Oh great, the Republicans want a FLAT TAX

[JohnT]

Originally posted by Oerdin


That's all well and good except... How do we cut everyone's taxes in half and not destroy the budget? It seems like with our huge debt and Bush's ever generous spending increases we can't afford to keep cutting taxes. At least not if you give a rat's behind about the nation's finances.

Hence my later comment about the proposed 17% rate being too low - it isn't revenue neutral.

The benefit of a flat tax isn't that it reduces taxes, it makes preparation and filing of them much simpler and it erases all deductions, exemptions and loopholes in the personal income tax code. It's easy to remove any element of regressivity by increasing the personal deduction - under a flat tax plan, a personal deduction of $30,000 would pretty much cover the entirety of the middle class, leaving the income tax burden on those with higher incomes.

[PLATO]

Teresa Heinz-Kerry payed 12.5% of her income in tax last year. So how is a progressive tax better than a flat tax? A Flat tax would work if an exemption amount is fairly set...all income below $50K tax free (or $60K or whatever is deemed fair). Elimination of all deductions except mortgage interest and child credit to maintain the government's social engineering in favor of homeownership and allow families to support the extra financial burden of kids.

[JohnT]

Naw, just increase the dependent deduction to $15,000 or something.

[PLATO]

Originally posted by JohnT
Naw, just increase the dependent deduction to $15,000 or something.

I'd be okay with that. The net-net should be about the same.

[AnnC]

Originally posted by PLATO
Teresa Heinz-Kerry payed 12.5% of her income in tax last year.

That's a very good example - which illustrates the degree to which Bush's 2003 tax cut was a giveaway to the wealthy.

Teresa Heinz-Kerry doesn't work for wages, she derives all her income from stocks and bonds. Bush reduced the capital gains rate to 15% and applied it to stock dividends. So for example, if Teresa gets 5/6 of her income from dividends and 1/6 from tax-free municipal bonds then her tax rate nets out at 12.5%.

Before Bush's tax cuts, Teresa paid the top marginal rate of 39.6% on her dividend income. So as you can see, people who live off their investments now pay much lower taxes than people who earn wages/salaries - and that's the way Bush wants it.

[Tingkai]

Republican concept of a flat tax.

[Bosh]

Originally posted by JohnT


Hence my later comment about the proposed 17% rate being too low - it isn't revenue neutral.

The benefit of a flat tax isn't that it reduces taxes, it makes preparation and filing of them much simpler and it erases all deductions, exemptions and loopholes in the personal income tax code. It's easy to remove any element of regressivity by increasing the personal deduction - under a flat tax plan, a personal deduction of $30,000 would pretty much cover the entirety of the middle class, leaving the income tax burden on those with higher incomes.

Right there's nothing wrong with a flat tax as long as the personal deduction is high enough, it taxes capital gains the same as earned income and the personal deduction is inflation-indexed. I'd be also be good if Social Security taxes were rolled into the flat tax since right now SS taxes are regressive.

I very much doubt it would fly though, since so many people have their favorite deduction, so you'd piss of a whole lot of people, such as ones with a big mortgage, lots of kids, lots of education fees etc. etc. etc.

[JohnT]

Well, who you would really piss off is the entire industry of CPA's, tax lawyers, and other bloodsucking leeches, which is why a flat tax plan will almost never pass.

[Bosh]

Originally posted by JohnT
Well, who you would really piss off is the entire industry of CPA's, tax lawyers, and other bloodsucking leeches, which is why a flat tax plan will almost never pass.

That too, but you need some deductions just for sanity's sake like the expat one, you can't have people who have to pay full foreign taxes taxed at the same rate as people in the us. But then maybe I'm biased

[Imran Siddiqui]

No, I agree Boshko. People saying it all simple if we do it X way don't understand all the things involved. The lesser taxes for expats is one important thing to be considered. And, of course, what is considered taxable will still be a big issue and keep the IRS busy for years to come.

[JohnT]

sez the future lawyer.

[chequita guevara]

Originally posted by Patroklos
Paying youer taxes is basically the only civic duty left. If you don't make the poor pay you have just made second class citizens out of all of them. Imagine the people who already think they are lazy burdens to society.

Must be the first or second time we agree.

Civic duty

[Lawrence of Arabia]

Paying youer taxes is basically the only civic duty left. If you don't make the poor pay you have just made second class citizens out of all of them. Imagine the people who already think they are lazy burdens to society.

civic duty?? why would they be second class citizens? thats like saying people who dont vote are second class citizens.

[chequita guevara]

A flat tax would also penalize at home businesses and small businesses if you didn't have capital investment deductions. The code is horribly compicated, but it doesn't affect most people.

[chequita guevara]

Originally posted by Lawrence of Arabia
civic duty?? why would they be second class citizens? thats like saying people who dont vote are second class citizens.

They are. What do they get from the government? When you vote, politicians pay attention to you.