The Flat Tax

[Auteur]

All a flat tax would do would be to further increase inequality in society, a trend that is already accelerating, without any help from the tax department. Those that believe in supernatural invisible guiding hands in the marketplace, rewarding only the honest and hard working, and slapping lazy welfare people on the head, are merely living out a fantasy, one strongly promoted by the most affluent, for obvious reasons.



One argument advanced by the flat taxers is that the current system is somehow "punishing success" and "chasing away our entrepreneurs." But this idea is just plain wrong. Top marginal income tax rates were well over 80% in the 1950s and 1960s, the decades of the past century with the highest levels of GDP, income and productivity growth.

A flat tax for fat cats | Canadian Centre for Policy Alternatives

The above discusses Canada, but the issues are the same in the US.

Living in a fantasy only in the sense that we have the expectation that people hold themselves accountable. Which of course you liberals have an extreme aversion to. And historical circumstances may have plaid a small role in the productivity of those decades.

Historical circumstances did indeed play a role. A progressive tax system, and veteran's benefits, and other social programs steming from FDR's New Deal created a middle class with the income sufficient to create demand for products and services, thereby leading to growth and employment. A middle class is key to having a healthy economy, and the flat tax would further erode the middle class, more so than any other group in society. The rich would get a free ticket, and the saved resources would no doubt quickly go to creating more distortions and bubbles in the world's economy. The poor are not going to be able to pay anyway. Impose a ten percent tax on a family making $20,000 a year, and you are going to have riots.

And you are accountable, are you? Perhaps you would like to reproduce here the memos you sent to Goldman Sachs, or Bear Sterns, directing them not to assemble or market any more derivative products a few years ago, as they were going to be catastrophic to the world economy. How about your letter to the corporate lobbyists who insisted on the deregulation of commercial banks, which allowed them to speculate with your savings, when you really just wanted a savings account. Maybe you wrote, and they didn't reply. Gee, being accountable is not as easy as one might guess, is it? Before you turned on your light switch this morning, did you do a survey to see where this power was coming from? If it was coal fired power plants, then what? Phone them and insist on new, cleaner burning equipment, or go without lights? No matter, you probably think global warming is a fantasy anyway.

Much as you might like to think you are a cowboy bern, you are not. You, like everyone else, now belongs to a complex economy, and an interlocking world. The only hope we have of creating a positive, livable world is to take control of the means of power, and direct resources to pro-social projects. If you insist on handing this power to the corporate lobby, then you will be stuck with the divided, unfair, conflict ridden society that we once thought we got ride of.

 

[oldfart]

Once free of the USSR, many of the Soviet empire nations instituted flat taxes that were quite successful and those nations enjoyed amazing economic growth. But was that due to the flat tax? Or was it due to being out from under the oppressive Soviet regime? That would be difficult to say.

Actually it's not difficult at all. Compared to a Soviet-style command economy complete with Gosplan and Gulag, anything else looks efficient! In the first 5--8 years the engine of growth is the abandonment of inefficient state-owned enterprises. The challenge is the management of the social disruption created by these changes and developing the institutions of commercial law and market mechanisms. In these years I have a hard time seeing how the budget and tax policy have much effect on the growth rate.

In the wake of the 2008 global downturn, many nations are now suffering economic woes regardless of their tax systems. But can you blame the flat tax for that? It would really be difficult to make a case that the flat tax was the problem.

As before, the tax system was not the cause of the early success or the later economic problems.

The bottom line for me is that a flat tax depoliticizes the tax system. A flat tax applied equitably across the board means the government cannot use the tax code to buy favor to keep itself in power nor punish its 'enemies'. A change in the tax code would affect everybody equally and proportionately which means the government would have more incentive to do its level best to keep all the people happy. It might even be persuaded to become more of a public servant again instead of a massive entity that serves mostly itself.

This sort of assumes that good government and market institutions develop a decade out. That has not been the case in a number of nations, like Russia. A flat tax does not remove bribery and corruption, nor political manipulation of the tax laws.

And if the government has less money to operate on, perhaps it won't be wasting as much money on a shrimp on a treadmill or lavish parties for government employees, and it will have at least some less incentive to use the people's money to buy votes to keep itself in power.

There is no necessary relationship between tax revenues and government spending in any nation that borrows predominantly in its own currency. If you want poster children for corruption and waste in government, the "flat-tax" countries are at the top of the list. This is not a causal relationship, both are the product of a failed transition to a civil society which can enforce a better tax system and make public spending moe accountable.

 

[Foxfyre]

Once free of the USSR, many of the Soviet empire nations instituted flat taxes that were quite successful and those nations enjoyed amazing economic growth. But was that due to the flat tax? Or was it due to being out from under the oppressive Soviet regime? That would be difficult to say.

Actually it's not difficult at all. Compared to a Soviet-style command economy complete with Gosplan and Gulag, anything else looks efficient! In the first 5--8 years the engine of growth is the abandonment of inefficient state-owned enterprises. The challenge is the management of the social disruption created by these changes and developing the institutions of commercial law and market mechanisms. In these years I have a hard time seeing how the budget and tax policy have much effect on the growth rate.

In the wake of the 2008 global downturn, many nations are now suffering economic woes regardless of their tax systems. But can you blame the flat tax for that? It would really be difficult to make a case that the flat tax was the problem.

As before, the tax system was not the cause of the early success or the later economic problems.

The bottom line for me is that a flat tax depoliticizes the tax system. A flat tax applied equitably across the board means the government cannot use the tax code to buy favor to keep itself in power nor punish its 'enemies'. A change in the tax code would affect everybody equally and proportionately which means the government would have more incentive to do its level best to keep all the people happy. It might even be persuaded to become more of a public servant again instead of a massive entity that serves mostly itself.

This sort of assumes that good government and market institutions develop a decade out. That has not been the case in a number of nations, like Russia. A flat tax does not remove bribery and corruption, nor political manipulation of the tax laws.

And if the government has less money to operate on, perhaps it won't be wasting as much money on a shrimp on a treadmill or lavish parties for government employees, and it will have at least some less incentive to use the people's money to buy votes to keep itself in power.

There is no necessary relationship between tax revenues and government spending in any nation that borrows predominantly in its own currency. If you want poster children for corruption and waste in government, the "flat-tax" countries are at the top of the list. This is not a causal relationship, both are the product of a failed transition to a civil society which can enforce a better tax system and make public spending moe accountable.

I hate breaking up posts like that friend, so will respond to your thoughtful post in narrative form.

My first comment re those former USSR nations was in direct response to a question to name any country that had prospered with a flat tax. There are many of those. My intention was to qualify the comment with recognition that the flat tax was not necessarily the reason for the prosperity, as no single factor is ever the reason for prosperity, but only to convey that the flat tax was not a hindrance to the prosperity and could also have contributed to it.

The same philosophy applies to the rest of the concept. No, a flat tax will not eliminate greed, graft, corruption and other self-serving malfeasance in government, but it could be a component of significant reform. It would depoliticize that portion of the tax code and make it much more difficult for the politicians to use the tax code itself to keep themselves in power. All income earners would have some skin in the game which is not the case now.

But to complete the reform, we will also need a mandatory balanced budget with extremely limited flexibility, and a return to constitutional limitations on what the federal government is allowed to spend our money on.

 

[oldfart]

I hate breaking up posts like that friend, so will respond to your thoughtful post in narrative form.

No problem. I've been flipping back and forth between here and a thread on monetary policy all afternoon. I might have to stop and do some real work if someone hits the door!

My first comment re those former USSR nations was in direct response to a question to name any country that had prospered with a flat tax. There are many of those. My intention was to qualify the comment with recognition that the flat tax was not necessarily the reason for the prosperity, as no single factor is ever the reason for prosperity, but only to convey that the flat tax was not a hindrance to the prosperity and could also have contributed to it.

I agree with you, there is no necessary causal link, and whatever such link exists is less pronounced in economies new to market systems.

All income earners would have some skin in the game which is not the case now.

The flat tax hinges on ignoring all other taxes for make this argument. Everyone who pays sales or excise taxes has skin in the game. These taxes are generally regressive, so a true "flat tax" system would have to have a progressive income tax to offset it. Some proposals do this with a rebate of sales taxes paid or an exclusion of a given amount from the flat tax.

 

[Wry Catcher]

All a flat tax would do would be to further increase inequality in society, a trend that is already accelerating, without any help from the tax department. Those that believe in supernatural invisible guiding hands in the marketplace, rewarding only the honest and hard working, and slapping lazy welfare people on the head, are merely living out a fantasy, one strongly promoted by the most affluent, for obvious reasons.



One argument advanced by the flat taxers is that the current system is somehow "punishing success" and "chasing away our entrepreneurs." But this idea is just plain wrong. Top marginal income tax rates were well over 80% in the 1950s and 1960s, the decades of the past century with the highest levels of GDP, income and productivity growth.

A flat tax for fat cats | Canadian Centre for Policy Alternatives

The above discusses Canada, but the issues are the same in the US.

Living in a fantasy only in the sense that we have the expectation that people hold themselves accountable. Which of course you liberals have an extreme aversion to. And historical circumstances may have plaid a small role in the productivity of those decades.

You're entitled to your opinion, if you want someone to believe your opinion has merit you might offer some evidence. The evidence is self evident that the rich would become richer every year if they only paid a 10% flat income tax.

Example: Joe makes 100,000 per year, pays $10,000 in taxes and keeps $90,000; Mitt earns 10,000,000 per year and pays $1,000,000 in taxes and keeps $9,000,000.

[BTW, Joe works with his labor, he's a plumber. Mitt simply moves other peoples money around and keeps some of it for his trouble]

Next we look at the death tax, another issue for the Republican Party. It takes little creative thought to see these sort of tax 'reform' will in very short order create an Oligarchy of the Rich and a pure plutocracy.

 

[RKMBrown]

Once free of the USSR, many of the Soviet empire nations instituted flat taxes that were quite successful and those nations enjoyed amazing economic growth. But was that due to the flat tax? Or was it due to being out from under the oppressive Soviet regime? That would be difficult to say.

Actually it's not difficult at all. Compared to a Soviet-style command economy complete with Gosplan and Gulag, anything else looks efficient! In the first 5--8 years the engine of growth is the abandonment of inefficient state-owned enterprises. The challenge is the management of the social disruption created by these changes and developing the institutions of commercial law and market mechanisms. In these years I have a hard time seeing how the budget and tax policy have much effect on the growth rate.



As before, the tax system was not the cause of the early success or the later economic problems.



This sort of assumes that good government and market institutions develop a decade out. That has not been the case in a number of nations, like Russia. A flat tax does not remove bribery and corruption, nor political manipulation of the tax laws.

And if the government has less money to operate on, perhaps it won't be wasting as much money on a shrimp on a treadmill or lavish parties for government employees, and it will have at least some less incentive to use the people's money to buy votes to keep itself in power.

There is no necessary relationship between tax revenues and government spending in any nation that borrows predominantly in its own currency. If you want poster children for corruption and waste in government, the "flat-tax" countries are at the top of the list. This is not a causal relationship, both are the product of a failed transition to a civil society which can enforce a better tax system and make public spending moe accountable.

I hate breaking up posts like that friend, so will respond to your thoughtful post in narrative form.

My first comment re those former USSR nations was in direct response to a question to name any country that had prospered with a flat tax. There are many of those. My intention was to qualify the comment with recognition that the flat tax was not necessarily the reason for the prosperity, as no single factor is ever the reason for prosperity, but only to convey that the flat tax was not a hindrance to the prosperity and could also have contributed to it.

The same philosophy applies to the rest of the concept. No, a flat tax will not eliminate greed, graft, corruption and other self-serving malfeasance in government, but it could be a component of significant reform. It would depoliticize that portion of the tax code and make it much more difficult for the politicians to use the tax code itself to keep themselves in power. All income earners would have some skin in the game which is not the case now.

But to complete the reform, we will also need a mandatory balanced budget with extremely limited flexibility, and a return to constitutional limitations on what the federal government is allowed to spend our money on.

Our problem is spending. Why would someone who makes 7.25 an hour mind if taxes were 100% and he got to live like a millionaire through re-distributions? Nah... the problem is spending. I would not make the assumption that the people who benefit the most from spending would change their mind about spending if the taxes affected them. Nah.. they'll just work less and argue for more money.

 

[Rshermr]

Actually it's not difficult at all. Compared to a Soviet-style command economy complete with Gosplan and Gulag, anything else looks efficient! In the first 5--8 years the engine of growth is the abandonment of inefficient state-owned enterprises. The challenge is the management of the social disruption created by these changes and developing the institutions of commercial law and market mechanisms. In these years I have a hard time seeing how the budget and tax policy have much effect on the growth rate.



As before, the tax system was not the cause of the early success or the later economic problems.



This sort of assumes that good government and market institutions develop a decade out. That has not been the case in a number of nations, like Russia. A flat tax does not remove bribery and corruption, nor political manipulation of the tax laws.



There is no necessary relationship between tax revenues and government spending in any nation that borrows predominantly in its own currency. If you want poster children for corruption and waste in government, the "flat-tax" countries are at the top of the list. This is not a causal relationship, both are the product of a failed transition to a civil society which can enforce a better tax system and make public spending moe accountable.

I hate breaking up posts like that friend, so will respond to your thoughtful post in narrative form.

My first comment re those former USSR nations was in direct response to a question to name any country that had prospered with a flat tax. There are many of those. My intention was to qualify the comment with recognition that the flat tax was not necessarily the reason for the prosperity, as no single factor is ever the reason for prosperity, but only to convey that the flat tax was not a hindrance to the prosperity and could also have contributed to it.

The same philosophy applies to the rest of the concept. No, a flat tax will not eliminate greed, graft, corruption and other self-serving malfeasance in government, but it could be a component of significant reform. It would depoliticize that portion of the tax code and make it much more difficult for the politicians to use the tax code itself to keep themselves in power. All income earners would have some skin in the game which is not the case now.

But to complete the reform, we will also need a mandatory balanced budget with extremely limited flexibility, and a return to constitutional limitations on what the federal government is allowed to spend our money on.

Our problem is spending. Why would someone who makes 7.25 an hour mind if taxes were 100% and he got to live like a millionaire through re-distributions? Nah... the problem is spending. I would not make the assumption that the people who benefit the most from spending would change their mind about spending if the taxes affected them. Nah.. they'll just work less and argue for more money.

Yup. That would be your conclusion. No one wants to work. They love living like shit on unemployment, or disability, or whatever. And there are trillions of them. Wonder how we have the highest productivity of any other country, or nearly so. What with all of those trillions of shirkers that, in your mind, do not want to work. Must be some kind of divine intervention.

 

[RKMBrown]

I hate breaking up posts like that friend, so will respond to your thoughtful post in narrative form.

My first comment re those former USSR nations was in direct response to a question to name any country that had prospered with a flat tax. There are many of those. My intention was to qualify the comment with recognition that the flat tax was not necessarily the reason for the prosperity, as no single factor is ever the reason for prosperity, but only to convey that the flat tax was not a hindrance to the prosperity and could also have contributed to it.

The same philosophy applies to the rest of the concept. No, a flat tax will not eliminate greed, graft, corruption and other self-serving malfeasance in government, but it could be a component of significant reform. It would depoliticize that portion of the tax code and make it much more difficult for the politicians to use the tax code itself to keep themselves in power. All income earners would have some skin in the game which is not the case now.

But to complete the reform, we will also need a mandatory balanced budget with extremely limited flexibility, and a return to constitutional limitations on what the federal government is allowed to spend our money on.

Our problem is spending. Why would someone who makes 7.25 an hour mind if taxes were 100% and he got to live like a millionaire through re-distributions? Nah... the problem is spending. I would not make the assumption that the people who benefit the most from spending would change their mind about spending if the taxes affected them. Nah.. they'll just work less and argue for more money.

Yup. That would be your conclusion. No one wants to work. They love living like shit on unemployment, or disability, or whatever. And there are trillions of them. Wonder how we have the highest productivity of any other country, or nearly so. What with all of those trillions of shirkers that, in your mind, do not want to work. Must be some kind of divine intervention.

Learn how to read, or find someone to explain what I wrote, cause your accusation of what I said makes you appear to be mentally retarded.

 

[Rshermr]

Our problem is spending. Why would someone who makes 7.25 an hour mind if taxes were 100% and he got to live like a millionaire through re-distributions? Nah... the problem is spending. I would not make the assumption that the people who benefit the most from spending would change their mind about spending if the taxes affected them. Nah.. they'll just work less and argue for more money.

Yup. That would be your conclusion. No one wants to work. They love living like shit on unemployment, or disability, or whatever. And there are trillions of them. Wonder how we have the highest productivity of any other country, or nearly so. What with all of those trillions of shirkers that, in your mind, do not want to work. Must be some kind of divine intervention.

Learn how to read, or find someone to explain what I wrote, cause your accusation of what I said makes you appear to be mentally retarded.

Again, you are proving ignorance. What you said was hardly difficult to understand. Congenital idiocy is a disease, me boy. Really, it is not your fault.

 

[RKMBrown]

Yup. That would be your conclusion. No one wants to work. They love living like shit on unemployment, or disability, or whatever. And there are trillions of them. Wonder how we have the highest productivity of any other country, or nearly so. What with all of those trillions of shirkers that, in your mind, do not want to work. Must be some kind of divine intervention.

Learn how to read, or find someone to explain what I wrote, cause your accusation of what I said makes you appear to be mentally retarded.

Again, you are proving ignorance. What you said was hardly difficult to understand. Congenital idiocy is a disease, me boy. Really, it is not your fault.

Agreed it was hardly difficult to understand. Yet you failed miserably. What is this disease that you keep claiming you were born with?

 

[Foxfyre]

Inserting my comments in blue:

I hate breaking up posts like that friend, so will respond to your thoughtful post in narrative form.

No problem. I've been flipping back and forth between here and a thread on monetary policy all afternoon. I might have to stop and do some real work if someone hits the door!

My first comment re those former USSR nations was in direct response to a question to name any country that had prospered with a flat tax. There are many of those. My intention was to qualify the comment with recognition that the flat tax was not necessarily the reason for the prosperity, as no single factor is ever the reason for prosperity, but only to convey that the flat tax was not a hindrance to the prosperity and could also have contributed to it.

I agree with you, there is no necessary causal link, and whatever such link exists is less pronounced in economies new to market systems.

But again, there is no indication that a flat tax in any way hindered the prosperity that was generated, and no emperical evidence that it was not a contribution to it. In other words, there is no reason or logic to dismiss it any more than there is reason or logic to give it all the credit.

My intent was to defend the flat tax concept from those who would say it cannot work.

All income earners would have some skin in the game which is not the case now.

The flat tax hinges on ignoring all other taxes for make this argument. Everyone who pays sales or excise taxes has skin in the game. These taxes are generally regressive, so a true "flat tax" system would have to have a progressive income tax to offset it. Some proposals do this with a rebate of sales taxes paid or an exclusion of a given amount from the flat tax.

Disagree. That the flat tax puts 'skin in the game' does not suggest or ignore that there are no other taxes that do that. But I will continue to defend the flat income tax over any form of consumption tax becase a) it is much more difficult to manipulate without attracting a lot of notice and b) when applied evenly cross the board on all forms of earned income--wages, interest, business, investment etc.--it is less regressive than most or all other general taxes.

 

[Auteur]

But again, there is no indication that a flat tax in any way hindered the prosperity that was generated, and no emperical evidence that it was not a contribution to it. In other words, there is no reason or logic to dismiss it any more than there is reason or logic to give it all the credit.

My intent was to defend the flat tax concept from those who would say it cannot work.



Disagree. That the flat tax puts 'skin in the game' does not suggest or ignore that there are no other taxes that do that. But I will continue to defend the flat income tax over any form of consumption tax becase a) it is much more difficult to manipulate without attracting a lot of notice and b) when applied evenly cross the board on all forms of earned income--wages, interest, business, investment etc.--it is less regressive than most or all other general taxes.

Putting aside the underlying assumption of perfect functioning of markets, and the bigger assumption that all good boys deserve favours, and always get them, there are pragmatic reasons not to have a flat tax.

Too much money in the world's financial system is a little bit like unemployed youth. It tends to float around, and eventually cause trouble unless more pro-social tasks for it can be found. The Asian currency crisis, the dot com bubble, and the real estate bubble are examples of money that could have been put to better use. Untaxed money eventually caused a meltdown of the world economy, and trillions of dollars of lost wealth. Government may be inefficient at times, but greed can cause biblical spectacles.

We are already seeing a huge polarization of wealth in the US, and other countries, and a flat tax would accelerate this trend. We don't have to look too far into history to see the results of wealth concentrated in a tiny minority of the population, and an impoverishment of the masses. Even if there is no social dislocation, the further atrophying of the middle class, and enrichment of the affluent means more resources going to peripheral wims, rather than employment creating, local businesses where the middle class are statistically more likely to spend their money.

 

[ScienceRocks]

I support a flat tax of 25% for everyone.

 

[Bern80]

Historical circumstances did indeed play a role. A progressive tax system, and veteran's benefits, and other social programs steming from FDR's New Deal created a middle class with the income sufficient to create demand for products and services, thereby leading to growth and employment. A middle class is key to having a healthy economy, and the flat tax would further erode the middle class, more so than any other group in society. The rich would get a free ticket, and the saved resources would no doubt quickly go to creating more distortions and bubbles in the world's economy. The poor are not going to be able to pay anyway. Impose a ten percent tax on a family making $20,000 a year, and you are going to have riots.

How would it do that exactly? Your aversion to this flat tax is truly bazarre. You realize 10% is LESS THAN what 90% of the population pays in taxes right? How exactly the bulk of the population having more money in their pockets result in their financial ruin. You are also wrong about this supposed power the rich would have with such a tax. They would less power because they would no longer be able to garner favors through the tax code from politicians. You seem to be of this wierd notion that getting taxed is somehow what keeps rich people in check from committing some type of nefarious act.

And you are accountable, are you? Perhaps you would like to reproduce here the memos you sent to Goldman Sachs, or Bear Sterns, directing them not to assemble or market any more derivative products a few years ago, as they were going to be catastrophic to the world economy. How about your letter to the corporate lobbyists who insisted on the deregulation of commercial banks, which allowed them to speculate with your savings, when you really just wanted a savings account. Maybe you wrote, and they didn't reply. Gee, being accountable is not as easy as one might guess, is it? Before you turned on your light switch this morning, did you do a survey to see where this power was coming from? If it was coal fired power plants, then what? Phone them and insist on new, cleaner burning equipment, or go without lights? No matter, you probably think global warming is a fantasy anyway.

Your response here clearly indicates I was correct about your aversion to personal responsibility. You couldn't have missed that particular more if you wanted to.

Historical circumstances did indeed play a role. A progressive tax system, Much as you might like to think you are a cowboy bern, you are not. You, like everyone else, now belongs to a complex economy, and an interlocking world. The only hope we have of creating a positive, livable world is to take control of the means of power, and direct resources to pro-social projects. If you insist on handing this power to the corporate lobby, then you will be stuck with the divided, unfair, conflict ridden society that we once thought we got ride of.[/QUOTE]

You are so out to lunch on this it's unblievable. You act as if this is some extreme idea when all it is simplifying the tax code. Your aversion to it shows you are the power hungry one who wants to maintain a system that allows are government to socially engineer through the tax code. You're the bad guy here bud, not me.

 

[Bern80]

But again, there is no indication that a flat tax in any way hindered the prosperity that was generated, and no emperical evidence that it was not a contribution to it. In other words, there is no reason or logic to dismiss it any more than there is reason or logic to give it all the credit.

My intent was to defend the flat tax concept from those who would say it cannot work.



Disagree. That the flat tax puts 'skin in the game' does not suggest or ignore that there are no other taxes that do that. But I will continue to defend the flat income tax over any form of consumption tax becase a) it is much more difficult to manipulate without attracting a lot of notice and b) when applied evenly cross the board on all forms of earned income--wages, interest, business, investment etc.--it is less regressive than most or all other general taxes.

Putting aside the underlying assumption of perfect functioning of markets, and the bigger assumption that all good boys deserve favours, and always get them, there are pragmatic reasons not to have a flat tax.

Too much money in the world's financial system is a little bit like unemployed youth. It tends to float around, and eventually cause trouble unless more pro-social tasks for it can be found. The Asian currency crisis, the dot com bubble, and the real estate bubble are examples of money that could have been put to better use. Untaxed money eventually caused a meltdown of the world economy, and trillions of dollars of lost wealth. Government may be inefficient at times, but greed can cause biblical spectacles.

We are already seeing a huge polarization of wealth in the US, and other countries, and a flat tax would accelerate this trend. We don't have to look too far into history to see the results of wealth concentrated in a tiny minority of the population, and an impoverishment of the masses. Even if there is no social dislocation, the further atrophying of the middle class, and enrichment of the affluent means more resources going to peripheral wims, rather than employment creating, local businesses where the middle class are statistically more likely to spend their money.

You keep saying that, but you seem unable to explain the mechanism by which that would really happen. Explain how if we went to a flat tax tomorrow why EXACTLY it would be the doom of the middle class. How exactly would the rich having more money inherently mean the middle class can not have more money?

 

[Auteur]

But again, there is no indication that a flat tax in any way hindered the prosperity that was generated, and no emperical evidence that it was not a contribution to it. In other words, there is no reason or logic to dismiss it any more than there is reason or logic to give it all the credit.

My intent was to defend the flat tax concept from those who would say it cannot work.



Disagree. That the flat tax puts 'skin in the game' does not suggest or ignore that there are no other taxes that do that. But I will continue to defend the flat income tax over any form of consumption tax becase a) it is much more difficult to manipulate without attracting a lot of notice and b) when applied evenly cross the board on all forms of earned income--wages, interest, business, investment etc.--it is less regressive than most or all other general taxes.

Putting aside the underlying assumption of perfect functioning of markets, and the bigger assumption that all good boys deserve favours, and always get them, there are pragmatic reasons not to have a flat tax.

Too much money in the world's financial system is a little bit like unemployed youth. It tends to float around, and eventually cause trouble unless more pro-social tasks for it can be found. The Asian currency crisis, the dot com bubble, and the real estate bubble are examples of money that could have been put to better use. Untaxed money eventually caused a meltdown of the world economy, and trillions of dollars of lost wealth. Government may be inefficient at times, but greed can cause biblical spectacles.

We are already seeing a huge polarization of wealth in the US, and other countries, and a flat tax would accelerate this trend. We don't have to look too far into history to see the results of wealth concentrated in a tiny minority of the population, and an impoverishment of the masses. Even if there is no social dislocation, the further atrophying of the middle class, and enrichment of the affluent means more resources going to peripheral wims, rather than employment creating, local businesses where the middle class are statistically more likely to spend their money.

You keep saying that, but you seem unable to explain the mechanism by which that would really happen. Explain how if we went to a flat tax tomorrow why EXACTLY it would be the doom of the middle class. How exactly would the rich having more money inherently mean the middle class can not have more money?

Start your reading here:

http://opinionator.blogs.nytimes.com/2013/04/14/a-tax-system-stacked-against-the-99-percent/?_r=0

 

[Skull Pilot]

Demagoguery at its finest. No one likes to pay taxes, but few of us would want government services curtailed to the extent a flat tax of 10% would cause. Some people seem to believe that those who pay a top rate of 90% do so on all of their income. Most of us know that is not true.

The truth being a billionaire pays the same tax that I do and all of us do on equal earnings. The rate goes up on schedules listed in the tax booklet as does income. A flat rate would simply increase the amount of wealth of the very wealthy, rapidly and enormously.

Wealth = Power, and in a society where money can buy political ads and influence our road to a pure Plutocracy would be facilitated by a 10% flat tax. Hence, those Libertarian types who claim to support Liberty and Freedom for the individual really don't. For economic slavery is little different than confinement.

Excuse me but do you care to prove that a 10% flat tax on all income regardless of the source would result in less revenue not more and don't forget to factor in the billions that could be saved when we downsize the IRS.

Right now the total effective tax rate is 11% but that does not include 100% of all income. A flat tax of 10% on all income from dollar one would not reduce revenue.

Sorry. You forgot to provide a link to back up your claim that the current effective tax rate is 11%. So, how about one. Because effective tax rate has a number of variables. Who are the people on whom the rate is based. What taxes are included. Why do you think a flat tax would have no deductions over time? Can you constiturionaly keep politicians from adding deductions?? And on, and on, and on.

Summary of Latest Federal Individual Income Tax Data | Tax Foundation

Compared to the gross earnings the income tax collected s 11% of that.

That 11% is collected even though nearly 50% of those with earned incomes pay zero income tax or indeed a negative income tax.

The basis of a flat tax is that it be on dollar one.

And focusing on ifs, and buts and on and on and on is a great way to criticize any argument.

Hell I could use ifs buts on and on and on as reasons for abolishing the income tax altogether.

 

[Bern80]

Putting aside the underlying assumption of perfect functioning of markets, and the bigger assumption that all good boys deserve favours, and always get them, there are pragmatic reasons not to have a flat tax.

Too much money in the world's financial system is a little bit like unemployed youth. It tends to float around, and eventually cause trouble unless more pro-social tasks for it can be found. The Asian currency crisis, the dot com bubble, and the real estate bubble are examples of money that could have been put to better use. Untaxed money eventually caused a meltdown of the world economy, and trillions of dollars of lost wealth. Government may be inefficient at times, but greed can cause biblical spectacles.

We are already seeing a huge polarization of wealth in the US, and other countries, and a flat tax would accelerate this trend. We don't have to look too far into history to see the results of wealth concentrated in a tiny minority of the population, and an impoverishment of the masses. Even if there is no social dislocation, the further atrophying of the middle class, and enrichment of the affluent means more resources going to peripheral wims, rather than employment creating, local businesses where the middle class are statistically more likely to spend their money.

You keep saying that, but you seem unable to explain the mechanism by which that would really happen. Explain how if we went to a flat tax tomorrow why EXACTLY it would be the doom of the middle class. How exactly would the rich having more money inherently mean the middle class can not have more money?

Start your reading here:

http://opinionator.blogs.nytimes.com/2013/04/14/a-tax-system-stacked-against-the-99-percent/?_r=0

Not a good link friend. His argument are so full of holes it's no wonder yours are so stupid. Where to start..... First he wants Us all to buy into the class envy argument that we should be upset that the rich don't pay more in income taxes and that they've actually had to pay a little less over the years. Second he tries to continue to sell his unfairness argument by comparing our progressive tax rates to other countries. That argument doesn't fly because he hasn't established why a progressive income tax is fair in the first place. Next implying that capitals gains should be taxed on unrealized income; taxing money you don't actually have, yeah, sorry you might want to get your tax theory from smarter people at some point. Lastly he doesn't ever even touch on the concept of a flat tax. So make your own argument instead of using the argument of someone....or not the argument of someone else in this case.

The problem is people like you look at the tax system completely backwards. You look at it as a means of punishing this group or that group. That's wrong. The purpose of taxes is to fund the government's obligations. So step one in coming up with a system to do that should first be to determine how much money the government actually needs. That alone renders most of your argument irrellavent. The next question is simply what is a fair method of distributing that tax burden. Most of us derive equal benefit from that which our tax dollars fund. Defense of the country, our education system, roads and highways, social programs, etc. So it seems to me the fairest way to collect that would be to tax everyone's income the same amount. I would go higher than 10% admittedly. Historically the U.S. government has always collected around 18% of GDP in tax revenue. GDP can essentially also be thought of the entire countries gross income. It has always been around 18% give or take a couple percentage points despite politicians messing with the tax code over the decades. So since that's all they're ever likely to get anyway I would say an 18% flat tax on any and all income, elimination of most, if not all, tax credits, loopholes, deductions, etc. Would be a rather fair system for funding the government's obligations.

Lastly, you liberals really need to stop pretending what you want is fair tax code. In every tax debate I've had about this liberals prove they wouldn't know the definition of the word 'fair' if it bit them on the ass. A progressive tax system meets no defintion of the word fair that I know of. That the rich should pay more in taxes for no other reason than they have more meets no defintion of the word fair I am aware of. Make any other argument you want for whatever tax system you want, but please stop lieing and telling us it's because you want the system to be more fair.

 

[Wry Catcher]

You keep saying that, but you seem unable to explain the mechanism by which that would really happen. Explain how if we went to a flat tax tomorrow why EXACTLY it would be the doom of the middle class. How exactly would the rich having more money inherently mean the middle class can not have more money?

Start your reading here:

http://opinionator.blogs.nytimes.com/2013/04/14/a-tax-system-stacked-against-the-99-percent/?_r=0

Not a good link friend. His argument are so full of holes it's no wonder yours are so stupid. Where to start..... First he wants Us all to buy into the class envy argument that we should be upset that the rich don't pay more in income taxes and that they've actually had to pay a little less over the years. Second he tries to continue to sell his unfairness argument by comparing our progressive tax rates to other countries. That argument doesn't fly because he hasn't established why a progressive income tax is fair in the first place. Next implying that capitals gains should be taxed on unrealized income; taxing money you don't actually have, yeah, sorry you might want to get your tax theory from smarter people at some point. Lastly he doesn't ever even touch on the concept of a flat tax. So make your own argument instead of using the argument of someone....or not the argument of someone else in this case.

The problem is people like you look at the tax system completely backwards. You look at it as a means of punishing this group or that group. That's wrong. The purpose of taxes is to fund the government's obligations. So step one in coming up with a system to do that should first be to determine how much money the government actually needs. That alone renders most of your argument irrellavent. The next question is simply what is a fair method of distributing that tax burden. Most of us derive equal benefit from that which our tax dollars fund. Defense of the country, our education system, roads and highways, social programs, etc. So it seems to me the fairest way to collect that would be to tax everyone's income the same amount. I would go higher than 10% admittedly. Historically the U.S. government has always collected around 18% of GDP in tax revenue. GDP can essentially also be thought of the entire countries gross income. It has always been around 18% give or take a couple percentage points despite politicians messing with the tax code over the decades. So since that's all they're ever likely to get anyway I would say an 18% flat tax on any and all income, elimination of most, if not all, tax credits, loopholes, deductions, etc. Would be a rather fair system for funding the government's obligations.

Lastly, you liberals really need to stop pretending what you want is fair tax code. In every tax debate I've had about this liberals prove they wouldn't know the definition of the word 'fair' if it bit them on the ass. A progressive tax system meets no defintion of the word fair that I know of. That the rich should pay more in taxes for no other reason than they have more meets no defintion of the word fair I am aware of. Make any other argument you want for whatever tax system you want, but please stop lieing and telling us it's because you want the system to be more fair.

The link made a great deal of sense, your response is nothing more than an ad hominem attack and a bastardization of the word fair.

From the link:

We’ve drawn our most talented young people into financial shenanigans, rather than into creating real businesses, making real discoveries, providing real services to others. More efforts go into “rent-seeking” — getting a larger slice of the country’s economic pie — than into enlarging the size of the pie."

This ^^^ is 'Mitt Romney' and no amount of propaganda, distortion or demagoguery will ever displace the unfairness of his business life's endeavor.

 

[oldfart]

Inserting my comments in blue:

But again, there is no indication that a flat tax in any way hindered the prosperity that was generated, and no empirical evidence that it was not a contribution to it. In other words, there is no reason or logic to dismiss it any more than there is reason or logic to give it all the credit.

My intent was to defend the flat tax concept from those who would say it cannot work.

OK, I plead guilty to overenthusiasm. Whenever the Soviet economy comes up I have a "Goody! Goody! I get to use that graduate education!" moment.

I see the reason for raising the example and agree you are correct; a number of former Soviet-style economies have income tax systems that are pretty close to a flat tax, so it is not only possible, it happens. How long they stay that way and whether they help or hinder development is another issue, but they clearly don't implode the system.

Disagree. That the flat tax puts 'skin in the game' does not suggest or ignore that there are no other taxes that do that. But I will continue to defend the flat income tax over any form of consumption tax becase a) it is much more difficult to manipulate without attracting a lot of notice and b) when applied evenly cross the board on all forms of earned income--wages, interest, business, investment etc.--it is less regressive than most or all other general taxes.

I would agree that a flat income tax is superior to a consumption tax. I would prefer a progressive income tax, but the problem with the current tax system is not the rate structure, but the mind-numbing myriad of deductions and credits. So a flat tax with reform of all the goodies would be, IMHO better than the current Code.