why do people think a flat tax is a good idea

JasperL said:

I agree with the sentiment, but the proposals generally are OK for the poor, but what they do is shift taxes from the plutocrats, the top 1/10th of 1%, the big donor class, downward. Exactly who picks up the slack depends on the tax but it's generally middle class and above who get hit. I've yet to see one that, say, Warren Buffett would pay more or the Koch family, or the Walton family, etc.

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The flat tax would be fine if fully applied to everyone with some $ in credits paid out monthly (which is basically a form of UBI) and then we get rid of other forms of welfare.

Beyond that, I can't see where I can morally support it.

Trickle downers think that giving five old guys all of the money is the answer to everything.

This type of legislation is always pushed by the most wealthy Republican politicians AND Republican Media people. Of course they want to push more expense down to poorer people so they can become more wealthy.

The fact that they get middle class, lower middle class and poor people to support them, thus bringing on more burden to themselves, is a masterful con job.

CaughtInThe said:

This type of legislation is always pushed by the most wealthy Republican politicians AND Republican Media people. Of course they want to push more expense down to poorer people so they can become more wealthy.

The fact that they get middle class, lower middle class and poor people to support them, thus bringing on more burden to themselves, is a masterful con job.

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Generally there are two types of super rich

1. Those who just want all the money and think short term (i.e. the Koch brother)
2. Those who just want all the money but are smart enough to endorse social systems to give the masses some comfort and avoid backlash (I.E. Gates or Bezos)

Flat tax tends to be promoted by people in category 1.

tacomancer said:

Generally there are two types of super rich

1. Those who just want all the money and think short term (i.e. the Koch brother)
2. Those who just want all the money but are smart enough to endorse social systems to give the masses some comfort and avoid backlash (I.E. Gates or Bezos)

Flat tax tends to be promoted by people in category 1.

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Yup..

VanceMack said:

Well...for one thing a flat tax would eliminate deductions and resolve the concern about that whole "Pay your fair share" thing.

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There is no logical reason to eliminate a truly standard deduction - thus all income above $X/year is taxed at a single flat rate. What makes the current federal income tax code such a mess is creating the fictional Adjusted Gross Income amount based on how and upon who one's income was later spent.

JasperL said:

OK, but that won't work, so equality under the law can't be an achievable goal.

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There is nothing that prevents it from working. The market demonstrates it works every day.

JasperL said:

For businesses, that's a gross receipts tax, and it doesn't work very well. Low margin, high volume businesses like wholesalers, grocery stores, etc. get clobbered. So where they exist, there are different rates for those type businesses, which works like deductions in practice.

And at the individual level, people perceive it as unfair and it is in some ways. We don't have kids, but would pay the same tax as someone with 6 children. That's fair in some respects, but we have far more ability to pay than a couple who has to pay for healthcare, clothing, food, college and more for all those six kids. Similarly, if a family has to spend $100k on healthcare, most people would think it punitive for them to pay the same tax as a healthy 30 year old who spent $1,000.

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Complicating taxes does not magically make them work well.

I think there should be no taxes. Government should charge like every other business.

Helix said:

Trickle downers think that giving five old guys all of the money is the answer to everything.

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Trickle uppers think giving irresponsible and unproductive people all of the money is the answer to everything.

JasperL said:

For businesses, that's a gross receipts tax, and it doesn't work very well. Low margin, high volume businesses like wholesalers, grocery stores, etc. get clobbered. So where they exist, there are different rates for those type businesses, which works like deductions in practice.

And at the individual level, people perceive it as unfair and it is in some ways. We don't have kids, but would pay the same tax as someone with 6 children. That's fair in some respects, but we have far more ability to pay than a couple who has to pay for healthcare, clothing, food, college and more for all those six kids. Similarly, if a family has to spend $100k on healthcare, most people would think it punitive for them to pay the same tax as a healthy 30 year old who spent $1,000.

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Nope, that is called a retail sales tax. The (retail) business simply acts as a tax collection agent and the tax is paid by the customer. I agree that some goods/services are not subject to (exempted from?) that sales tax in many states (e.g. grocery items, prescription drugs, used items and rents are typically not taxed).

Aberration said:

Trickle uppers think giving irresponsible and unproductive people all of the money is the answer to everything.

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False. Some of us realize that the steering wheel can guide the car in different directions, and sometimes that direction isn't off the road hard right.

Aberration said:

Trickle uppers think giving irresponsible and unproductive people all of the money is the answer to everything.

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Not all of the money, just enough of it to maintain a congressional re-election rate of over 90%.

tacomancer said:

Generally there are two types of super rich

1. Those who just want all the money and think short term (i.e. the Koch brother)
2. Those who just want all the money but are smart enough to endorse social systems to give the masses some comfort and avoid backlash (I.E. Gates or Bezos)

Flat tax tends to be promoted by people in category 1.

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Yeah, it's essentially no more complicated than the concept of "noblesse oblige" is at its core not really a selfless concept - take care of the less fortunate because it's the right thing to do - but a selfish one, that taking care of the less fortunate is how the system they benefit so handsomely from is sustainable.

This healthcare debate, for example, is entirely predictable. ACA was a step in the right direction, but it started off with big shortcomings, and thanks to a bunch of red states that didn't expand Medicaid, left millions needlessly uninsured, and then the GOP spent years trying to gut the ACA, deliberately driving up premium costs to make it more expensive, and to fail, it was made far worse than necessary. Well, what kind of idiot is surprised that breaking the system with NOTHING to replace it that works better leads to....increased support for tearing it down with Medicare for All? I don't think we're there, yet, but a few more years of a broken system and MFA or something like it seems IMO inevitable. So what I don't get is the GOP and the super rich's end game here.

And that's just one example.

Aberration said:

Complicating taxes does not magically make them work well.

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Huh, I didn't claim that. Weird how you invented a straw man to attack.

I think there should be no taxes. Government should charge like every other business.

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That's nice you think there should be no taxes, but 5 seconds of reflection should reveal how that's unworkable. And if government charges like a business, why not disband the government? Just privatize the whole thing, and society would be run by CEOs, our corporate overlords. Can't see a problem with that.

ttwtt78640 said:

Nope, that is called a retail sales tax. The (retail) business simply acts as a tax collection agent and the tax is paid by the customer. I agree that some goods/services are not subject to (exempted from?) that sales tax in many states (e.g. grocery items, prescription drugs, used items and rents are typically not taxed).

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That's one way, but I was referring to an income tax with no deductions. Most people who say "no deductions" don't really mean that, except for itemized deductions for individuals. But the thing is we allow for itemized deductions for individuals for the same sort of big picture reason we allow businesses to deduct their expenses. What we think of as a fair tax has some relationship between the "profits" of a business, or the disposable income (the profit equivalent) of individuals.

The other problem is people obsessed with the concept of a "flat tax" almost never consider anything but the federal income tax. Property taxes and sales taxes and excise taxes and payroll taxes don't allow for deductions, and so our system has a lot of "flat" type taxes built into it, and those guarantee that even the poor pay a significant share of their income in some type of taxes, if not the federal INCOME tax. And if the poor paid, say, 20% of their income in income taxes like the wealthy, then the poor's total of ALL taxes as a share of their income would be much higher than Warren Buffet's, since property and sales and payroll taxes and excise taxes don't even register as a share of his income, but will be a very significant share of the income of a poor person.

Aberration said:

There is nothing that prevents it from working. The market demonstrates it works every day.

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Yes, well, that's fine. I don't have much interest in engaging that nonsense, so you can vote for people who promise that, and see how that works out for you. I suspect it won't work out AT ALL, but who knows. Give it a shot.

memberya2 said:

When i hear people talk about a flat tax i dont get it, so your gonna tax poor people the same as rich people?

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You may just not be listening well. Most flat tax proposals I have heard over the years exempt those under the federal poverty level from paying income taxes. And they are mostly exempted now.

but they dont have the same amount of money so why should it affect them like alot of these people pay 20 percent sales taxes at the store
we are already taxing people who buy grocerys and that includes the poor,

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However you are leaving out the part about the poor having the option to use EBT cards to buy most of their groceries. Please do not attempt to push a theory that the poor do not get a fair shake at grocery stores.

i think the rich should pay more because its not like
the poor can just pay for everything society needs to function, we have the fire department paid for with tax payer money
the fire department doesnt put out fires for free and they say my tax money goes to helping other well well
it also helps you too the money goes into society to help everyone including yourself.
i think the free healthcare plan is a great idea sure you pay more in taxes but its like car insurance,
everyone has to have it and if your car gets broken you can fix it,
although i dont know about forced but it should be given and if you need it then you can get it.
imagine not having car insurance and your car breaks down, imagine not having healthcare and you cant see a doctor,
you are paying taxes for it sure so its not totally free, but if you dont make over 30 thousand a year then its free its only for people
who make more. instead of paying for 20 thousand dollars a year private insurance your spending 4 thousand a year for a government plan
so it saves the middle class money. if people are upset about paying taxes then why are they against taxes on the wealthy?
if they dont want the rich to pay then they like the middle class paying? well if you really want lower taxes then get the rich to pay
i think we should just give everyone healthcare and make the rich pay for it not the middle class, that way no one would
be upset and their taxes wouldnt be raised except the wealthy.
if your working a job and paying most of it in taxes why arent you asking for a tax cut like rich people do?

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The rich already pay more. They always have. and under a flat tax system, they will continue to do so. All the flat tax does is make it fair across the board for all who pay taxes. All would pay income taxes at a fixed percentage of income. No income level pays a higher percentage rate or lower percentage rate then anyone else who pays taxes. For instance a 15% tax on $1000.00 would be $150.00. A 15% tax on $100,000.00 would be $15,000.00 A flat tax system would also eliminate most if not all deductions. No tax shelters. If a tax cut is passed, it affects every income group the same. If a tax increase is passed, it affects all taxpayers the same. The problem with a progressive tax system is that it punishes those who improve their own financial well being. It also punishes those who invest and create jobs that help others, including the poor improve their own financial well being. When the rich are taxed excessively, under the progressive tax system, they tend to invest less in ventures that create new job opportunities and hide it in tax shelters. My question to you is: What is your real motive for asking the rich to pay more? Is it compassion for the poor? Or is it envy of the rich? We are a capitalist nation. enabling those who have the ability to invest is what makes us the economic giant that we are. Punishing them with higher and higher tax rates inhibits that investment.

JasperL said:

That's one way, but I was referring to an income tax with no deductions. Most people who say "no deductions" don't really mean that, except for itemized deductions for individuals. But the thing is we allow for itemized deductions for individuals for the same sort of big picture reason we allow businesses to deduct their expenses. What we think of as a fair tax has some relationship between the "profits" of a business, or the disposable income (the profit equivalent) of individuals.

The other problem is people obsessed with the concept of a "flat tax" almost never consider anything but the federal income tax. Property taxes and sales taxes and excise taxes and payroll taxes don't allow for deductions, and so our system has a lot of "flat" type taxes built into it, and those guarantee that even the poor pay a significant share of their income in some type of taxes, if not the federal INCOME tax. And if the poor paid, say, 20% of their income in income taxes like the wealthy, then the poor's total of ALL taxes as a share of their income would be much higher than Warren Buffet's, since property and sales and payroll taxes and excise taxes don't even register as a share of his income, but will be a very significant share of the income of a poor person.

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We allow businesses to deduct (legitmate) business costs to compute "net profit", not the fact that the business owner bought a nicer home on credit, donated to charity, had personal medical bills or sent his kids to college. The concept of "disposable" income is mushy at best - how or upon who one decides to later spend their income should have nothing to do with "the taxation of income from all sources" which is the stated purpose (power) of the 16A.

The simple fact is that it costs more to rent a home than to buy one of similar value/size - yet there is no tax dedcution for simply paying one's rent even if that amounts to 30% (or more) of their gross income. Obviously the renter is paying the landlord's mortagage, taxes, insurance, maintenance/repair costs and allowing them to make a profit - yet that reduction in the renter's "disposable" income is not deductible.

Medical care deductions are (now) limited to those over 10% of AGI and which (combined with other deductions) exceed the standard duduction ($24K for a typical family household). Obviously, that does not help many poor or lower middle class folks or the rich.

Any gifts to charity are obviously coming out of "disposable" income since that was a voluntary spending choice - who gives up puttng food on their own table or paying the rent/mortagae to help feed or house others?

The same is true of the SALT deduction - it does not help the poor or lower middle class since even at a 10% SALT rate it would take an income of over $240K to have that SALT deduction (alone) exceed the standard deduction. At a 10% SALT rate a household making $60K (about the median household income) would have (at most) $6K in SALT expenses - thus requiring other deductions of at least $18K to make itemizing worthwhile.

The bottom line is that most federal income tax deductions, credits, special accounting methods and exclusions are perks to the upper middle class and the rich.

What makes the most sense, IMHO, would be to have a more generous, and truly standard, deduction of say $40K and then to tax income from all sources above that amount at say 20%. Under such a "two number" federal income tax (FIT) system one making $30K (or less) would pay no FIT, one making $60K would pay $4K in FIT, one making $100K would pay $12K in FIT and one making $1M would pay $199.2K in FIT. The effective FIT rates (in my prior example, rounded) would be 0%, 6%, 12% and 20% - making the FIT rates quite progressive (for those making under $1M/year - aka the vast majority) yet employing a flat FIT rate.

SkyChief said:

NO tax is better than a Flat Tax.

Before 1913, Tariffs and some usage Taxes were plenty to fund the federal government.

In 1848, Karl Marx and Frederick Engels advocated a heavy progressive tax as a means of despoiling the “bourgeoisie” and softening middleclass society up for the eventual dictatorshp of the proletariat. This was an important part their Communist Manifesto.

When President Wilson wanted to build his war chest, they passed the The Revenue Act of 1913 (aka the Underwood Tariff or the Underwood-Simmons Act), and Amended the Constitution which granted government the power to tax people's incomes "from whatever source derived" (16th Amendment).

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All of that is irrelevant as to why we have a progressive tax. If I need to raise 4 trillion dollars to fund all the obligations we have placed in the federal government, then you want to do so by placing the least amount of burden on the economy. Thus you raise more of that revenue from those for whom its less of a burden than from those for whom it would be much more of a burden. For example, our household from an economic perspective is solidly upper middle class. If you cut my marginal tax rates, without a proportionate cut in government spending, then the government must raise taxes substantially on someone else to make up for the lost revenue they were getting from me. I don't like paying taxes anymore than anyone else does, but they are a hell of a lot less of a burden on me than they are on a single mother or the working poor.

Drawdown said:

flat taxes are about a uniform rate and who the heck charges a 20% sales tax in the US for store purchases? I want to avoid that state.

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We pay just shy of 10% in California and no one escapes it. If you buy non essential items, you pay the flat tax. Don't ask me what California wastes this money on because I couldn't tell you. Homeless people using needles and defecating in the streets, schools a joke, traffic a nightmare. If it weren't for the weather, all California would have would be illegal aliens.

ecofarm said:

I'm guessing, from the "20%", that the OP is talking about this:

FairTax - Wikipedia

And they have ignored two things in regard to the Fair Tax being progressive.

1. Everyone receives a prebate, a check from the government, for the amount of sales tax that would be applied to the poverty line worth of purchases. For simplicity's sake, let's say the poverty line is $12000 per year. We'll keep the 20% for simplicity's sake. 20% of $12000 is $2400. Everyone gets that check.

2. There's no sales tax on used goods. Only retail. Not on used cars, used homes, used anything. No federal sales tax on anything sold second-hand. Only retail outlets are required to collect the tax in the same manner as they would state sales tax.

Poor people are not spending 12k on retail goods per year. They might not spend anything on retail goods. So that prebate is profit not making up for retail sales to the poverty line because that didn't happen.

In this way a flat tax, the Fair Tax, can be progressive.


But this is a sales tax replacing the federal income tax. If the OP means a flat federal income tax, then I dunno.

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A flat sales tax is the the only way to pay for health insurance. Then even people of meager means pay their fair share. It they want the big screen TV, they pay a tax. If they need the latest Game Boy, they pay a tax. If they want those $200.00 Nikes, they pay a tax. That goes to the health insurance pool and then they can see a government doctor in a government hospital who doesn't know their name.

memberya2 said:

When i hear people talk about a flat tax i dont get it, so your gonna tax poor people the same as rich people?
but they dont have the same amount of money so why should it affect them like alot of these people pay 20 percent sales taxes at the store
we are already taxing people who buy grocerys and that includes the poor, i think the rich should pay more because its not like
the poor can just pay for everything society needs to function, we have the fire department paid for with tax payer money
the fire department doesnt put out fires for free and they say my tax money goes to helping other well well
it also helps you too the money goes into society to help everyone including yourself.
i think the free healthcare plan is a great idea sure you pay more in taxes but its like car insurance,
everyone has to have it and if your car gets broken you can fix it,
although i dont know about forced but it should be given and if you need it then you can get it.
imagine not having car insurance and your car breaks down, imagine not having healthcare and you cant see a doctor,
you are paying taxes for it sure so its not totally free, but if you dont make over 30 thousand a year then its free its only for people
who make more. instead of paying for 20 thousand dollars a year private insurance your spending 4 thousand a year for a government plan
so it saves the middle class money. if people are upset about paying taxes then why are they against taxes on the wealthy?
if they dont want the rich to pay then they like the middle class paying? well if you really want lower taxes then get the rich to pay
i think we should just give everyone healthcare and make the rich pay for it not the middle class, that way no one would
be upset and their taxes wouldnt be raised except the wealthy.
if your working a job and paying most of it in taxes why arent you asking for a tax cut like rich people do?

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We should solve simple poverty and resort to general taxation instead of direct taxation whenever possible.

Aberration said:

I didn’t say anything about deductions, nor do I think they should exist.

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and I never said you did,
I was suggesting the deductions
Just a personal deduction and nothing else and tax what ever is left at a set percentage
Have a nice day

SouthernDemocrat said:

All of that is irrelevant as to why we have a progressive tax.

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All of that explains perfectly why we have a progressive income tax. The progressive income tax was invented by communist economists Karl Marx and Friedrich Engles.

SouthernDemocrat said:

If you cut my marginal tax rates, without a proportionate cut in government spending, then the government must raise taxes substantially on a burden on me than they are on a single mother or the working poor.

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This is true. Any cut in taxes MUST be accompanied with a cut in spending.

Last year (2019) the government took in $3.46 Trillion from tax revenues. They borrowed $1.23 Trillion. So they spent $4.69 Trillion to pay for everything.

The problem is that 66% of that $4.69 Trillion (over $3 Trillion) was redistributed in the form of entitlements, pensions, welfare, medicare, and interest on the debt.

US taxpayers were OVER-taxed in 2019 by $3 Trillion.

A flat tax could easily pay to sustain an essential government, i.e., gov't payroll, Courts, law enforcement, military and infrastructure.

SkyChief said:

NO tax is better than a Flat Tax.

Before 1913, Tariffs and some usage Taxes were plenty to fund the federal government.

In 1848, Karl Marx and Frederick Engels advocated a heavy progressive tax as a means of despoiling the “bourgeoisie” and softening middleclass society up for the eventual dictatorshp of the proletariat. This was an important part their Communist Manifesto.

When President Wilson wanted to build his war chest, they passed the The Revenue Act of 1913 (aka the Underwood Tariff or the Underwood-Simmons Act), and Amended the Constitution which granted government the power to tax people's incomes "from whatever source derived" (16th Amendment).

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That's before greedy leftwingers like FDR (worse president ever) took over.