Alternative Maximum Tax (shhhhh it's a flat tax)

[Scott]

How Much Do You Want_to_Pay? (http://www.opinionjournal.com/editorial/feature.html?id=110006227)

Your answer on a postcard, please.

BY STEPHEN MOORE
Sunday, January 30, 2005 12:01 a.m. EST

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I like this idea.

It's a flat tax that you have to option into. You don't want it? FIll out the 1040. You like? Fill out the post card.

The "Progressives" will be against this. Doesn't fit with their goal of punishing success via wealth redistribution. The forward thinking are the new reactionaries. Remember Robin Hood didn't steal from the rich and give to the poor. He stole from the tax collector and gave the money back to the people.

Seems like the real new ideas are coming from the right.

Here's some of the bullet points.


225 billion annual compliance costs attributable to the tax code could be cut in half, the financial windfall to the nation would be larger than the value of all goods and services produced by every worker and business in the states of Maine, Vermont and New Hampshire combined.

economist Dale Jorgenson of Harvard estimated several years ago that if the U.S. tax code were replaced with some kind of flat and simple consumption tax, the economy would grow about 10% faster

a year, it could grow at almost 4.5% a year, and in that case the nation could expand its way out of many of its thorniest problems, such as low wage-rate growth, stubbornly high poverty rates, the $413 billion budget deficit, and the decline in jobs in the manufacturing sector.

The central idea behind the Freedom to Choose Flat Tax is to create an optional postcard flat tax, which would be offered to tax filers as an alternative to--rather than a replacement of--the current tax code. There would be no deductions whatsoever, except for a generous personal deduction and child deduction.

What I am proposing is an Alternative Maximum Tax of 20%. Under this plan, the tax filer would be allowed to pay the lesser of the two tax liabilities. In fact, this idea eliminates the hated AMT by simply lowering the tax rate to 20% on all income, and then letting Americans opt into that system if they so wish.

This plan would accomplish each of the major goals of tax reform. It would be (1) sweeping in magnitude, (2) fair, because everyone would pay the same tax rate, (3) dramatically simpler than the current tax code, (4) an enormous boost to U.S. economic growth, and (5) politically feasible to adopt.

The advantages to this approach are manifold. First, there are no winners and losers as there are under conventional tax reform plans. Under this optional flat tax, no one is forced into a losing hand because every filer has the option of sticking with the current tax system.

Second, the plan does not force people to give up "sacred cow deductions" for homeowners, or charitable givers, or owners of municipal bonds. If tax filers want the homeowners' deduction, they can take advantage of it by staying in the current tax system.

Third, the plan does not require the writing of horrendously complicated transition rules to get from one system to the other.

Under the optional flat tax, every tax filer would be grandfathered into the old tax code as long as he wished; but once he migrated into the flat tax, he'd be in the flat tax system for good. All new workers would go immediately into the flat tax. Hence, over time, the old tax code would be essentially phased out and would soon become as obsolete as the rotary phone. The plan would require a two-thirds vote of both houses of Congress to raise the flat tax rate.

For those who believe that such a system is completely unworkable, I would note that the famous and spectacularly successful Hong Kong flat tax of 15% is an optional income tax. Hong Kong has a convoluted "long form" tax system, but not many know about it because nearly all workers favor the flat tax. And Hong Kong proves that flat taxes do not have to lead to budget deficits. In fact, Hong Kong has run a budget surplus in most years. Similarly, Russia's real income tax receipts have soared by more than 80% in just three years since it shelved its three brackets and 30% top rate and adopted its 13% flat rate income tax instead.

[groverat]

I would LOVE for someone to explain this one to me:

(3) dramatically simpler than the current tax code

Please... explain to me how this would make the tax code simpler. Please.

[BRussell]

Right now, the wealthy are paying more than 20%, and the lower-middle classes less than that. So, if this is revenue neutral, we're simply talking about cutting taxes on the wealthy and increasing taxes on the poor and middle class. Given the incredible growth in wealth that wealthy Americans have experienced over recent decades, and the stagnation experienced by the lower/middle classes, I don't know why we'd want to do that.

[BRussell]

Originally posted by groverat
I would LOVE for someone to explain this one to me:



Please... explain to me how this would make the tax code simpler. Please. Two deductions, as proposed in this system, would be simpler than what we have now. Right now there are a bazillion deductions, and it's all the deductions that make taxes complicated.

Of course, figuring your taxes BOTH under the new and old system would be more difficult than doing your taxes just under the old system.

[addabox]

......The "Progressives" will be against this. Doesn't fit with their goal of punishing success via wealth redistribution. ......


Uh huh....

And the "reactionaries" will no doubt support it because it's right in line with their lust for the blood of innocent children.

[hardeeharhar]

I have to say I am unimpressed.

A far better scheme would be for putting the payment of income taxes on banks and employers etc -- the average citizen then either receives a check from the federal government for a refund of some sort or the entire process is invisible...

Edit: Thinking about this system, I quickly realized that the progressive tax system ensures refunds for anyone whose salary fluxuates during the year and I am fairly certain that was intentional.

[tonton]

<If you wish to complain about the contents of a post, please alert the moderators! - groverat (who loves everyone) :) >

As Maxi Jazz said (and as stolen by Gary Kucinich)... "Greed is a weapon of mass destruction."

[groverat]

Originally posted by BRussell
Two deductions, as proposed in this system, would be simpler than what we have now. Right now there are a bazillion deductions, and it's all the deductions that make taxes complicated.

So it would be just as simple to keep the progressive tax and reduce deductions. Fantastic. :)

Let's do that!

[Scott]

You find the current tax system simple? Why all the tax lawyers then:???:

[groverat]

Originally posted by Scott
You find the current tax system simple?

When did I say this?
(Hint: never.)

Lowering the top tax rates and raising the lower tax rates will not simplify the code one tiny bit.

Reducing loopholes and deductions would, absolutely, but those actions do not require raising the taxes on the poor and lowering the taxes on the rich.

A progressive tax with loophole/deduction reform is just as simple as a flat tax with loophole/deduction reform.

[Scott]

I stand corrected kind sir. "just as simple" does not imply that it is simple.

First off you need to look past the single family tax payer. This tax system is for private citizens and businesses too. It's much more simpler because it gets rid of all the exceptions, deductions, write offs, loop holes, accounting tricks, blah blah blah. Income *.2 = tax. There I just created a one line tax form. And I didn't even need to buy Turbo Tax to do it.

[stupider...likeafox]

Originally posted by Scott
I stand corrected kind sir. "just as simple" does not imply that it is simple.


He wasn't saying that the current system is "simple", nor was he saying that the current system is "just as simple" as anything. He was pointing out that a 'simple' tax system can easily (and almost certainly should) be progressive.

If you want a flat tax say so.
If you want a simple tax system then say so.
If you want both, then say so.

Don't argue that you want a flat tax because the new system will be simpler than the current one, because it's stupid/intellectually dishonest.

[kneelbeforezod]

The intended purpose of the AMT was to ensure that high net worth high income individuals whose assets were a primary source of income could not escape paying their fair share of taxes. Its introduction served to make the US Tax system much more equitable.

The problem with AMT is that it has not properly accounted for inflation. It now kicks in for a lot of taxpayers to whom it should not apply. Time and money is wasted figuring it out only to discover that it is unnecessary. The only reform that is needed is to ensure that the AMT continues to be applied only where it should be.

[BRussell]

Originally posted by kneelbeforezod
The intended purpose of the AMT was to ensure that high net worth high income individuals whose assets were a primary source of income could not escape paying their fair share of taxes. Its introduction served to make the US Tax system much more equitable.

The problem with AMT is that it has not properly accounted for inflation. It now kicks in for a lot of taxpayers to whom it should not apply. Time and money is wasted figuring it out only to discover that it is unnecessary. The only reform that is needed is to ensure that the AMT continues to be applied only where it should be. It stumped me for a few moments too, but this isn't about the AMT. This is the alternative maximum tax. The alternative minimum tax that we have right now is something completely different.

[Frank777]

I'd be willing to look at it.

There's got to be a way to keep the tax rate on the wealthy the same and eliminate the ridiculously complex system we have now.

Canada doesn't really produce anything anymore. We shuffle paper. We've become a country of accountants and tax lawyers, and it's a huge part of the reason we're not competitive with the rest of the developed world.

[groverat]

Originally posted by Frank777
There's got to be a way to keep the tax rate on the wealthy the same and eliminate the ridiculously complex system we have now.

Just use this proposed system. Except you use a progressive tax rate instead of a fixed.

There is absolutely nothing more complicated about a progressive tax when compared to a flat tax. It's just a percentage. Whether or not that percentage is the same for the rich or poor makes no difference when it comes to the actual math.

The complications come from deductions and tax shelters and loopholes. Close those up and you have a simplified tax code. The actual tax rates have literally nothing to do with the complexity.

The flat tax... the only purpose of it, is to increase the tax responsibility of the poor and middle classes. That is it. That is all it is.

[FormerLurker]

Originally posted by Frank777
Canada doesn't really produce anything anymore. Except the best beer on the continent - that has to count for something!

I do agree that other than the fixed rate, this sounds like a great reform of the tax system, which is indeed a smothering behemoth that sucks up way too much time, energy, and productivity.

[kneelbeforezod]

Originally posted by BRussell
It stumped me for a few moments too, but this isn't about the AMT. This is the alternative maximum tax. The alternative minimum tax that we have right now is something completely different. My initial skim through read of Moore's article was that his Alternative Maximum Tax would dismiss the current AMT and exist paralell to the existing tax...damn Monday morning diminished reading comprehension levels...

I'm with Groverat on the issue of flat tax though. Shifts the burden to those who are less able to carry it.

[Gon]

Originally posted by stupider...likeafox
If you want a flat tax say so.
If you want a simple tax system then say so.
If you want both, then say so.

Don't argue that you want a flat tax because the new system will be simpler than the current one, because it's stupid/intellectually dishonest. That's not completely true. When people present their ideas of flat tax, they usually "sell" the complete package: removal of all old laws and exemptions, and a simple system to replace it. There isn't just a multitude of "possible" tax systems. There is the current system, if you wish another to be put in effect, you have to find a way to move from the current system to the new. I'll return to this question later on..

I used to stand for flat tax, whether on income (income tax, capital gains tax) or consumption (value added tax). I thought the latter the best one because then it could be written into law that the government cannot keep any records on private property - that is the most reliable way I can think of to ensure the politicians can't just go back to their old ways and start inventing little fledgling taxes one by one.

Later on, I have become sceptical of any proposal that includes replacing the tax system with a totally new one. It may well be that the existing system is wasteful and riddled with technicalities and loopholes. But the new system will still be written by politicians. History shows that reorganizations of this nature tend to end up more repressive than the original system. A specific scenario I'm worried about is that the new tax system would impose a burden similar to the old on first sight, but with no deductions and other ways to avoid tax, so the overall burden would increase sharply. To avoid this scenario, the only tax "reforms" I automatically support are ones where single tax or several are unequivocally cut or totally eliminated. Anything else I view with suspicion.

[tonton]

If anyone honestly believes that "progressives" or "lib'rals" or (God forbid) "socialists" want to "punish success", then they are completely unclear on the concept of compassion.

[FormerLurker]

Yes... or else willfully dishonest about the motives of their political opponents.

[Scott]

Originally posted by tonton
If anyone honestly believes that "progressives" or "lib'rals" or (God forbid) "socialists" want to "punish success", then they are completely unclear on the concept of compassion.

You're under this tax system. What do you think about it?

[tonton]

Originally posted by Scott
You're under this tax system. What do you think about it?

It enocourages wage increases for those with money and wage reductions for those earning the least. And that's exactly what has been happening.

A CEO does not have to earn 100 times more than a secretary. A CEO is not 100 times more important, or 100 times more "successful" than a secretary.

But that's the way things are.

[Frank777]

Originally posted by tonton
It enocourages wage increases for those with money and wage reductions for those earning the least. And that's exactly what has been happening.

A CEO does not have to earn 100 times more than a secretary. A CEO is not 100 times more important, or 100 times more "successful" than a secretary.

But that's the way things are.

Tonton,

As a Evangelical, I see this outcome as being rooted more closely in our modern day society's greed, immorality and take-as-much-as-you-can-get philosophy.

How is the present tax system responsible for the overpayment of CEO's?

[NaplesX]

Let's see...

Everyone that makes an income would pay say 15% fixed. Rich and poor alike.

Flat tax means that a poor man and a rich person stand equal before the man...

A flat tax would free congress up to solve real problems. Wait, one less thing for Repubs and Dems to bicker over? Come on people what are you waiting for?

Truly I cannot believe that you would be selfish enough to even fight something so sensible as a flat tax. The benefits to everyone are many.

A flat tax is the great equalizer.

Libs/Progs/Socialists don't really care about that though.

[FormerLurker]

... raising the taxes on the poor and lowering the taxes on the rich That is exactly what moving to a flat tax amounts to.

Or he could just read about half of the posts on the topic so far... he's just trolling as usual, he knows damn well why non-conservatives (even those more libertarian than progressive, like me) are completely opposed to a flat tax.

It seems obvious to me that *someone* is just waiting for any non-conservative to oppose this plan, so he or she can rant about liberals opposing tax "reform" and the "freedom to choose" a flat tax (ah, those freedom hating liberals, why don't they just leave the US already?) ... willfully dishonest about the motives of their political opponents

[NaplesX]

Originally posted by ShawnJ
If someone could kindly explain to Naples how a "flat tax" is hardly equal, then I think he just might change his mind (considering that's the reason on which he bases his support) :) Maybe someone should explain why it is exactly fair. Since you you believe in redistributed wealth.

[Kishan]

Another idea I heard floated around (and I am not sure what it is formally called) is the abolishment of federal income tax altogether and the institution of a sales tax on non-essential items. Things like groceries and clothing would be exempt from this tax, but durable goods etc, would be taxed at a relatively high rate. This already exists in the form of a "luxury" tax on certain high end items such as expensive cars and the like. I find this to be an intriguing idea, because it taxes money spent not earned. I am curious to hear opinions on this and also, from a personal point of view... I wish that I could just opt out of social security. I don't want to claim benefits in 35 years when I might be eligible (if it still exists), so I don't want to pay into it right now.

[tonton]

Since the poorer you are, the higher the percentage of your income you spend on necessities (up to 100%), while the richer you are, the higher the percentage of your income you spend on luxuries and the lower the percentage you spend on necessities.

Doesn't take a PhD to understand that someone making $5000 a year and paying 20% tax is going to hurt a lot more due to that tax than someone making $500,000 a year and paying 20% tax is going to hurt.

The guy making $500,000: "I can't afford a new Mercedes this year. I'll have to keep using my old 2004 Land Rover. Taxes suck!"

The guy making $5000: "I can't pay the rent this month because Timmy got sick. Now we have to live on the street."

[Scott]

Originally posted by tonton
It enocourages wage increases for those with money and wage reductions for those earning the least. And that's exactly what has been happening.

How does that happen?

[NaplesX]

Originally posted by tonton
Since the poorer you are, the higher the percentage of your income you spend on necessities (up to 100%), while the richer you are, the higher the percentage of your income you spend on luxuries and the lower the percentage you spend on necessities.

Doesn't take a PhD to understand that someone making $5000 a year and paying 20% tax is going to hurt a lot more due to that tax than someone making $500,000 a year and paying 20% tax is going to hurt.

The guy making $500,000: "I can't afford a new Mercedes this year. I'll have to keep using my old 2004 Land Rover. Taxes suck!"

The guy making $5000: "I can't pay the rent this month because Timmy got sick. Now we have to live on the street." First, 20% seems a bit steep. 13%-15% seems to be the sweet spot.

Second, fair does not mean easy for everyone. Fair means that everyone pays exactly the same. Not "everyone according to his means", which is exactly what you are preaching. Marx would be proud.

[groverat]

NaplesX:

Flat tax means that a poor man and a rich person stand equal before the man...

15% of 20,000 is more than 15% of 200,000.
Those two are not standing equal before the man, not in any sense that "equal" is actually meaningful.

The benefits to everyone are many.

How does a flat tax benefit those whose current tax rates are below the flat tax rate? (<-- Please answer this question.)

There is a reason you are left to case childish aspersions about generalized groups of people. It is because your arguments are paper-thin on this matter.

To be against "re-distrubuted" wealth would assume that one thinks the wealth was distributed properly in the first place.

[tonton]

Originally posted by Kishan
Another idea I heard floated around (and I am not sure what it is formally called) is the abolishment of federal income tax altogether and the institution of a sales tax on non-essential items. Things like groceries and clothing would be exempt from this tax, but durable goods etc, would be taxed at a relatively high rate. This already exists in the form of a "luxury" tax on certain high end items such as expensive cars and the like. I find this to be an intriguing idea, because it taxes money spent not earned. I am curious to hear opinions on this and also, from a personal point of view... I wish that I could just opt out of social security. I don't want to claim benefits in 35 years when I might be eligible (if it still exists), so I don't want to pay into it right now.

Rich misers should pay tax too.

The one idea that's been floating around is a flat tax plus socialist system. Theoretically, this could work, if the tax rate were high enough (over 40%) and the individual allowance were high enough as well. However, such an arrangement would be very close to communism in that people wouldn't necessarily be encouraged to work harder if by not working at all they could still afford to live in relative comfort. That's why a bracketed tax system works better. No one can claim that the poor in the US are living in relative comfort. However, they're not going to starve.

What I don't understand is why we can't have a mathematically curved tax rate rather than a bracketed one. That would guarantee that someone earning one dollar more than the other guy would always have a higher income. With brackets, the guy earning a dollar more could take home less than the guy earning a dollar less if that dollar happens to bump him into a higher tax bracket. And a curve would make things much simpler in terms of filling out your tax form.

[Hassan i Sabbah]

Originally posted by NaplesX
Maybe someone should explain why it is exactly fair. Since you you believe in redistributed wealth.
Allow me.

When you go to visit Third World Country x, you will notice that the roads are bad, the hospitals are poor, people are not innoculated, literacy and numeracy are problems, and the police are inefficient and often corrupt.

Roads, healthcare and paying the wages of public servants costs sum y.

Third World Country x can't afford sum y. So these things are quite shit there.

We go on holiday there and get an upset stomach; we laugh at the roads; sometimes we have to pay bribes to the police.

For those of us in Europe, Australia and in the United States especially, our roads, hospitals and public servants are all good and paid for. Our states can afford to pay sum y.

In our countries, we pay tax towards sum y and we all benefit.

The rich pay more than the poor. Whoever pays more, sum y is the same.

If the rich, who can afford it, were to pay the same as the poor, who can't, sum y would still be the same— and sum y has to paid because if it isn't, we now live in Third World Country x.

So, if we all pay the same either we have to grit our teeth and get on with living in Third World Country x because we can no longer to afford to pay sum y or else the poor people now have to pay more.

A flat rate of tax means that poor people pay more. Poor people, being poor, cannot afford to pay more. Rich people, being rich, can. A flat rate of tax means that the rich pay less than they were paying, which suits them, and the poor pay more, which does not suit them.

Because the money has to be found, unless we want to live in Third World Country x.

So Rich Person z, being rich, can afford to go on holiday to Third World Country x, because he is paying less, and Poor Person w has to get two jobs to pay the rent and when he or she gets sick he can no longer afford to go to the hospital, because he or she is now poorer than he or she was.

This does not seem very fucking fair to me.

[tonton]

Originally posted by Scott
How does that happen?

Who determines who gets paid what? Would a CEO be more inclined to give himself a raise or his frontline staff? Why were CEOs in Hong Kong getting average annual wage increases of 10-15% each year for the last ten years, while the average entry level wage has dropped by half in a difficult economy?

[tonton]

It's not about "fair" vs. "unfair". It's about compassion. It's about the fact that in a perfectly "fair" world, no one would be hungry. But people are hungry. The rich who don't help the poor are cruel and hearltess. And too many rich just don't help the poor when given the choice. So a good government requires it.

[NaplesX]

Originally posted by tonton
Who determines who gets paid what? Would a CEO be more inclined to give himself a raise or his frontline staff? Why were CEOs in Hong Kong getting average annual wage increases of 10-15% each year for the last ten years, while the average entry level wage has dropped by half in a difficult economy? Who cares what CEO's make and what difference does it make in tax law. Seems you guys have CEO envy.

If you have ever run a company you know why CEO's make so much and usually deservedly so.

You guys are getting to the point where this is becoming comical.

"As the new Federal Reserve Chairman I vow to base my decisions on the wages GEO's make. I feel that the name Chairman Tonton should mean fairness. Next question please."

[NaplesX]

Originally posted by tonton
It's not about "fair" vs. "unfair". It's about compassion. It's about the fact that in a perfectly "fair" world, no one would be hungry. But people are hungry. The rich who don't help the poor are cruel and hearltess. And too many rich just don't help the poor when given the choice. So a good government requires it. That is BS. The US is the most generous country on the face of the earth. The poor here have two TVs and a 1985 Buick.

[groverat]

NaplesX:

Considering how frustrated you are in the other thread with those who do not answer your questions, I sure hope you don't turn out to be a hypocrite and ignore my question.

:)

[NaplesX]

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[groverat]

Originally posted by NaplesX
The tax itself benefits everyone that lives in the US, and will benefit the poor guy more since the rich guy is never likely to fully utilize the governments resources.

You are making a general statement about taxes, which was not my question.

You stated that the move to a flat tax would benefit "everyone". I asked, "How does a flat tax benefit those whose current tax rates are below the flat tax rate?" and you still have not answered my question. You cannot simply dismiss it as silly because you have no answer.

[NaplesX]

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[Hassan i Sabbah]

Originally posted by NaplesX
I gave you an answer, my friend. If you don't like it, there's nothing I can do about that.
You gave him an answer, my friend, to a question you pulled out of your own head.

Now answer his.

[Gon]

Originally posted by groverat
To be against "re-distrubuted" wealth would assume that one thinks the wealth was distributed properly in the first place. No matter how well wealth is distributed now, you aren't capable of distributing it better. Many people have thought they had an unique ability to such a thing and they have all failed.

On the other hand, if we assume wealth as it is distributed now is not distributed fairly, and we somehow know what the "fair" distribution is...

If the government takes it all, and redistributes it "fairly"... now, that would be a real redistribution to fix the supposed unfair distribution of wealth in an one time event. Consequences? In twenty years, many who were wealthy would again be wealthy. Many who were poor would again be poor. And you would be calling for another redistribution, since the situation where we arrived from a fair starting point and a level playing field is obviously... unfair.

However, this is not what you advocate. You want the unproductive to leech off the productive, constantly, forever, using the government's monopoly of force to extract more and more taxes. I resent that, not only because it runs contrary to the right to own property and work towards prosperity, but destroys the natural human instinct to give and share. When you are forced to involuntarily give up your property, that's not giving. That's not compassion. (I note Tonton is horribly abusing that word.) That's being the victim of a robbery.

[NaplesX]

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[BRussell]

Originally posted by tonton
What I don't understand is why we can't have a mathematically curved tax rate rather than a bracketed one. That would guarantee that someone earning one dollar more than the other guy would always have a higher income. With brackets, the guy earning a dollar more could take home less than the guy earning a dollar less if that dollar happens to bump him into a higher tax bracket. And a curve would make things much simpler in terms of filling out your tax form. You never make less money by getting into a higher bracket. Brackets are marginal rates. Say there are two brackets, 20% and 30%, and the cutoff for 30% is $40,000. If you make $39,000, you pay 20%. If you make $41,000, you pay 20% of all your income up to $40,000 and then you pay the 30% rate only on the $1000 you make above $40,000.

[Gon]

Originally posted by NaplesX
I am not sure that paying taxes is considered by anyone a 'benefit'.It's a 'benefit' in the same newspeak that says a drop in 'state income' is considered 'bad'. Sorry if the meaning is a bit off. I see this fallacy most often presented in my native language, and not so much in media.

[NaplesX]

Originally posted by Gon
It's a 'benefit' in the same newspeak that says a drop in 'state income' is considered 'bad'. Sorry if the meaning is a bit off. I see this fallacy most often presented in my native language, and not so much in media. No you hit it. Right.

[Hassan i Sabbah]

Originally posted by NaplesX
Q: How does a flat tax benefit those whose current tax rates are below the flat tax rate?

A: The same way you are benefitted - they can have the sense that they did their part to help - they fulfilled their duty.

I am not sure that paying taxes is considered by anyone a 'benefit'.

How are you benefitted by paying taxes?
Rrright.

So when poorer people have to pay more tax than they were, their 'benefit' would be the satisfaction of fulfilling their duty.

But you argue that a flat rate of tax is better because it's not fair that richer people, who can do more for society, should pay more—even though their 'satisfaction' should, by this logic, be all the greater.

OK.

This makes fuck all sense, but OK.

And everyone benefits by paying tax. It's what stops our countries from being like Mozambique and Papua New Guinea. If you like good roads and policemen who don't augment their salaries by taking bribes, you benefit. I get pissed off paying taxes. I still think they're a good thing.

[groverat]

Originally posted by NaplesX
A: The same way you are benefitted - they can have the sense that they did their part to help - they fulfilled their duty.

So the wealthy get an actual economic benefit and the poor get a moral benefit knowing they "fulfilled their duty"?

Do you honestly think this makes sense?

And since you cannot argue that the poor get an economic benefit from the move to a flat tax from our current system, do you have the moral courage and honesty to admit that the move to a flat tax system hurts the poor and helps the rich economically?

I am not sure that paying taxes is considered by anyone a 'benefit'.

How are you benefitted by paying taxes?

You are the one who made the statement --The benefits to everyone are many.--, not me.

You are talking out of both sides of your mouth and becoming petulant and sniping while doing so.

If your own statements make you angry then you should probably pay attention to what you post.

[kneelbeforezod]

Originally posted by NaplesX
That is BS. The US is the most generous country on the face of the earth. The poor here have two TVs and a 1985 Buick. Just to clarify; are you saying that the poor in the US are as well off or better off than the poor in other countries of comperable wealth? Or that the poor in the US are better off than the poor in developing economies?

[NaplesX]

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[NaplesX]

Originally posted by kneelbeforezod
Just to clarify; are you saying that the poor in the US are as well off or better off than the poor in other countries of comperable wealth? Or that the poor in the US are better off than the poor in developing economies? Come on. I lived in Pittsburgh, the welfare capital of the US and the "welfarers" lived better than I did. I was supposedly lower middle class at the time.

I really don't want to get into a long drawn out thing about it, but I lived right in center of it and saw the corruption in the system as it sits today. It's a mess. There is such a thing as "career" poor people. This whole concern over the so-called poor, misses the actual poor and downtrodden.

[groverat]

NaplesX:

Are you questioning my honesty? Is that not a no-no? I guess not.

I'm asking you whether or not you are. I didn't say you were not. There is a significant difference. I didn't make a statement, just offered up a question which you can answer. It's up to you.

You are thinking directly linearly, and seem unwilling to see the greater and indirect benefits to the poor from a flat tax.

"Thinking linearly"? Can you explain what that means? Because it sounds to me like an attempt to muddy the waters rhetorically and cover your logical tracks.

OK, fine if you need to hear it. A flat tax will indeed effect those that are tax-free at the moment. But that state of the tax law is in itself, unfair.

Effect them how? Why can you just not be honest and say "moving from our current system to a flat tax would help the rich and hurt the poor"? Why can you not state that, why do you have to make such vacuous and empty statements?

But the benefits to the working-poor, will be many. Because they don't get a paycheck from a poor guy. The big bad rich guy will be able to afford his salary and then a whole lot more for the employees of his company. Say like workman's comp, insurance, that dental plan that he has been wanting to pick up forever, perhaps even doughnuts in the morning, some raises that have been long overdue.

So you're saying that the poor/working-classes will benefit because tax cuts would allow the rich classes to pay them more in salary?

That is an entirely indirect and completely unguaranteed benefit. There is no real way to say that will happen. But moving from a graduated progressive tax to a flat tax would have a direct and significant economic benefit to the rich in exchange for a guaranteed economic hit to the poor with only the potential for an indirect benefit.

Is this not troublesome to you? Do you think that trade is "fair"?

Go ahead and disparage the American business owner if you must, but I have only worked for a couple of 'jerks' in my lifetime that did not care about their employees. But the door is wide open for you to attack. So why miss an opportunity?

What on earth are you talking about?
When did I disparage the American business owner?

You are flailing about to try and drag this off-topic and into some kind of personal/idealogical battle. Sorry, Naples, but that will not work with me.

[NaplesX]

-

[groverat]

NaplesX:

I think a switch to a flat tax will be innately more fair than the system we have now.

I realize that you can say those words. I am wondering if you have the moral terpitude to come out and acknowledge the consequences of making the system "fair" and remain an advocate. You have not shown an ability to honestly state the situation, only couch it in generalistic terms and shout and curse when pressed for specific language.

You can say:
"Yes, even though moving from our current system to a flat tax would harm the poor economically and benefit the rich economically it is still better because of the inherent moral fairness of an equal tax rate."

Acknowledge the harm it does the poor, that's all I'm asking. You have yet to, instead you are couching your argument in generalized terms.

Ya wanna ask me "if you know some dogs will loose there homes, and be left to wander in allies because of the flat tax, is that honestly a benefit? Are you that cruel?"

YES IT WILL BE MORE FAIR.

Dogs? Interesting.

[FormerLurker]

Originally posted by NaplesX
I think a switch to a flat tax will be innately more fair than the system we have now.
Why?
Because it makes the poor pay more, and they don't deserve to pay less in your opinion? 'Cause they really aren't that poor anyway, they're welfare queens driving Caddy's?

If that doesn't summarize your viewpoint, then maybe you could try actually explaining it instead of indignantly ranting and raving some nonsense about linear thinking.

k thx bye

[NaplesX]

-

[giant]

Originally posted by groverat
Originally posted by NaplesX
Ya wanna ask me "if you know some dogs will loose there homes, and be left to wander in allies because of the flat tax, is that honestly a benefit? Are you that cruel?"
Dogs? Interesting.
Interesting indeed

[Hassan i Sabbah]

Originally posted by NaplesX
I don't agree with your premise that a flat tax will harm anyone, because I did not hear mention of the tax law effecting the current welfare laws - the protection for the poor will still be there.

I think it would be fair and just to everyone to pay exactly 15% of their income, if we HAVE to come to the conclusion that taxing income is fair. Personally I think a national sales tax would be even 'fair'er. But that is another discussion.
Unless you want to live in a country with shit roads, crap police, no libraries and no Star Wars defence-type stuff, the state will have to continue to spend money.

However the government collects its taxes, it will still have to collect the same amount to meet its burden.

A flat rate of tax will mean that the poorest will have to pay more, since the richest will be paying less.

The richest will pay less; the poorest will pay more.

Do you concede that the poorest will be worse off under a flat rate of tax?

[BRussell]

One of the ironies of the debate over the flat tax is that conservatives usually support using the tax code to help the poor, as opposed to welfare/gov't spending. Right now, "welfare" comes in large part due to the Earned Income Tax Credit, by which most poor people actually make money by filing income taxes. People making I think less than around $20,000 right now pay negative taxes, due to the EITC. That's a very "unflat" tax, and it's primarily a conservative idea, though liberals supported it too.

One of the benefits of a flat tax is that, since all your money is taxed at the same rate, there's no disincentive to invest with your extra money. That's not so much a benefit to the poor per se, but it could arguably be a benefit to the economy as a whole.

And a flat tax can be progressive, if you have a large exemption. I'm personally in favor of a flat tax. Here's the if-BRussell-was-king tax code:

Sales tax: 5%.
Income tax: 40%, exclude all income below $50,000.

Of course you can fiddle with the percentages so it comes out as the same revenue collected as today. The poor and lower/middle class would be completely excluded from paying income tax; instead they would pay in the form of sales taxes. But the wealthy would see a tax increase because of the high 40% flat rate.

[atomic_angel]

Originally posted by groverat
15% of 20,000 is more than 15% of 200,000.

What? Huh? How? In what way?

Look, I know what you are trying to say here...but you've stated it incompletely or incorrectly.

[atomic_angel]

While we are discussing the fantasy of tax reform (ain't gonna happen folks)...What seems like the simplest first step might be something like this:

1. Do an analysis of what people ACTUALLY pay (percentage-wise) of ACTUAL (not "adjusted") income. For example...when I run TurboTax it gives me these numbers. Forget my tax brackets, deductions, etc. At the end of it all...my tax rate was something like 15% (perhaps less) last year.

2. Based on #1...dump ALL deductions and create a revised tax schedule that reflects the reality discovered in #1.

Of course this plan is probably much more complicated than what I think. But what I really want is simpler. I'd give up ALL of my deductions in exchange for a table that said something like: "You made (salary, interest, everything) $50,000 last year? Your tax bill is $12,000." Or some such thing. No forms...no accountants...no Turbo Tax.

Just a simple table:

<$50,000 -- 10%
$50,000 - $200,000 -- 15%
>$200,000 -- 20%

EDIT: I realize the problems that exist at the movement from one bracket to another. Perhaps this is even moer argument for just a flat tax.

That's what I want.

I'm aware of all the debates over the relative burdens and such...but let's simplify the damn thing!

[Kishan]

Originally posted by Hassan i Sabbah
Unless you want to live in a country with shit roads, crap police, no libraries and no Star Wars defence-type stuff, the state will have to continue to spend money.

However the government collects its taxes, it will still have to collect the same amount to meet its burden.

A flat rate of tax will mean that the poorest will have to pay more, since the richest will be paying less.

The richest will pay less; the poorest will pay more.

Do you concede that the poorest will be worse off under a flat rate of tax?

Not to defend NapleX's statements, but I think it is fair to say that the resentment from the so called "rich" with regards to taxes stems not from quality infrastructure. Roads, hospitals and a defense shield are to the benefit of every American, tax paying or not. I believe a great deal of the resentment stems from working taxpayers (rich or otherwise) who see social wellfare programs as a drain on the country's coffers. Speaking only for myself now, I would gladly pay an aggregate 40% of my income to state and federal taxes if I could agree with where it was being spent. Roads, hospitals, schools, defense, are all worthy bits of infrastructure that contribute to a better tomorrow. Working in hospitals with mostly wellfare/social security/medicare/medicaid patients has given me a horrible impression of persons on the public dole. The malignant sense of entitlement that these people have is sickening to me, a person who has held some kind of job since I was 15. Moreover, few of these persons I have dealt with seem to have any ambition to do anything more. Why? Because it takes an investment of time, energy and money to fulfill ambition. The perceptual problem that these people need to get over is that education and hard work are unrewarded. And to be fair, perhaps people like me need to refine the perception that all people on the public dole are happy to stay that way. I truly hope that this is the case, but it hasn't been borne out in my experience yet. There is a saying that God helps those who help themselves... I think our government should be the same way. Show me, the taxpayer, that you want to climb out of poverty and that you are willing to put in the work to do it. I believe that you will find many "rich" people who would be glad to offer help to this segment of the poor.

What does this all have to do with a fair tax rate? I think the desire for a fair tax is a final throwing up of hands in frustration by the "working rich" (if I may use that phrase) in response to a sense of Stop spending my money on people who don't work as hard as I do! Show the taxpayers that their money is being well spent and I think high tax rates would be better tolerated.

[groverat]

NaplesX:

I don't agree with your premise that a flat tax will harm anyone, because I did not hear mention of the tax law effecting the current welfare laws - the protection for the poor will still be there.

You said it would have "an effect" on the poor. Now you say it doesn't? Is it really unreasonable for me to ask for consistency from you?

Also, Poor = on welfare? Who brought up welfare

I think it would be fair and just to everyone to pay exactly 15% of their income, if we HAVE to come to the conclusion that taxing income is fair.

15% of $20k is more than 15% of $200k.

Going from $20k to $17k is far more significant than going from $200k to $170k. Do you not agree?


atomic_angel:

Look, I know what you are trying to say here...but you've stated it incompletely or incorrectly.

I stated it perfectly.
Had I said "is a larger number" I would have phrased it improperly. But I didn't, I said it was "more", and it is. We're talking about the impact of taxes, not straight mathematics.

[NaplesX]

-

[groverat]

NaplesX:

I agreed with you that switching to flat tax will create a burden on the so-called poor.

Then you said there wouldn't be an effect. Now you say the opposite. You refuse to pick a position. You say it creates a burden, now you say it doesn't.

Don't get mad at me because you are spinning so fast you can't keep up with yourself.

You are trying to get me to admit something but I am not sure what. But hey keep trying, I guess...

I want you to acknowledge the reality of moving from our tax system to a flat tax system, which is an increased burden on the poor and a lessened burden on the rich and then stick to it. That's where your problem has been, spinning in circles.

Have the moral strength to say:
"Moving from our current tax system to a flat tax would harm the poor economically and benefit the rich economically but that is acceptable because of the moral fairness of a flat tax system."

I'm not changing anything, I posted the same thing earlier and asked you to acknowledge it. You haven't.

I have an Idea, just to shut groverat up (which is stupid when writing tax law, I know), let's implement the 13-15% flat tax rate, and then put all the money saved by not needing a cumbersome IRS, to a help the poor fund and let groverat administer it, as he seems to have the 'poor' on his brain. I am sure he can wipe it out in no time with that kind of cash and his fighting spirit.

The fact that you say "to shut groverat up" shows me that you don't actually consider what you are saying. You are taking a political side and trying to play some childish rhetorical game. The problem is that you are not skilled at rhetorical games, but you still want to play one.

Moving to a flat tax is meant to make the rich richer and the poor poorer and that's it. If you think that's morally right that is your thing, but come out and say it.

Then, if you're feeling adventurous, tell me how your faith in Christ fits into that idea.

[atomic_angel]

Originally posted by groverat
15% of $20k is more than 15% of $200k.

Going from $20k to $17k is far more significant than going from $200k to $170k. Do you not agree?

Maybe. It really depends on a lot of things I would say. You cannot assume similar or even comparable standards of livign for people with those two incomes. A person making $200,000 per year certainly has higher expenses for things as well (house, car, utilities, etc.) While these are certainly by choice, they are no less real. So in the short-term the felt impacts could be nearly the same.

Originally posted by groverat
I stated it perfectly.

Well, I guess we disagree.

Originally posted by groverat
Had I said "is a larger number" I would have phrased it improperly. But I didn't, I said it was "more", and it is. We're talking about the impact of taxes, not straight mathematics.

Fair enough...but the plain reading of the statement "15% of $20k is more than 15% of $200k" doesn't make that clear. The plain reading of the statement "15% of $20k is more than 15% of $200k" does imply "is a larger number". (And the rest of the context of your post did not elucidate things any further.)


EDIT: Removed poorly thought out example.

[addabox]

Part of the problem of trying to debate something like tax policy with, um......conservatives, are the sociological prejudices that either go unstated, or confusingly stated, or are just implicit in the rhetoric.

Clearly, from Naples and a few others, a lot of this is nothing more than animosity towards "the poor" based on the notion that "the poor" are, variously, lazy, nonexistent, deserving of their status, actually pretty well off, leeches, cunning con artists or a liberal stalking horse.

Obviously, proceeding from this preconception, a tax system that puts more burden on this group is "fairer" in the sense that it punishes the stupid assholes.

Of course, that sounds a little mean spirited, so there has to be a lot of vague hand waving about simplicity and difficult to quantify benefits to society and such.

I, for one, would prefer to hear the ugliness straight up: poor people in America are largely belligerent Negroes who Don't Even Appreciate What We've Done For Them, who sit on their fat asses all day watching their color TVs that my tax dollars paid for, who are shiftless and lazy and expect to be taken care of by the nanny state that the liberals engineered to keep them voting Democratic for the rest of their worthless, possibly criminal lives.

Right? That's what's really being talked about here, albeit in coded terms. So freeing up money for rich white executives (who so clearly deserve every penny, and who know? May even spring for a dental plan for the toiling masses!) by shifting more of the tax burden to those fucking lazy welfare queens Who Live Better Than Me isn't so much about economic sense as it is about "fuck you" sense.

[BRussell]

Originally posted by atomic_angel
Using the very simple table I laid out in an earlier post...if I am making $49,000/year, I am paying $4,900/year in taxes for an after tax income of $44,100. Now say that I am working hard and my employer decides to give me a raise of $1000/year. Guess what, now I am actually making LESS ($42,500 after tax). My employer would have to be extraordinarily generous, giving me a 6% raise (to $52,000) in order for me to just stay even from an after-tax perspective. No, that's not how marginal rates work. See my post about that earlier in this thread. You never make less as a result of moving into a higher bracket. That would be just insane.

[atomic_angel]

Originally posted by BRussell
No, that's not how marginal rates work. See my post about that earlier in this thread. You never make less as a result of moving into a higher bracket. That would be just insane.

Good point. You are correct. Sorry.

[BRussell]

Originally posted by addabox
Clearly, from Naples and a few others, a lot of this is nothing more than animosity towards "the poor" based on the notion that "the poor" are, variously, lazy, nonexistent, deserving of their status, actually pretty well off, leeches, cunning con artists or a liberal stalking horse. Even prior to welfare reform, so little money went to welfare that those who complained about giving their money to the poor lazy freeloaders, while Reagan's increases in military spending were more than the total budget for welfare, were just being silly. *

Now, however, after welfare reform, there's absolutely no excuse at all for complaining about those lazy freeloaders. There's virtually no welfare anymore, at least not in the old sense. Whether this was a good thing or not, I don't know. It may be good. But there's no money going to long-term poor people any more. It's all temporary.

In my view, government spending seems to benefit the wealthy much more than the poor. As far as I can tell, most government spending goes to military contractors and physicians.

[edit] * Uh, I challenge anyone to actually follow that sentence.

[addabox]

Originally posted by BRussell
Even prior to welfare reform, so little money went to welfare that those who complained about giving their money to the poor lazy freeloaders, while Reagan's increases in military spending were more than the total budget for welfare, were just being silly. *

Now, however, after welfare reform, there's absolutely no excuse at all for complaining about those lazy freeloaders. There's virtually no welfare anymore, at least not in the old sense. Whether this was a good thing or not, I don't know. It may be good. But there's no money going to long-term poor people any more. It's all temporary.

In my view, government spending seems to benefit the wealthy much more than the poor. As far as I can tell, most government spending goes to military contractors and physicians.

[edit] * Uh, I challenge anyone to actually follow that sentence.

Very true, but as usual there is a fixed notion in the right wing universe about "poor people" that drives various debates (affirmative action, social spending, tax reform, criminal justice) regardless of what changes occur within income distribution or federal spending.

It seems to arise from a mystical faith in the "free market" to allocate resources fairly, i.e. according the soundness of character of the participants. Hence, poor people have a poor character by definition, and any policies designed to change their status "rewards" poor character, with dire consequences for the Republic.

[NaplesX]

-

[Ensoniq]

The problem with income tax is not whether it's flat or progressive. The problem is that the income tax system itself is flawed because it does exactly what we're seeing here: It creates a system based on "class" that causes the "have's" and "have not's" to fight it out over what's "fair". And since we cannot come to a consensus on whether we're talking about mathematical fairness or ethical fairness, it's a debate which neither side can ever win.

http://www.fairtax.org

The FairTax is currently being debated in Congress, and has bi-partisan support (although of course far more Republicans are for it than Democrats).

It's a national sales tax that completely eliminates the need for the IRS, would eliminate the need for families to file tax returns each year, closes ALL loopholes, and is the only current Tax Reform policy that actually cuts the payroll taxes that most people are worried/angry about.

I defy anyone who checks out the details of the FairTax proposal to explain why it wouldn't work, and why it isn't fair. A flat tax on income is not a solution. The FairTax program is. I suggest those with open minds and a desire to actually solve the tax problem rather than keep the status quo or engage in class warfare actually take the time to read the details.

[hardeeharhar]

Originally posted by Ensoniq
The problem with income tax is not whether it's flat or progressive. The problem is that the income tax system itself is flawed because it does exactly what we're seeing here: It creates a system based on "class" that causes the "have's" and "have not's" to fight it out over what's "fair". And since we cannot come to a consensus on whether we're talking about mathematical fairness or ethical fairness, it's a debate which neither side can ever win.

http://www.fairtax.org

The FairTax is currently being debated in Congress, and has bi-partisan support (although of course far more Republicans are for it than Democrats).

It's a national sales tax that completely eliminates the need for the IRS, would eliminate the need for families to file tax returns each year, closes ALL loopholes, and is the only current Tax Reform policy that actually cuts the payroll taxes that most people are worried/angry about.

I defy anyone who checks out the details of the FairTax proposal to explain why it wouldn't work, and why it isn't fair. A flat tax on income is not a solution. The FairTax program is. I suggest those with open minds and a desire to actually solve the tax problem rather than keep the status quo or engage in class warfare actually take the time to read the details.

It is regressive.

[Placebo]

Originally posted by NaplesX
The poor here have two TVs and a 1985 Buick.
And yet, are starving.

[hardeeharhar]

Originally posted by hardeeharhar
It is regressive.

Wealthy people don't live any more richly on the whole than sort of well off people -- that is they don't consume equal portions of their income proportionally to what they earn.

[groverat]

atomic_angel:

Maybe. It really depends on a lot of things I would say. You cannot assume similar or even comparable standards of livign for people with those two incomes. A person making $200,000 per year certainly has higher expenses for things as well (house, car, utilities, etc.) While these are certainly by choice, they are no less real. So in the short-term the felt impacts could be nearly the same.

Do you honestly believe the argument that you just made? Honestly?

Answer this question:
Do people who make $200k spend 10x more than people who make $20k? Think about it for 2 second and answer that question.

(And the rest of the context of your post did not elucidate things any further.)

Isn't that interesting considering that everyone including you understood it perfectly, only you felt it would be clever to point out your own willing misunderstanding?


Naples X:

1. Are we comparing two people that live in the same neighborhood and have the same kind of jobs, same good credit, same level of honesty, eats in all the time, spends the same on entertainment... specify the 2 income earners for me.

Single income. Different lifestyles is expected.

2. do these 2 people have exact expenses also?

Of course not.

and has misc other expenses and incidentals each month totaling $600.00/MO
...
and has misc other expenses and incidentals each month totaling $6000.00/MO

Am I correct in assuming that "misc other expenses" includes little tiny insignificant things like food, insurance and clothing.

$600 v. $6000. You think this is similar in terms of the impact of taxes? (<-- Answer this question, please.)

[BRussell]

Originally posted by Ensoniq
I defy anyone who checks out the details of the FairTax proposal to explain why it wouldn't work, and why it isn't fair. A flat tax on income is not a solution. The FairTax program is. I suggest those with open minds and a desire to actually solve the tax problem rather than keep the status quo or engage in class warfare actually take the time to read the details. I like the idea of a sales tax because one can choose whether or not to pay taxes, depending on whether you buy stuff. It's also better from an international trade perspective, and it encourages savings rather than consumption. But from what I've read about this plan, it's a total sham. The rates they propose - usually 23% - are not revenue neutral. They involve a huge drop in revenues for the gov't. Objective analyses show that the rate would have to be around 50% to take in as much money as the income tax. That's absurd. And it's terribly regressive. It's a huge tax cut for the wealthy, and a huge tax increase on the poor. It's much more regressive than most flat tax proposals. Also I don't buy the argument that it would reduce the cost of collections. Someone would have to monitor the sales taxes just like they monitor the income tax.

[Gon]

Originally posted by BRussell
I like the idea of a sales tax because one can choose whether or not to pay taxes, depending on whether you buy stuff. It's also better from an international trade perspective, and it encourages savings rather than consumption. But from what I've read about this plan, it's a total sham. The rates they propose - usually 23% - are not revenue neutral. They involve a huge drop in revenues for the gov't.This is a bad thing how? A drop in revenues is an unequivocally good thing, it means the people are getting a little less of their property taken by force. Now, you know the government doesn't have "revenue neutral" on its vocabulary. If you give it more, it will spend more. Is it not enough proof that in the last elections politicians promised to cut down the deficit - when they should be looking to cut down the debt? All the while going to war, talking about missile defense programs, Mars programs. :no: The only way to stop them is to cut down the oxygen supply, the money flow. If the government still spent and went bankrupt, that would actually be the best thing in the long run. They could no longer get themselves in debt - no one would make loans to them - and future taxpayer generations wouldn't need to bear the extravagant spending of their predecessors. It would not be reasonable that debts were automatically inherited in the case of private persons and their offspring, yet this is somehow acceptable when it's about whole generations?
Objective analyses show that the rate would have to be around 50% to take in as much money as the income tax. That's absurd. And it's terribly regressive. It's a huge tax cut for the wealthy, and a huge tax increase on the poor. It's much more regressive than most flat tax proposals. Also I don't buy the argument that it would reduce the cost of collections. Someone would have to monitor the sales taxes just like they monitor the income tax. Uh, if "poor" means "people below poverty line" then FairTax has them at 0% tax rate. If you mean "middle class" then say so. I don't see a reason why everyone besides the poor can't be taxed equally.

[atomic_angel]

Originally posted by groverat
Answer this question:
Do people who make $200k spend 10x more than people who make $20k? Think about it for 2 second and answer that question.

I thought about this question for more than 2 seconds, and, honestly? Yes I do...or nearly so. Do they spend 10X on "essentials". Probably not. But given the person/household debt/savings/etc. statistics...I would make a SWAG that, yes, indeed they do spend 10X as much...perhaps even more since they likely have access to more credit than the $20K/year folks.

My point before was that short-term the impact can feel just as big to the upper income folks as it does to the lower income folks. It might be she's giving up the $4 lattes and $120/month cable bill (among other things)...but in the short-term (because of the nature of getting accustomed to these things) the impact will feel quite large. And in the short-term, some things are difficult to change/adjust at all (mortage payments, car payments/leases, etc.)

[BRussell]

Originally posted by Gon
This is a bad thing how? A drop in revenues is an unequivocally good thing, it means the people are getting a little less of their property taken by force. It may or may not be a good thing. For example, if you do what we're doing now in the US, cutting taxes without cutting spending (indeed, while dramatically increasing spending), it is unequivocally a bad thing. It increases the debt, thereby increasing taxpayer obligations over the long run. In that sense, cutting taxes increases gov't spending, just like running up your credit card increases your spending because you not only have to pay for what you buy, you also have to pay the interest.

In any case, let's have that debate, but when we talk about tax reforms let's not slip massive revenue reductions into the equation without saying so to make your reform plan look more appealing than it really is. Let's compare apples to apples.Uh, if "poor" means "people below poverty line" then FairTax has them at 0% tax rate. If you mean "middle class" then say so. I don't see a reason why everyone besides the poor can't be taxed equally. So this plan has one of those "rebates" - a gov't check that everyone gets every month. It's not really a 0% rate on the poor, it's just a rebate in the amount of the tax rate X the poverty level. I'd have to look at some analyses of this, but I believe it's still harder on the poor than the current tax code, which actually benefits the poor through the Earned Income Tax Credit.

[giant]

Originally posted by atomic_angel
perhaps even more since they likely have access to more credit than the $20K/year folks.
My understanding is that the marginal propensity to consume is steady, but I'm not an economist.
And in the short-term, some things are difficult to change/adjust at all (mortage payments, car payments/leases, etc.)
That's not the same for both. For example, I have an xbox, playstation, gamecube and multiple computers. It's much easier for me to give up one or a couple of those than for someone without any to deal with none.

Likewise, if I had to live in a neighborhood with $500-800K houses rather than $800+, it wouldn't have the same negative impact on my daily life as someone who went from $400-$700K neighborhood down to $150-$400K neighborhood (urban). I would still be in a nice neighborhood while they would likely have to move somewhere with higher crime.

The impact's not the same because on the lower end you start eating into necessities.

On the high end you don't have to do without anything, you just have to deal with stuff that isn't quite as nice. On the low end you actually have to give stuff up.

[giant]

If you and your significant other had to deal with two accords rather than two BMWs, it doesn't affect your daily life as much as a couple that can only affort one car.

It's that simple.

[atomic_angel]

Originally posted by giant
If you and your significant other had to deal with two accords rather than two BMWs, it doesn't affect your daily life as much as a couple that can only affort one car.

I agree...but in the short-term it can equally difficult to make the expense changes at both levels...meaning "hard to execute"...not "hard to accept".

[giant]

groverat's quote:
Originally posted by groverat
15% of 20,000 is more than 15% of 200,000.
Those two are not standing equal before the man, not in any sense that "equal" is actually meaningful.
And it's dead on.

[Towel]

Originally posted by NaplesX
Second, fair does not mean easy for everyone. Fair means that everyone pays exactly the same. Not "everyone according to his means", which is exactly what you are preaching. Marx would be proud. Since this is the crux of the flat-tax evangelists' argument, someone should point out that whatever Marx might think, Jesus most certainly would be proud.

[Ensoniq]

The FairTax FAQ in PDF format:

http://www.fairtaxvolunteer.org/smart/FairTaxFAQ.pdf

Now available in a single click to anyone who would like to see the details from the source instead of either speculation, or possibly biased reporting (on either side) of what the program entails.

How can a plan that insures that not only the poor but EVERY American citizen does not pay once cent of tax on income below the poverty line (as defined by the government) be considered "unfair to the poor"?

Seriously...anyone who hasn't read the FAQ should do so. Then if you still choose to disagree with the idea, at least you'll be qualified to comment on it. :)

[groverat]

atomic_angel:

I thought about this question for more than 2 seconds, and, honestly? Yes I do...or nearly so. Do they spend 10X on "essentials". Probably not. But given the person/household debt/savings/etc. statistics...I would make a SWAG that, yes, indeed they do spend 10X as much...perhaps even more since they likely have access to more credit than the $20K/year folks.

I am actually in shock that you included savings in "spending". That might be the most intellectually dishonest ploy to be used in this thread so far, and that is saying a lot considering how specious the pro-flattax arguments have been.

Here's a fact and a well studied one: Consumer spending does not rise in proportion with income. That's a fact. It's a stone-cold fact. It rises, but not in proportion. The rich spend more than the poor, but they also save. They invest. That is not spending. And honestly I don't think even Hannity McLimbaugh would say that if they were taking what they said seriously.

If there is one constant in the world of economics it is that, as giant has already said, "the marginal propensity to consume is steady".

It is fairly obvious that you're trying to dig yourself out of an idealogical hole, that is fine, just don't expect me to turn a blind eye to the thrashing.

My point before was that short-term the impact can feel just as big to the upper income folks as it does to the lower income folks. It might be she's giving up the $4 lattes and $120/month cable bill (among other things)...but in the short-term (because of the nature of getting accustomed to these things) the impact will feel quite large.

You are comparing $4 lattes and $120/mth cable bills to food, insurance and clothing?

Are you really doing that? Just tell me that you think this is a valid argument and it should be considered seriously, please say that.

The wool is being pulled over your eyes by the "moral" party controlled by wealthy elites. Take off your blindfold.

I think it is fair that everyone pay towards the government and that the payment be structured so that minimal harm is done to all parties.

[hardeeharhar]

Originally posted by Ensoniq
The FairTax FAQ in PDF format:

http://www.fairtaxvolunteer.org/smart/FairTaxFAQ.pdf

Now available in a single click to anyone who would like to see the details from the source instead of either speculation, or possibly biased reporting (on either side) of what the program entails.

How can a plan that insures that not only the poor but EVERY American citizen does not pay once cent of tax on income below the poverty line (as defined by the government) be considered "unfair to the poor"?

Seriously...anyone who hasn't read the FAQ should do so. Then if you still choose to disagree with the idea, at least you'll be qualified to comment on it. :)

I read the faqs before commenting on it.

Dependence on the poverty line is retarded even if we do it now -- it is clear enough that the poverty line is not the same throughout the nation and is far more dynamic than the process that reviews it.

Regardless, everything stated above about such plans still holds true...

[atomic_angel]

Originally posted by groverat
I am actually in shock that you included savings in "spending".

I didn't. What I said was "But given the person/household debt/savings/etc. statistics" by which I meant in my SWAG if you were to look at these statistics it might tell us something about whether the $200K guy was spending 10X as much as the $20K guy. If he is not his savings rate should be higher. But based on the general personal savings rate and personal consumer debt rates I often here of...I would GUESS that his savings rate isn't higher.

Originally posted by groverat
Here's a fact and a well studied one: Consumer spending does not rise in proportion with income. That's a fact. It's a stone-cold fact. It rises, but not in proportion.

So I admitted that mine was a SWAG. Please provide something besides your statement to support this "stone-cold fact."

Originally posted by groverat
If there is one constant in the world of economics it is that, as giant has already said, "the marginal propensity to consume is steady".

Sorry, I studied economics. There is nothing "constant" in that world. Though, if that statement were correct, I'd be right in what I have said. The fact is "the marginal propensity to consume" does change (probably decrease) as income goes up (not constant)...but what we don't know with much certainty is at what income point it begins to decline consistently. Is it $200K? Less? Higher?

EDIT: Another problem in all of this is defining "the poor" and "the rich". Is a person with an income of $200K/year "rich"? Be careful here.

Originally posted by groverat
It is fairly obvious that you're trying to dig yourself out of an idealogical hole

No...but feel free to think that. I really don't have an idealogical position on this. I was merely trying to question/challenge the "common wisdom" notion that "the rich" don't spend proportionally more than "the poor".

EDIT: See my comment above about the trouble with defining "the rich" and "the poor".

Originally posted by groverat
You are comparing $4 lattes and $120/mth cable bills to food, insurance and clothing?

Are you really doing that? Just tell me that you think this is a valid argument and it should be considered seriously, please say that.

You are missing my point. I have repeatedly said in that in the short-term, impact can be quite large at both ends. You also conveniently seem to have ignored my mention of the much larger expenses of things like mortgages and cars (and other expensive toys "the rich" often own) and how shifting/changing/reducing those expenses is not done quickly and easily in the majority of cases.

Originally posted by groverat
The wool is being pulled over your eyes by the "moral" party controlled by wealthy elites.

Nope, but thank you for playing anyway.

[Scott]

Originally posted by tonton
Who determines who gets paid what? Would a CEO be more inclined to give himself a raise or his frontline staff? Why were CEOs in Hong Kong getting average annual wage increases of 10-15% each year for the last ten years, while the average entry level wage has dropped by half in a difficult economy?

What does that have to do with the tax system?

[groverat]

atomic_angel:

If he is not his savings rate should be higher. But based on the general personal savings rate and personal consumer debt rates I often here of...I would GUESS that his savings rate isn't higher.

That guess would be wrong.
By default, what you don't spend you save. So you set it up from the outset for the tax impact to equal out. The rich save, the poor don't.

So I admitted that mine was a SWAG. Please provide something besides your statement to support this "stone-cold fact."

I have no idea what SWAG stands for. But your statement that the rich merely spend more in proportion than the poor is just ignorant of life. I am amazed that you demand backup for my plain statement of the fact that people who are rich are people who save and invest (same thing, essentially).

I know rich people. I know poor people. Do you know what one of the key differences is? Savings and investment.

but what we don't know with much certainty is at what income point it begins to decline consistently. Is it $200K? Less? Higher?

Definitely less than $200k. Without doubt. Well below $100k if you don't have kids. Again, this is based on observing the world around me.

I was merely trying to question/challenge the "common wisdom" notion that "the rich" don't spend proportionally more than "the poor".

It's common wisdom because it is true. The rich accumulate wealth and make it grow. It is "common wisdom" because it is "common sense.

I have repeatedly said in that in the short-term, impact can be quite large at both ends. You also conveniently seem to have ignored my mention of the much larger expenses of things like mortgages and cars (and other expensive toys "the rich" often own) and how shifting/changing/reducing those expenses is not done quickly and easily in the majority of cases.

And I pointed out the moral depravity that is the idea of equating, in terms of real-world impact, the loss of a second or third luxury car to the loss of clothing, food or shelter.

[midwinter]

Originally posted by groverat
And I pointed out the moral depravity that is the idea of equating, in terms of real-world impact, the loss of a second or third luxury car to the loss of clothing, food or shelter.

ding ding ding.