honest, I've never looked. But I doubt it.

There. Nelson's experience with the human race is that much richer. As for the rest, pretty much what Adam just said and what I said many moons ago: those who benefit the most from society and its infrastructure should help support it the most.
post #48 of 57
Quote:
Adam Warren:
Quote:
Kronos:
Aww come on! You can defend the practice of wealth re-distribution, can't you?
Can you attack it?

This isn't 1955. The modern society is as it is because of this redistribution(in limited forms). Economics, society, the world, indeed life as we know cannot be reduced simple concepts such as "punishing the rich" or "social equality." We've created an extraordinarily complex social hierarchy. One whose problems require, fortunately or not, complicated solutions.

Can the the rich achieve 'modern' success(a Cadillac which requires a specialist mechanic to diagnose air contitioning problems, a computer(with progrms) which relies on hundreds individuals with entirely different, compartmentalized, skills, modern life-spans, and the such) largley because of modern society—which allows them such things as skilled workers(for computers), stability(so they don't have to build a castle in which to hoarde their fortune), and a strong middle class to buy goods(created, initially, in part, by re-distribution of wealth). It seems natural that those who benefit from society put the most back in; they can afford to.

I'll address your points as you raise them. This is a difficult iussue to summarize in two paragraphs.
Thanks for addressing what I didnt want to. What do you plan on doing with yourself? If you go into politics...I'd vote for ya.
post #49 of 57
I don't actually need to attack wealth re-distribution in the form of taxation. It seems to define itself as wrong right from the start.

Income taxes are wrong and evil...period. When you begin with that resolution everything that follows is social engineering. To tax people on what they earn, at differing rates depending on how much they earn, is simply so indefensible as to be sickening.

But that's the World we live in. It's established now, Government agencies don't go away.

And nothing said on a messageboard is going to change a thing. Neither are people's minds and hearts going to be profoundly changed.

We can both spout ideology all we want. The place where it matters in in the voting booth...or maybe at the election night party...depending on if she agrees to go home with you that night...

Did I say that?
post #50 of 57
Kronos, redistribution of wealth is not evil. Or sickening. Neither are taxes. Perhaps fewer absolutisms would make your argument more compelling...

...interns in the voting-booth on the other hand.

Ned, politics is evil. I shan't have a thing to do with it. It's nice to know at least one person would vote for me, however.
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