What are the pros of a flat tax over a proggessive tax?

Discussion in 'Budget & Taxes' started by Mr. Swedish Guy, Aug 12, 2012.

  1. Mr. Swedish Guy

    Mr. Swedish Guy New Member

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    Possibly a moral one but on the practical side I'd favour a progressive tax. seeing as the 'trickle-down' effect has been sort-of-disproven (unless one of you can bring good proof, which is what I'm hoping. I want to learn after all) and that rich people really can survive with higher taxes. I still want it to be profitable to be rich though, but that's obvious. I listen to a lot of rightists but I've never personally felt how a flat tax would be a better choice.

    Please, leftist and rightists: show thyne arguments.
     
  2. RedRepublic

    RedRepublic Banned at Members Request

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    Why the need for a token tax if you're going to leave the rich alone in their societal positions where they can systematically exploit us for the wealth we create? Half-arsed morality is pathetic.
     
  3. Mr. Swedish Guy

    Mr. Swedish Guy New Member

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    Referring to why I still want it to be profitable to get rich? Simply because you get rich by (or should get rich by) creating wealth (invent thngs, start a business) and people wouldn't do that if they themselves didn't get richer in the process.
     
  4. webrockk

    webrockk Well-Known Member Past Donor

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    An equally applied consumption tax is the only way to keep American collectivists from pimping their favorite class warfare narrative.

    That.....

    besides giving every American an equal, voluntary stake in America, an equal interest in how DC is spending their money, and promoting the notion of equal treatment under the law versus separating individuals into income groups and treating them differently.....

    is the biggest "pro" over progressive taxation.
     
  5. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    The trickle down effect hasn't been dis proven. It is just the top are globalists and it is trickling elsewhere, as free trade legislation opened up the dam to the point it no longer holds any water. Proponents of flat taxes always include the "closing of loopholes" as part of their compelling argument. I say close the loopholes now, and we can talk about a flat tax.
     
  6. Reiver

    Reiver Well-Known Member

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    A flat tax, given diminishing marginal utility of income, is inherently unfair. A progressive tax, in contrast, achieves a more equitable result whilst also providing for efficiency gain: in particular, as long as its integrated with the benefit system (providing a variation of the negative income tax), it can help eliminate work disincentive effects by ensuring suitably low marginal rates of tax on the lower income deciles
     
  7. Gator

    Gator New Member

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    "Trickle down" has not been disproven at all. If you really "want to learn" about it, why aren't you learning? Do your own reading and research. A simple Google search will turn up plenty of good economic analysis.

    A major benefit to a flat tax is simplicity, particularly for business owners. It takes an inordinate amount of work to comply with the tax code. The record keeping required to fill out the various returns and support audits is extensive and permeats every aspect of business. About 5% of a small business activity is spent on the tax code, go to a flat tax and productivity increases 5% immediately. Its even greater for large companies.

    Switch to a revenue neutral flat tax and the economy will surge.

    Then there is the fairness issue. No loopholes or special discounts for anyone. Everyone pays. When everyone pays, the politicians cant divide the nation into classes and play one group off another.

    Massachussetts, Illinois, and Michigan have a flat tax (state income tax). Thats right, all those libs that whine about a federal flat tax being so unfair live in states with a flat tax. Hypocrits all.
     
  8. Friendly

    Friendly Banned

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    Well, we have 15 trillion debt..... and we have a progressive tax system... Working AWESOME!
     
  9. satv365

    satv365 New Member

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    It would give Government less money. Forcing them to spend less and get the hell out of our wallets.
     
  10. Reiver

    Reiver Well-Known Member

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    Such innocence! The biggest 'supply side' experiment was Thatcherism. That let to a massive increase in working poverty and child poverty. Clear proven failure!
     
  11. Mr. Swedish Guy

    Mr. Swedish Guy New Member

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    The american tax code isn't the kind of progressive tax code that people are looking for I think. Is it not possible to make a progressive tax simple? And, if I recall correctly, the american economy was great during the 50's 60's or something and they had really high taxes on the rich. You've heard that one before, you know what I mean.
     
  12. Reiver

    Reiver Well-Known Member

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    Only through integration of tax and social expenditure systems
     
  13. Roy L

    Roy L Banned

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    Few of the rich ever created wealth commensurate with the amount of wealth they ended up having, and few of the highly productive ended up with wealth commensurate with what they produced.
     
  14. Gator

    Gator New Member

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    There can be a "flat" tax with steps based on income, but that defeats one purpose of a flat tax which is to prevent the govt from playing class warfare. A stepped (progressive) code pits one segment of society against another making it easier to manipulate the tax code, after a while we are in the position we are in today - half the people dont pay any income tax, and the top 10% pay almost all the tax.

    In the past, the top tax rate was higher than it is today and the nation was doing well. There is a major flaw in that arguement - the top tax rate is a false metric. You can look at the effective tax rate, which is the taxes paid over gross income. That takes into account all of the deductions.

    For example, in 1980 the top rate was 70%, but the effective rate on the top 0.1% was 32.2%. You will also find that the more a person makes, the higher their effective tax rate. It is a myth that the richer a person is the less tax they pay.

    When the top rate is high (91% in 1963), people shift their compensation out of the taxed income. People take compensation in other non-taxed forms. Why would anyone voluntarily make money if 91% was going to be taken away? Its ridiculous to think people will sit idly and pay 91% tax.

    The foundation of your implication is that increasing the tax rate leads to higher federal revenue with minimal impact on the economy. Its not so simple. Taxes depress activity, even obama has said that publicly. Raise taxes and economic activity slows and people work to avoid paying the taxes (thats not cheating, I mean legal avoidance). Raise taxes too high and there is a major slowdown and it becomes very profitable to avoid taxes.

    Lowering taxes does the opposite. Lowering tax rates increases federal revenue by stimulating the economy (more economic activity = more tax revenue) and its not worth peoples effort to avoid taxes (which means more revenue).

    If you look at federal revenue as a % of GDP, you will see it is independent of the top tax rate. It does change with the economic cycle (recession, boom, bubble, etc).
     
  15. Gator

    Gator New Member

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    Prove it.

    Dont just throw out BS talking points.

    Back it up or shut up.
     
  16. Blasphemer

    Blasphemer Well-Known Member

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    Simpler system with less loopholes and bureaucracy.

    As for the issue of fairness, even tough flat tax can be myopically considered unfair due to marginal utility, this may not necessarily be true when looking at bigger picture. The reason is that benefits provided by government are usualy adressed not to everyone equally, but primarily to poorer people, and this hidden redistribution should not be neglected. It is common for poorer people to have zero or negative total "taxation" when this is taken into account in flat tax models.
     
  17. Reiver

    Reiver Well-Known Member

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    A flat tax is class warfare. It actively attacks the poorer deciles as the tax damage is maximised. Simple diminishing marginal utility of income for you!
     
  18. Reiver

    Reiver Well-Known Member

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    Without integration of tax and benefit systems the poorer people face substantial marginal rates of tax (possibly over 100%). Diminishing marginal utility of income only informs us the irrationality of a tax system. We have to go further to understand how, for example, we can maximise work incentives
     
  19. satv365

    satv365 New Member

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    You relied on imports too much. That's a variable America doesn't have when it comes to basic commodities. Now, when it comes to luxory items and useless (*)(*)(*)(*) like pocket knives or pokemon toys....

    Essentially "trickle down" is a workable theory. You lower costs for business and businesses grow. The arguing points is where do you lower costs for business? I don't think giving tax breaks to trust fund babies or CEOs is the answer but the idea that people who hire workers ought to pay outrageous taxes is just plain stupid.
     
  20. FreshAir

    FreshAir Well-Known Member Past Donor

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    a flat tax treats everyone equal... as long as all income is treated equally

    I believe no one should pay taxes on any money earned below the poverty line, everyone should pay a flat tax on every dollar above that

    rich or poor alike, same rules for everyone


    .
     
  21. satv365

    satv365 New Member

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    Depends on how you implement a flat tax. If everybody pays 5%. Those with more still pay more as five percent of a million dollars is more than five percent of 20,000.

    Let alone the fact that you wouldn't even have to tax the poverty stricken people below a certain income. The trouble is Government spending. That needs to be reigned in, before this discussion can even be turned into a theory in progress in my views.
     
  22. FreshAir

    FreshAir Well-Known Member Past Donor

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    i would not tax the profits of a business, only the salary paid out to the owners\employees

    any profit that goes back into the business should not be taxed, that said, the profit from selling a business should be taxed

    .
     
  23. FreshAir

    FreshAir Well-Known Member Past Donor

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    yep, if I buy more at a store I still pay the same tax per dollar, i just bought more stuff, same with making more dollars, you should still pay the same tax per dollar as everyone else, there is no need to reward the rich with huge tax cuts, being rich is the reward


    .
     
  24. Reiver

    Reiver Well-Known Member

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    It doesn't. Once we factor in social expenditures, we are necessarily talking about extreme marginal rates of effective tax on the poor
     
  25. Gator

    Gator New Member

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    Just eliminate all business taxes. A tax on business revenue is simply passed on to consumers. Business "profit" is either put back into the company (and then it is no longer profit and becomes a business expense and not taxed) or it is given to employees as a bonus or share holders as dividends so it comes out of the employees/shareholders pocket.

    Just implement a flat tax on all personal income regardless of the income source.
     

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