[smoothy]

Anything less than a flat rate tax... where everyone pays the same percentage... without any credits or deductions isn't going to be fair. So there is a lot of unfairness going around... problem is its unlikely to ever be fair.

Until it is... you hire a competent tax preparer who can find every deduction you are entitled to and give advice to you on how to maximize your next years deductions. As long as they exist.. there is nothing wrong with taking advantage of them. Someone else will be.

[AtlantaTaxExpert]

I would argue that a flat tax is ALSO unfair, because, in order to generate enough income to cover the government's costs, would have to be exceptionally high (say about 25%).

A 25% tax rate is fine for someone making $500K a year; The resulting tax of $125K would actually be a tax cut for most $500K income earners.

But for someone making $20K, the resulting $5,000 tax would be devastating.

[smoothy]

No intention of taking this thread off topic so I will leave it at this comment. One does not pay graduated prices at the theater, gas station, grocery store, restaurant or when you buy a house or car based on income... because that would not be fair... neither is doing it with taxes. The US tax code is what, over 200,000 pages long at this point? How can anything that complicated be fair. Since all of the deductions and credits have been a political fovor or payback for specific legislators or groups over its history. True... people in your trade owe their very livelyhoods to their knowledge of its intricacies. Heck... I'm a college graduate that has always paid a CPA (my CPA does tax stuff) to do mine because I don't have the time to learn all the nuances of the tax codes and changes from year to year... because I would miss deductions I am entitled to... or claimed something I shouldn't and end up getting audited.

[AtlantaTaxExpert]

I do not argue that the tax return's complexity is what keeps me in business, but the issue is FAR more complicated than simply passing a flat tax as a solution.

[ScottGem]

My thoughts on this. The huge complexity of the tax code provides loopholes and does little more than keep tax prepapers in business (sorry ATE). Eliminating almost all of the tax code would, In my opinion, allow the tax rate to be greatly lowered. It might even allow for a flat tax at a rate reasonable to all. Even if we continued to use a tiered rate, it could still be cut significantly in all brackets.

But I have to disagree with smoothy's analogy. Yes we do pay graduated prices at all those mentioned. People pay more for better seats because they can afford to, those who can't sit in the upper balcony. Richer people buy cars that use premium grades of gas. Poorer people buy generic groceries and smaller houses in lesser areas.

[smoothy]

OK.. I see this earned its own thread (was split off another topic) so it's a fair topic of discussion now.

People that earn lots of money rarely inherit their jobs from their parents... in fact "old money" isn't as common as "new money" At least in my part of the world. New money was made by making the right decisions and hard work.....and yes sometimes luck is a factor.

25% is 25% (using that since you used it). People that act financially responsibly and live within their means have different norms of what they expect... 25% to a high earner is as big of a sting as a lower wage earner... I earn 6 times what I earned after college... but that's not all extra money I have a hard time finding ways to spend it on... I own a house rather than rent... and everything that goes with it... I pay over $6.000 on property taxes alone every year... renters don't owe that... I'd LOVE to have the 14% (tossing out a rough number) I pay in SSI tax that I might not get to collect when I retire... because I can't afford to put 14% of my income into a 401K and I don't have a defined pension plan... I drive a nicer car than I did then... but that's the perks of working your butt off... not to have it taken away to subsidize someone who chose to drop out... and didn't want to further their education or take the extra work and responsibilities to get a promotion and pay raise so they could take the easy way out... because they were happy on less money because they didn't have to deal with the responsibilities and the extra work that go with the higher paying jobs.

Same reason you see third and fourth generation welfare recipients never working a day in their lives... Now I'm not talking some rural Arkansas or Mississippi town where there is nothing... I'm talking people that grew up near me and went to the same public school and had the same opportunities I had... they pay no income taxes and get money back... while my tax load goes up to subsidize their laziness because I was the responsible type that wanted to earn what he got. They are happy because they get a cost of living adjustment and paid for every kid they have. Nobody that works for a living I know ever got a raise every time they knock someone up. THey are used to their standard of living and happy with it....again....some of my best friends in school fit this description. I didn't realize at the time I would be working extra hard to support them too. I would have viewed them differently if I had. But then kids rarely see the big picture.

A flat rate with no deductions or credits is as fair as possible because everyone has skin in the game when it comes to government spending at all levels... because nobody gets a return larger than they paid in the first place. Or less than their neighbor does. When every member of society pays the same percentage of their income... everyone will care about how its spent. 25% of $100,000 is significantly more than 25% of $25,000. People that earn more WILL be paying more, they just won't be forced to pay taxes the high school dropout with 6 kids isn't paying to curry political favor of that group any longer. And on the other hand we won't be hearing sob stories from people about How Exxon or GE is paying a lower rate than they are. Because 25% will be 25%.

If everyone had to pay 25% you would see a lot more people demanding welfare become a short term safety net....like 2 or 3 years and you find a job..any job or you are cut off. Rather than a lifestyle choice. Like I said...I knew families that were three generation welfare bums....working off the books so they kept their benefits when they felt like it. At least for part of one family its on the 5th generation now.

Everyone would care about pork barrel spending and other stuff like that because everyone would be paying for it...and not a fraction of the working population.

You would see zero line budgeting enacted and a lot less government waste. Because it would no longer would it be someone elses money paying for handouts.

Everyone wants to vote for free stuff THEY will collect as long as someone else has to pay for it.....flat rate tax stops that incentive dead in its tracks.

Since this is certain to come up....at no point am I saying take away SSI from the legitimately disabled.....only ruling fat and lazy isn't a disability (if you weight 300+ lbs sure your back and legs will hurt so eat less)....and unless you really are...then you don't collect a dime until you are 65.

[Catsmine]

I've been a flat tax proponent since Steve Forbes laid out a detailed plan oh so many elections ago. The definition of "fair" gets mangled in this discussion just as the definition of "equal" does in others. Like your mother used to say: who told you life was fair? You work harder, you earn more. If that's offensive or arrogant or "racist," tough. I'm an ant. I hate grasshoppers. I hate parasites even more.

[talaniman]

Me too Cat, but that middle age woman who gets up at 5 am to get a bus to a school she cooks at, by 8 in the morning, is hardly a parasite. I think we separate the parasites from the honest working people who work hard but may not have the brains you and smoothy have to figure out how to make mo' money.

A flat tax may be great for upwardly mobile types or rich folk, but for decent honest working poor folk, it's a killer. I know you aren't honestly saying being poor, or low paid, makes you a parasite are you?

[paraclete]

let's see if I get the nub of this argument right, you think there should be a 25% tax with no deductions. As a person who paid more than 25% for much of his life even after deductions, that argument has merit. It also has great merit if applied to corporations, afterall they are income earners too. However, I am not someone at the lowest level of income but I can see how much that would hurt someone on minimum wage, so there has to be a threshold, a minimum level of income before tax is applied.

the way around all of this is not to have income tax but a consumption tax and it can be at a much lower level than 25%

[talaniman]

Yeah a consumption tax, make everything 25% more. Most states have a sales tax already, 8% where I am, so go ahead jack up already soaring prices.

[paraclete]

No you don't get it, wages are high because of income tax, remove the tax and you remove one pressure point on wages, second if everyone pays the tax then it doesn't need to be 25% and of course there is only room for one consumption tax, so do away with those cumbersome state taxes. You see a consumption tax does away with snouts in the trough, those graturities are no longer tax deductable and to be fair the tax has to be imposed on government expenditure as a pass through, so it is reflected throughout the economy. It puts the focus where it needs to be on expenditure. To overcome the impact on welfare there is a one time adjustment to the rate of benefit.

the next step is to introduce a luxury tax, everything above a price point attracts a surcharge, you want a cadillac or a yacht you pay more

[smoothy]

If you go with anything that takes effect above a certain price point then you cease to have a fair and equitible tax... because you start exempting one group and charging another twice as much to make up for it. THen you end up right where you started... punishing the most productive people and rewarding the least productive.

[talaniman]

Prices rise a lot faster than paychecks, and that destroys the whole theory of consumption taxes. Companies just charge more for debt spending for lower incomes and that destroys consumption. That's just for necessities not luxuries. It goes back to what the tax guy said, 25% of a high wage is a benefit, but 25% of a much lower wage is a burden.

[smoothy]

I've been on the lower rung and I've been in the midfdle... and 25% is a burden no matter where it is... and it's a burden for the wealthy. 25% is a whole lot more money when you make more than it is when you make less...

It's a lot mopre of a burden for anyone of any group that isn't capable of financial responsibility and willing to live within their means.

And that's not an abstract theory... Its reality and one of the lessons of life I learned the hard way by going through it.

Look at how many illegals manage to raise a family and send money to their home country while working minimum wage....while a single person making even more whining they can't make ends meet and refuses to curb expectations and make sacrifices to do it....and ends up with a big credit card debt for buying things they want...but don't really NEED.

On the other end...prices do rise.....jack up the minimum wage and prices have to go up to cover those costs and what happens...inflation....which helps nobody.


A person new to the workforce is NOT worth the same money as someone who has been working for years.....nor should they be paid the same....and the person who has been working their butts off for years ammassing knowledge and value should not be punished because of it to give a break to the person who hasn't earned it yet. This is exactly why so many people preffer to work off the books.....so they can keep mor eof what they earn. And there are a lot of experienced people that do exactly that. Not just illegals. In fact its common for a lot of cash businesses.

[excon]

Hello:

A consumption tax would be unfair. That's because poor people spend 100% of their income to live. That means they'd pay tax on EVERYTHING they earned.. Rich people spend maybe .02% of their money to live, and that means their tax rate would be VERY VERY small. It's a right wingers DREAM.

I'm NOT opposed to certain flat taxes.. One on FICA would be nice. If we didn't give RICH people a break on those taxes, Social Security would SOLVENT forever. A flat tax on income could be a possibility, if ALL income, INCLUDING capital gains, is taxed at the same flat rate..

But, any tax rate that punishes the poor ain't gonna fly. That's another right wingers DREAM.

excon

[talaniman]

Don't YOUR wages and raises make the prices go up too? Don't CEO bonuses make the prices go up too? Don't administrative costs drive up prices too? Why is cheap labor the only driver of costs/prices we ever discuss? Why are lower wage people the only driver of costs we suppress?

You speak of illegals as a group that jacks up costs, but Walmart workers wages are subsidized by tax payers. Then we turn around and subsidize the whole retail industry to exploit cheaper labor overseas to keep the prices down(?) and give them a tax break to build a huge store, and hire more subsidized workers. It's no coincidence that dope dealers use the same business model as Walmarts or any other legal business to extract huge profits.

But you blame cheap workers for making things so expensive.

[smoothy]

Flat rate isn't punishing anyone because it's the same for everyone.

Everything else is flat rate... taxes should be too. Milk isn't priced according to your income, nor fuel, nor utilities...

Anyone that spends 100% of their income is being financially irresponsible... poor or not. My mother who grew up poor... not pretend poor... always taught us if you ake $10... you take $2 and put it in the bank and you make do with that other $8. You don't buy Fillet when all you can afford is Chuck. You don't buy name brand if a store brand will stretch your dollar further. You don't buy luxuries until your base needs are met and you've set aside some of your paycheck for savings...

I know too many people on food stamps that complain they are broke... yet eat out rather than pack a lunch. One of them has a $90 a month cell phone bill and an Iphone. I have a basic cell phone with no data plan that my company pays for and it would cost barely over $40 a month if I got one like it.

I've been poor... I know a lot of poor people... few of them know how to act responsibly with their money... which is how they manage to remain poor. I've also known some other people who came here with nothing... worked hard and were fiscally responsible and now own multiple homes... they rent them out and did this on a housekeepers income while raising two kids as a single mother. With no alimony or child support. I know more than one that has done this, and I've known them for a lot of years.

Why should the irresponsible get breaks for their bad behaviour and bad decisions? While the responsible people bear the burden for all. There is no incentive to change their actions. And all the incentive for the responsible to say why even bother.

[smoothy]

Tal... its not only CEO's that get bonuses... there are a LOT of people that do all the way down the income ladder, tips for waiters is a bonus for good service paid by the customer... they make less than minimum wage.. They are usually an incentive to excede a goal that's set out. And its not only salaried employees that get them, though most are on a salary.

The concept of an economy being zero sum is a false one the left preaches. Just because one person makes more doesn't mean it has to come at the expense of someone else's income.


And this autocorrect on the forum is buggered up today......it keeps freezing up when you click to edit....I need to make a report on that.

[talaniman]

That was my point also, its not just minimum wage workers that affect the bottom line, but lower income wages of highly profitable companies are subsidized by us both. Let the companies pay wages so I don't have to. Henry Ford made a fortune paying his workers so why can't Walmart or McDonalds? The days of entry level jobs left when the factories left. Fast food and retail are the new factories for the blue collar middle class person. If they cannot compete fairly without me subsidizing wages, then they don't need to be in business. This ain't India, or China.

We all are having issues with that edit button though. So far refreshing and re editing is the only way around it I have found.

[smoothy]

Go flat rate on taxes... do away with all deductions and credits...no food stamps, then nobody is subsidizing anyone else. Big business, farmers, welfare bums...nobody will get getting handouts someone else is paying for.

If they don't pay enough... they will have trouble finding people to work for them... Salaries are set by the free market... they only offer you what you are worth to them... or they find someone else. If they don't offer enough, they won't fill the position. THere is always someone else willing to take the position... and that's just as true at the top... even though there are fewer people with the needed skillsets. Nobody is irreplacible...