[Leidenschaftlich für Wahr]

Ok... I don't even know which 'side' this opinion would be considered... but, why can't everyone have the same percentage of taxes taken from them, instead of [brackets] ?
Please inform me I don't know much about politics lol...

[KISS]

It has been tossed around. A sales tax is very close to that. States without sales taxes do have to pay personal income taxes.

[MukatA]

Same percentage of taxes will be unfair to people with low incomes. A large number of such persons file taxes and get extra money from IRS.

[Leidenschaftlich für Wahr]

Same percentage of taxes will be unfair to people with low incomes. A large number of such persons file taxes and get extra money from IRS.

I don't understand why. I mean... ten cents on every dollar is the same no matter whose dollar it is, right? And it seems like the people that are so low income that they couldn't survive would be receiving government assistance...

[MukatA]

The basic philosophy behind income tax is to collect tax from the people who can pay.

[ebaines]

The argument over what is "fair" when it comes to income tax policy will go on forever. Some people do believe that a flat tax would be the fairest of all - Steve Forbes has perhaps been the loudest and longest proponent of this, but his attempts to run for national ofice have been qiute woeful, so his argument doesn't seem to resonate too well with most people. The argument for a "progressive" tax such as we have now is rooted in the idea that it's less onerous to tax a person with more money at a higher rate - the thinking is that someone making $200K could more readily afford paying a highr percentage of his marginal earnings than a person making, say, $30K. Again, whether that's "fair" is open to debate. However, because today the vast majority of taxes are paid by a small percentage of people (the richest 5%), any change towards a flat tax would inevitably mean higher taxes for more people, unless there was a corresponding move to rsignificantly reduce the total amount of income tax collected. Consequently there is little political will for it.

[ScottGem]

Ok, lets take two single people, one making $25K/yr the other making $250K/yr.

Both of them have to eat and food costs the same whether you make $25K or $250K. You both pay the same rate for gas, electricity, etc. You have to keep yourself clothed though the 250K earner would probably pay more for their clothes out of choice.

So the thinking is that since there are a certain amount of common expenses the higher earner has more disposable income and can, therefore, afford to pay more in taxes.

I think that's what you are missing. Its not just the same percentage of a dollar.

I would be in favor of a flat tax ONLY if they eliminated ALL credits and deductions. If they did that, then I think they could reduce the overall rate because wealthy people would not be able to shelter their income.

[AtlantaTaxExpert]

I have heard, reviewed, read and studied multiple arguments for a "flat tax" or "national sales tax" over the past 30 years. They all have the same arguments for them:

1) They are "fairer" in that everyone pays the same percentage.

2) They are "less complicated" because there are no deductions, exemptions, credits, depreciation, etc. to calculate.

3) They will produce more tax revenue because everyone will pay willingly due to the perceived "fairness".

As Ebaines noted, how "fair" a tax is is entirely dependent on one's point of view. The barely literate ditch digger who makes minimum wage thinks it is vary fair that he pay no income tax and that his "evil rich" boss pay 60% of his net earnings in income taxes. The "evil rich" boss's point of view is rather different, thinking that his ditch digging employee should pay at least 10% and that he should not have to pay more than 25% of his net income. Again, it is all a matter of perspective.

That said, I have noticed several commonalities in all of the "flat tax" or "national sales tax" drives:

1) They all suggest that the flat tax can be implemented at a moderate rate of between 17-to-25%. The current "Fair Tax" proposal being pushed by Neil Boortz (an Atlanta-based talk show host who has written two books on this subject) says the tax can be 23% (or 30%, depending on how you look at it).

However, several respected tax think tanks all say that such a percentage is WAY TOO LOW if the flat tax is to replace both in the income and FICA (Social Security and Medicare) tax systems. They all say that the actual percentage would have to be about 35% to equal current tax revenues.

2) They all relish in pushing the concept that the flat tax could be administered by the individual states and that the IRS could be disbanded.

This is wishful thinking. Someone would have to collect the flat tax as well, and I guarantee that the federal government would NOT be willing to leave that chore to the individual states. The mission would be somewhat different, but the IRS would still be around.

3) They all think that compliance to pay this "fair tax" would be almost universal.

HOGWASH!! A fair tax or national sales tax anywhere above 15% would create a massive black market filled with entrepreneurs who are guaranteed a profit equal to the tax rate by avoiding paying the tax. If anything, the IRS would have to be expanded to try to enforce the new "fair tax".

FINALLY, if you look at all of the people who are seriously pushing the fair tax drive, you will find that they are the ones who are paying the bulk of the taxes under the current system.

Under our current tax system, anyone who has taxable income in excess of $350,000 pays about 35% with restricted itemized deductions and personal exemptions. When you factor in state income taxes, especially in high tax states like California, New York and Massachusetts, their total tax rate approaches 50%. To them, a 23% "fair tax" rate represents a tax cut of about one-third of what they previously paid. So, of course, they want the "fair tax" passed.

This simple mathematical fact was identified by Newsweek Magazine when Steve Forbes was running for office with a "flat tax" proposal as his central issue, and it quickly made him irrelevant when everyone realized how much LESS in taxes he would pay if the flat tax proposal was ever implemented.

[ScottGem]

There is one other factor here that would mitigate this. If a simplified, flat tax was implemented, it would cause a large jump in unemployment. Intuit, H&R Block and other tax preparers and CPAs would be out of business. The burden on our already overtaxed economy would be great. :D

[AtlantaTaxExpert]

Scott:

While I grant you that my tax business would take a huge hit, other aspects of my business (financial planning, bookkeeping, sales tax work) would probably increase more than enough to compensate.

I am NOT worried about it, however, because every time I have shown my clients the actual numbers of what they pay now versus what they would pay under the "fair tax" system, almost universally do they change their position.

[Leidenschaftlich für Wahr]

I have heard, reviewed, read and studied multiple arguments for a "flat tax" or "national sales tax" over the past 30 years. They all have the same arguments for them:

1) They are "fairer" in that everyone pays the same percentage.

2) They are "less complicated" because there are no deductions, exemptions, credits, depreciation, etc. to calculate.

3) They will produce more tax revenue because everyone will pay willingly due to the perceived "fairness".

As Ebaines noted, how "fair" a tax is is entirely dependent on one's point of view. The barely literate ditch digger who makes minimum wage thinks it is vary fair that he pay no income tax and that his "evil rich" boss pay 60% of his net earnings in income taxes. The "evil rich" boss's point of view is rather different, thinking that his ditch digging employee should pay at least 10% and that he should not have to pay more than 25% of his net income. Again, it is all a matter of perspective.

That said, I have noticed several commonalities in all of the "flat tax" or "national sales tax" drives:

1) They all suggest that the flat tax can be implemented at a moderate rate of between 17-to-25%. The current "Fair Tax" proposal being pushed by Neil Boortz (an Atlanta-based talk show host who has written two books on this subject) says the tax can be 23% (or 30%, depending on how you look at it).

However, several respected tax think tanks all say that such a percentage is WAY TOO LOW if the flat tax is to replace both in the income and FICA (Social Security and Medicare) tax systems. They all say that the actual percentage would have to be about 35% to equal current tax revenues.

2) They all relish in pushing the concept that the flat tax could be administered by the individual states and that the IRS could be disbanded.

This is wishful thinking. Someone would have to collect the flat tax as well, and I guarantee that the federal government would NOT be willing to leave that chore to the individual states. The mission would be somewhat different, but the IRS would still be around.

3) They all think that compliance to pay this "fair tax" would be almost universal.

HOGWASH!! A fair tax or national sales tax anywhere above 15% would create a massive black market filled with entrepeneurs who are guaranteed a profit equal to the tax rate by avoiding paying the tax. If anything, the IRS would have to be expanded to try to enforce the new "fair tax".

FINALLY, if you look at all of the people who are seriously pushing the fair tax drive, you will find that they are the ones who are paying the bulk of the taxes under the current system.

Under our current tax system, anyone who has taxable income in excess of $350,000 pays about 35% with restricted itemized deductions and personal exemptions. When you factor in state income taxes, especially in high tax states like California, New York and Massachusetts, their total tax rate approaches 50%. To them, a 23% "fair tax" rate represents a tax cut of about one-third of what they previously paid. So, of course, they want the "fair tax" passed.

This simple mathematical fact was identified by Newsweek Magazine when Steve Forbes was running for office with a "flat tax" proposal as his central issue, and it quickly made him irrelevent when everyone realized how much LESS in taxes he would pay if the flat tax proposal was ever implemented.

Hmmmm... okay, so far, from what I've learned about this subject (from the site and my husband) it seems like if persons over 50-60k a year had flat tax rate, and under it had brackets, it would work. The reason I say that is because since the flat rate would be so high (my husband said ron paul wanted 23% flat rate) people making say 20k couldn't survive. I would be one of those, were I single. Still I don't know much about taxes and politics, just know I'm staunch conservative. Lol

Thanks a lot for feedback!

PS. What's mccain think about flat tax, if he even speaks of it?

[AtlantaTaxExpert]

Neither McCain nor Obama support the flat tax, though McCain has not said such in so many words.