How about a flat 10% income tax?

[Toro]

Cutting tax rates can have the effect of increasing the amount of money available to the government.

Jeez. You libs are a slow and stubborn stupid lot.

Cutting income taxes would merely add to the deficit. In the OP's case, massively so. You can't raise tax revenues for the government for the government by decreasing income tax revenues when the average rate of income tax in the economy is 17%. 70% maybe, but not 17%. It might increase the marginal amount of tax collected on a given amount of income but it does increase the absolute amount of revenue for the government. It decreases it.

The OP would see a loss of $600 billion in tax revenues. Let's say $500 billion to make the math easy. That's a 50% decline from the $1 trillion collected. Income taxes are half of all revenues raised by the government, which is $2 trillion. The economy is $14 trillion. Currently, $7 trillion of GDP supports the income tax and $7 trillion supports all other revenues. The marginal rate of tax on the economy is ~14% (2/14). Cutting the income tax in half lowers the tax rate from 14% to 10% (.5x.5x1/7+.5x1/7~.1). To get back to the same amount of revenues after the tax cut, GDP would have to rise to $20 trillion. ($2T/.1=$20T). That means to pay for the tax cut, the economy would have to grow over 40%. Given that the long term trend in economic growth in the US is about 3% - 2% productivity growth and 1% population growth - there is no way at all the economy can grow that fast to make up for the lost revenues.

 

[Toro]

Nice analysis. I suppose it means we should increase the taxes on the above 85,000 crowd to around 35% to eliminate the deficit. Or cut spending.
I might support either move.
Most people earning over 85k have jobs which cannot be moved overseas, that is why they earn over 85k.
Lawyers, accountants, politicians etc. who have been so ready to collapse the pay scale for engineers (it can be designed anywhere) and factory workers (it can be built anywhere) might not like having the loss of income for those groups haunt them in the form of higher taxes for themselves.

Perhaps we could consider revenue tariffs. A revenue tariff is distinguished form a protective tariff because the rate is set at a level to maximize government income (from the tariff), not to discourage trade. This would not "end free trade" it would encourage such trade, without the distortions which American military power introduce into the equation (if Timbuktu nationalizes XYZ corps widget factory because they pay only 7 cents an hour then the Marines invade to set matter right, which lets XYZ get huge profits without commensurate risk)
Anyone who wanted to avoid paying those tariffs could buy American.

Thanks. I appreciate the compliment.

I don't necessarily have a problem with a flat tax. I just have a problem with the OP.

I am against raising tariffs. Raising tariffs has the effect of raising costs for everybody and limiting choices. Economic growth is a function of productivity growth. Productivity growth is just a fancy way of saying making everything cheaper. Making everything more expensive, as tariffs would, makes everyone poorer.

 

[Big Fitz]

uhm...the financial meltdown happened on Bush's watch.

whatever happened to the buck stops here? LOL

Who's president now? that's where the buck stopped.

Question is, why's he fucking up so bad?

Because he either believes the socialist nonsense he is pushing or he understands that it helps buy his party votes.

Oh yeahhhhhhh....

I r a consurvativ... i fergotted.

dur....

 

[Liability]

Nice analysis. I suppose it means we should increase the taxes on the above 85,000 crowd to around 35% to eliminate the deficit. Or cut spending.
I might support either move.
Most people earning over 85k have jobs which cannot be moved overseas, that is why they earn over 85k.
Lawyers, accountants, politicians etc. who have been so ready to collapse the pay scale for engineers (it can be designed anywhere) and factory workers (it can be built anywhere) might not like having the loss of income for those groups haunt them in the form of higher taxes for themselves.

Perhaps we could consider revenue tariffs. A revenue tariff is distinguished form a protective tariff because the rate is set at a level to maximize government income (from the tariff), not to discourage trade. This would not "end free trade" it would encourage such trade, without the distortions which American military power introduce into the equation (if Timbuktu nationalizes XYZ corps widget factory because they pay only 7 cents an hour then the Marines invade to set matter right, which lets XYZ get huge profits without commensurate risk)
Anyone who wanted to avoid paying those tariffs could buy American.

Thanks. I appreciate the compliment.

I don't necessarily have a problem with a flat tax. I just have a problem with the OP.

I am against raising tariffs. Raising tariffs has the effect of raising costs for everybody and limiting choices. Economic growth is a function of productivity growth. Productivity growth is just a fancy way of saying making everything cheaper. Making everything more expensive, as tariffs would, makes everyone poorer.

Nicely said.

 

[Vast LWC]

OK, I support the idea of a flat tax.

As long as all taxes are included in it, including payroll taxes, capital gains taxes, sales taxes, etc, etc.

Unfortunately, in order to pay for all the shit that we've put into our budget, it'll have to be a lot higher than 10%.

Hell, 10% wouldn't even pay for the Military, Social Security, and the required interest on pre-existing debt, much less anything else.

 

[Vast LWC]

Nice analysis. I suppose it means we should increase the taxes on the above 85,000 crowd to around 35% to eliminate the deficit. Or cut spending.
I might support either move.
Most people earning over 85k have jobs which cannot be moved overseas, that is why they earn over 85k.
Lawyers, accountants, politicians etc. who have been so ready to collapse the pay scale for engineers (it can be designed anywhere) and factory workers (it can be built anywhere) might not like having the loss of income for those groups haunt them in the form of higher taxes for themselves.

Perhaps we could consider revenue tariffs. A revenue tariff is distinguished form a protective tariff because the rate is set at a level to maximize government income (from the tariff), not to discourage trade. This would not "end free trade" it would encourage such trade, without the distortions which American military power introduce into the equation (if Timbuktu nationalizes XYZ corps widget factory because they pay only 7 cents an hour then the Marines invade to set matter right, which lets XYZ get huge profits without commensurate risk)
Anyone who wanted to avoid paying those tariffs could buy American.

Thanks. I appreciate the compliment.

I don't necessarily have a problem with a flat tax. I just have a problem with the OP.

I am against raising tariffs. Raising tariffs has the effect of raising costs for everybody and limiting choices. Economic growth is a function of productivity growth. Productivity growth is just a fancy way of saying making everything cheaper. Making everything more expensive, as tariffs would, makes everyone poorer.

Nicely said.

Why? the post he was addressing was talking about people paying for the services of our government when they are being used for personal gain, over and above the services a normal average American would receive.

Seems about right to me.

Perhaps "tariffs" is a bad name for it, how about "fees"?

 

[Liability]

OK, I support the idea of a flat tax.

As long as all taxes are included in it, including payroll taxes, capital gains taxes, sales taxes, etc, etc.

Unfortunately, in order to pay for all the shit that we've put into our budget, it'll have to be a lot higher than 10%.

Hell, 10% wouldn't even pay for the Military, Social Security, and the required interest on pre-existing debt, much less anything else.

And since a truly flat tax is rather regressive -- hitting the less affluent with greater force -- I could also get behind some arbitrary starting point after which the taxes kick in. I don't know that the number is $85K or $50K or $150K. But whatever it is, that too would force the flat rate perecent to go higher than 10% .

And as long as we then get serious about balancing our budgets, paying down the debt over time in a rational way, and getting rid of bogus unfunded mandates (for at least a couple of significant reasons), I think most of us would support a flat tax. Simplification is not just a buzz word from Walden Pond. Our tax structure is a monstrous joke. Simplifying it would free up enormous amounts of potentially productive time, too.

Avoid all other taxation and just make it one FLAT rate, I would be fine with 20%.

 

[Vast LWC]

OK, I support the idea of a flat tax.

As long as all taxes are included in it, including payroll taxes, capital gains taxes, sales taxes, etc, etc.

Unfortunately, in order to pay for all the shit that we've put into our budget, it'll have to be a lot higher than 10%.

Hell, 10% wouldn't even pay for the Military, Social Security, and the required interest on pre-existing debt, much less anything else.

And since a truly flat tax is rather regressive -- hitting the less affluent with greater force -- I could also get behind some arbitrary starting point after which the taxes kick in. I don't know that the number is $85K or $50K or $150K. But whatever it is, that too would force the flat rate perecent to go higher than 10% .

And as long as we then get serious about balancing our budgets, paying down the debt over time in a rational way, and getting rid of bogus unfunded mandates (for at least a couple of significant reasons), I think most of us would support a flat tax. Simplification is not just a buzz word from Walden Pond. Our tax structure is a monstrous joke. Simplifying it would free up enormous amounts of potentially productive time, too.

Avoid all other taxation and just make it one FLAT rate, I would be fine with 20%.

Works for me. As long as we cut spending enough for that level to pay the debt though.

We might have to have a higher rate to start with for a few years until we pay some stuff off, and have it written into law that the rate would go down at some point in the future.

 

[Liability]

OK, I support the idea of a flat tax.

As long as all taxes are included in it, including payroll taxes, capital gains taxes, sales taxes, etc, etc.

Unfortunately, in order to pay for all the shit that we've put into our budget, it'll have to be a lot higher than 10%.

Hell, 10% wouldn't even pay for the Military, Social Security, and the required interest on pre-existing debt, much less anything else.

And since a truly flat tax is rather regressive -- hitting the less affluent with greater force -- I could also get behind some arbitrary starting point after which the taxes kick in. I don't know that the number is $85K or $50K or $150K. But whatever it is, that too would force the flat rate perecent to go higher than 10% .

And as long as we then get serious about balancing our budgets, paying down the debt over time in a rational way, and getting rid of bogus unfunded mandates (for at least a couple of significant reasons), I think most of us would support a flat tax. Simplification is not just a buzz word from Walden Pond. Our tax structure is a monstrous joke. Simplifying it would free up enormous amounts of potentially productive time, too.

Avoid all other taxation and just make it one FLAT rate, I would be fine with 20%.

Works for me. As long as we cut spending enough for that level to pay the debt though.

We might have to have a higher rate to start with for a few years until we pay some stuff off, and have it written into law that the rate would go down at some point in the future.

The debt is so damn massive (by which I mean the real debt which includes things like medicare, retirment packages, SSI, etc.) that I harbor NO belief that we can pay it off any time soon.

Accordingly, my suggestion would be to budget for a paydown that includes ALL interest due in any given year as well as some significant portion of that massive pricniple obligation (which, sadly is itself not stagnant) as PART of each year's fiscal budget. Then, of course, as you correctly noted, we'd have the other legitimate obligations of government, like the military, etc. Real budgets and no more gimmicks. Get a figure we can manage and figure the flat tax rate according to those real numbers. Adjust it year by year for as long as it takes to pay off the debt.

There would, in my scenario, be no more deficit spending EXCEPT as specifically authroized by a super-majority and then only for declared national emergenices like 9/11 type attacks, wars or disasters like Katrina or Haiti.

My concern is that such thinking is likely to be dismissed out of hand by the kinds of politicians we have long been sending to Office in D.C. -- regardless of Party affiliation.

 

[Toro]

A flat tax above a certain level is a progressive tax scheme. For example, if that level is $50k and the tax rate is 25% - I don't know what the proper levels are either - a person earning $50k would pay 0% in taxes, a person at $100k would pay 12.5%, and a person earning $1MM would pay 23.75%.

The problem, though, is that such a flat tax would shift more of the tax burden from the wealthy to the middle class, and that would be virtually impossible to implement politically.

 

[blu]

there should be no income tax and the government should return to its constitutional size

 

[JakeStarkey]

How about a flat 10% income tax with a SINGLE DEDUCTION of $85,000? This way it is not complicated and the vary poorest don't have to pay them.

Yes, I would support that.

 

[PeterS]

How about a flat 10% income tax with a SINGLE DEDUCTION of $85,000? This way it is not complicated and the vary poorest don't have to pay them.

Fine if you include an constitutional amendment stripping the government of the power to issue debt. If you don't then all you are doing is passing onto future generations the taxes you don't have the balls to pay.

The best proposal for a flat tax I ever hear was a single revenue neutral flat that rolled all federal taxes into one tax and gave everyone a single cost of living deduction...no other breaks. The beauty of such a plan is that if Obama wants to increase government programs he also has to sell a tax increase and if Palin and her fellow fruitbats want tax cuts they have to tell everyone what programs they are going to cut. This is the only plan that forces political honesty and accountability and the only plan that does not place onto future generations burdens they we lack the balls to assume...