Is the Flat Tax the fairest system for everyone?

[MattTheSkywalker]

best system would be a national sales tax, not a flat tax. All a flat tax does is flatten the tax rates, it doesn't fundamentally change the system, just the rate structure. The IRS would still exist, as would audits, complexity of the tax code, tax evasion, etc. A sales tax system would eliminate all of this. However with all this said I hope the tax system gets even more confusing than it is as I am a CPA (well soon to be ) and may very well be working in taxation for awhile...if I don't land an investment banking position.

This would crush poor people. However, the income tax does perpetuate the absurdity of taxing money before it is spent.

None of those thigns mentioned above need exist, if you just make a flat tax truly flat (about 15%) and strip away all the deductions.

People under a certain income would be exempt, and everyone else pays the same rate, whether income, capital gains, etc.

 

[bigguns7]

There are still problems with a flat tax system, especially in regards to lower incomes. Giving the government 10% of your income hurts someone that makes $18,000.00 per year more than someone that makes $40,000.00 per year. There is a basic level of retainable income one needs to have basic necessities and that's where our progressive wealth redistribution system comes into play. There would still have to be an arbitrary point where one pays no or little taxes which just turn it back into a progressive system. Also, the deduction system encourages certain behaviors that we as a society value and also act as a way of influencing economic policy. While I certainly agree the current system needs to be much simpler and I hate paying a high percentage of my income as taxes a simple flat system or sales tax system isn't a panacea.

Well said. A flat tax helps everyone until you get down to the poor people. Then even the ten percent is too much. So what do you have to do? You have to give them a break - tax them at a lesser percentage. And then, guess what? It's not a flat tax anymore.

 

[Rockafella Skank]

What JavaGuru said.

 

[MattTheSkywalker]

Well said. A flat tax helps everyone until you get down to the poor people. Then even the ten percent is too much. So what do you have to do? You have to give them a break - tax them at a lesser percentage. And then, guess what? It's not a flat tax anymore.

There would have to be a cut off. But it could be like under $20K, pay nothing, and above that is flat. Yes it sucks if you make $21K, but $2100 per year isn't outrageous.

Deductions theoretically do promote behaviors we value, but eliminate them and it will quickly become apparent as to how unsound the behavior of using taxes (and tax credits) to dictate public policy really is.

All we have done with the deduction and tax credit system is to create a wealth redistribution system. Why? Where is the value?

 

[bigguns7]

All we have done with the deduction and tax credit system is to create a wealth redistribution system. Why? Where is the value?

Agreed.

 

[GLADIATOR351]

best system would be a national sales tax, not a flat tax. All a flat tax does is flatten the tax rates, it doesn't fundamentally change the system, just the rate structure. The IRS would still exist, as would audits, complexity of the tax code, tax evasion, etc. A sales tax system would eliminate all of this. However with all this said I hope the tax system gets even more confusing than it is as I am a CPA (well soon to be ) and may very well be working in taxation for awhile...if I don't land an investment banking position.

a national sales tax would be a good system... and I do not think it would crush the poor.. why? All people buy stuff at one point or another.. this includes drug dealers and others that are not paying income tax...the tax would not have to be a huge percentage. IMO you would take in a lot more money this way. This will also help people realize what they WANT and what they NEED.

but then again, the down side is that it may put companys like HR block and others out of business.

 

[rudedawg]

a national sales tax would be a good system... and I do not think it would crush the poor.. why? All people buy stuff at one point or another.. this includes drug dealers and others that are not paying income tax...the tax would not have to be a huge percentage. IMO you would take in a lot more money this way. This will also help people realize what they WANT and what they NEED.

but then again, the down side is that it may put companys like HR block and others out of business.

I have always thought that the national sales tax would be great.

H & R Block and virtually all CPA's........not sure if that is a good thing or not.

 

[p0ink]

is it fair that the top 1% of america has to pay 33% of the taxes? i think it is bullshit that rich people have to be taxed to death and that we are just expected to give more and more to poor people and cut them more and more breaks. this is the only country that punishes hard work and success and rewards laziness.

 

[Prometheus]

Manny...if you make any decent amount of money, your taxes would be "lower" under a flat tax--

if this is true, then it is the obvious reason why there will never be such a system.

the rich are disproportionately taxed because they CAN be - evidenced by the fact that people comply with the current system. if/when they can be taxed more, the politicians will raise the burden up to the maximum people will bear at a given time.

the overall effective taxation rate has risen steadily since the founding of the country (either by raising rates or adding new taxes like social security, medicare, telephone, gasoline, alcohol taxes, etc.). Looking back through history at countless repetitions of the same theme, there is no reason to believe this trend will reverse absent a revolution.

 

[rudedawg]

Just read in the paper today that Americans are overpaying the IRS by nearly $1 BILLION because they don't itemize. They overlook mortage int, charitable contributions, state and local income taxes, and property taxes. 2.2 million returns in 98 overlooked all of these.

I itemize everything...... paper clips, staples, phone, advertising, long distance, miles, food, the space in my house that my office takes up.......anything I can write off I do. I have even paid my son $10K for the last 2 years and he is only 9. He sure is creative though.
52% of my income got written off this year. I really like my accountant.