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. Roy L

    Roy L Banned

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    Your constant weaseling, dishonesty and goalpost-moving are getting tiresome. In post #177 you lied: "When the majority of our federal tax revenue is paid by the top five percent of income earners, that means the "rich" are paying the "majority" of those taxes." Now you know that you have been proved wrong, so you are trying to claim that corporations are included as "income earners" and that the top 5% is actually the top 10%, so anyone who even manages to get their income into six figures is "rich."
    Again, that is bald lie on your part. While the rich do indeed pay most of the corporate income tax, that only accounts for 9% of federal revenue. So the rich's share might be 7%. You know that the rich pay very little personal income tax -- Romney's 14% rate is pretty standard for the super-duper uber-rich -- so you have to lie that ordinary middle class working people who happen to have a six-digit income in a given year -- the folks who are really getting soaked by the income tax -- are "rich."

    Your lie is a very simple one: you want the super-duper uber-rich to be exempted from taxation even more than they already are, so you have to pretend that the taxes being paid by ordinary working people -- who pay almost all the taxes -- are actually being paid by the super-duper uber-rich. The way you have to do this is by lying that ordinary working people who are well below the top 1% and paying exorbitant taxes on their earned incomes are "the rich." Your lie is always the same, and I invite all readers to verify for themselves that you always have to tell that same lie: that the heavily taxed six-digit earned incomes of middle class working people are the lightly taxed seven- eight- and nine-digit UNearned incomes of the super-duper uber-rich.
    What happened to your 5% "objective fact"? What "objective fact" suddenly made corporations into "income earners"?
    No, it is not. A billionaire with no income is still rich. A working person with no significant assets who happens to have a six-figure income one year is not rich. Any claim to the contrary is just a lie. Stop lying.
    I am not suggesting it. I am stating it as an indisputable fact: the measure of wealth is wealth, not income.
    Objective fact.
    Of course you have. All apologists for privilege lie. That is a natural law of the universe.
     
  2. Roy L

    Roy L Banned

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    Fact.
    If you want to use food stamps, you have to live near a grocery store, and you have to pay a landowner full market value for the advantage of that location.
    Healthcare spending doesn't go to the poor, it goes to the rich: pharma corps, hospital corps, insurance corps, and monopoly-privileged rent-seeking medical providers.
    And the money all goes to landowners, which is why the landowners get rapidly richer while the poor stay poor.
    More accurately, no amount of convoluted sophistry on your part will change the immutable fact that the poor stay poor, and their landlords get rich.
    You claim welfare for the poor is too expensive, but welfare for the rich is an order of magnitude larger.
     
  3. drj90210

    drj90210 Active Member

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    Sure. Since the Fair Tax calls for a prebate (advance rebate of tax on purchases up to the poverty level), this essential acts to consume their "necessities of life" entirely free of acts." From http://www.fairtax.org/site/PageServer?pagename=FAQs#1: Under the FairTax, all Americans consume what they see as their necessities of life free of tax. While permitting no exemptions, the FairTax (HR25/S13) provides a monthly universal prebate to ensure that each family unit can consume tax free at or beyond the poverty level, with the overall effect of making the FairTax progressive in application. There is no marriage penalty as the couple gets twice the amount that a single adult receives. While everyone pays the same tax rate at the cash register, the prebate results in effective tax rates (annual taxes paid divided by annual spending) that increase as the level of spending increases a progressive tax rate structure. For example, a person spending at the poverty level has a 0% effective tax rate, whereas someone spending at twice the poverty level has an effective tax rate of 11.5%, and so on.

    In effect, essential are not taxed for those spending at or near the povery level.

    See above link.
     
  4. drj90210

    drj90210 Active Member

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    Hell yes: If we define luxuries as anything that is not essential, then of course all of these item are luxuries.
    1) Toys for kids: Children themselves are a luxury and a responsibility: It is thus the duty of potential parents to discuss whether or not they are financially capable to have kids. Toys, of course, are luxuries. However, via a Fair Tax the poor can buy second-hand toys that will be tax-free, since through a Fair Tax only new items are taxed.
    2) Pet food: When I think of luxury items, pets are one of the first things that come to mind. They are certainly not essential. If you can't afford the pet food, then you should not have a pet.
    3) Air filter: I don't think I know anyone that owns one of these.
    4) Gasoline: Certainly a luxury, since driving itself is a privilege/luxury. Besides, there are already are state gasoline taxes, and Europe still seems to be existing with their very high gasoline taxes.

    Not true. Under a Fair Tax, the poor actually pay less than zero-percent retail sales tax on their spending. Much like with the earned income tax credit of today, the rebate may give them more money than they actually spend on retail taxes. Especially if they are frugal and buy mostly used products. On the other hand, the wealthy approach a maximum of 23-percent retail sales tax on their spending. See http://www.fairtax.org/site/PageServer?pagename=FAQs#1 under the heading "Is the FairTax progressive? Do the rich pay more and the poor pay less as a percentage of their spending?"

    Absolute falsehood. By the nature of the spending of the poor, middle class, and rich, it is clearly a PROgressive tax.

    Well the current Federal Income Tax is a tax on production yet I still go to work every day. Since production and consumption are inherently linked, then if you were a fair-minded person you should have an equal problem with the Federal Income Tax.

    The massive difference with the Federal Income Tax and the Fair Tax is the only through the Fair Tax do people have a CHOICE of what they can spend their money on (since via the federal income tax their money is automatically taken from their paycheck before they even receive the check. Hence, they will have much MORE of their hard-earn money to spend on items. If they were smart, they can spend their money on quality used items that would be free of tax.

    Again, with that logic, we shouldn't have a progressive income tax that automatically takes money from our paychecks when we work, since this would create a disincentive to produce (i.e. work). Yet, people like my wife, myself, and tens of millions others are out there every day. However, according to your logic, everyone who produces (i.e. works) is "dumb."

    What are these magical barriers that you speak of? As I have said before, the government creates price controls on billed procedures/visits that effectively cap what physicians can make, and these payments actually decrease over time as the cost of living goes up. This forces already-busy physicians to either cram more and more patients into the same limited time slot, or retire from the profession. The government also makes it illegal for physicians to charge for certain services. For instance, if a physician who is on call for his service is called at 2:00 AM by a patient with any "emergency" and spends 30 minutes deals with the patient and his/her family, he is unable to bill for his treatment recommendations, even though the patient has a right to sue this physician if they follow his recommendation and something goes wrong.

    They also cap the number of times a physician's service can bill in a 24 hour period (only one bill per day). For instance, if a patient is admitted by a physician who is on call for his service at 12:30 AM and discharged the same evening at 6:30 PM (eighteen hours later), Medicare allows only one bill. Thus, instead of this service being able to bill twice (for an admission and a discharge), they can only bill once. There are MANY more examples where the government is an obvious impediment on physician income.

    The AMA is an organization that supposedly represents physicians' interests, but I personally do not see how.
     
  5. skeptic-f

    skeptic-f New Member

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    I've got a question for the Flat Taxers? How do you get states and municipalities to go along with the concept? If they don't have a Flat Tax system as well, then how is a federal Flat Tax really flat? And what about government fees (i:e, driving licences)?
     
  6. Ethereal

    Ethereal Well-Known Member

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    Interesting. Please explain how an abstraction like a "business" can "engage in economic activity", or any activity, for that matter. I am always fascinated when people attribute human qualities to something they just claimed was a non-human entity.
     
  7. Iriemon

    Iriemon Well-Known Member Past Donor

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    The "prebate" is not an exemption of the tax on basic items as you claimed. The "prebate" is an amount of money given to every household, paupers and billionaires alike.

    Billionaires can spend it on their boat or plane or anything they want. So it is as much an exemption for luxury goods as it is for basic goods.

    Contrary to your assertion, the Fairtax does not apply to just "luxury" goods. There are exemptions and loopholes built into the so-called "fair"tax, but that is not one of them.
     
  8. Anikdote

    Anikdote Well-Known Member

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    That's a pretty perverted use of the term, I'm really not sure what else to say about it. Especially gasoline considering that public transit or walking isn't even an option for most jobs. You must not own a car or a home either, or you'd know that air filters aren't a luxury either if you have to drive to work or have central heating/air.

    It most certainly is, the most poor spend a significantly larger proportion of their income on goods that would be taxed by the "Fair" tax, so while the rate may be flat, the poor are disproportionately affected.

    Nope, even with the prebate they'd come out in the red, I'm assuming that's what you meant, otherwise the way you worded this would mean that retailers would actually mark down items for the poor, which we know isn't the case.

    You're confusing rebates with exemptions, they aren't the same.

    Ahh yes, a question being answered by the organization endorsing it, could you have possibly found a more bias source? Nope.

    Any and all consumption taxes are regressive, no matter how many caveats you want to throw in because the poorest folks spend a greater portion of their expendable income on goods and services than do the most wealthy.

    The best case you can possibly make is that it's flat (since the rate is the same for everyone), you cannot make a case that it's progressive. The case that it is regressive however is easy to make as I've doen already.

    All taxes are distortionary, I said that already. However, because much of our income taxes are paid by withholding the effects are partially unseen by the payee, unlike the consumption tax that would be realized at the point of sale and thus, influence buying decisions.

    The choice is only an illusion since spending isn't optional, further if there were a massive shift to used goods then there's no way the "Fair" tax could be revenue neutral, even at the 34% estimate. So basically it not only harms buying decisions, but also impacts production by incentivizing the purchase of used goods.

    It is true, but as mentioned, it's what is seen and felt that we react to, taxes taken through withholding have a weaker distortionary affect.

    It's not magic, it's licensing.

    Protects them from new entrants and thus competition.
     
  9. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    I really don't like the geoist platform. But I thoroughly agree with the point you're making in this post. Even those making a million a year, with inflation, are basically the new middle class being taxed to death. When 10s of millions go from 60-100k a year down to 20-60k a year, you have to pay for your bloated monster of a government somehow. The problem is both sides of the spectrum are guilty of this charge. The right does it so they can mask the fact the top tier really pay none comparatively, and the left do it because those with the most own them as well and they have to get their state revenue from somewhere.
     
  10. Vilhelmo

    Vilhelmo New Member

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    I disagree.

    From a moral position, the tax burden should fall upon (unearned) income that is derived from privilege (Economic Rent), leaving (earned) income derived from work free from taxation.

    From an economic position, the taxation of privilege, in the form of an Economic Rent Tax, is the most efficient form of taxation.
    An Economic Rent Tax, unlike all other taxes, does NOT add to prices, nor does not deter production, distort market mechanisms or otherwise create deadweight losses.
    Because the supply is inelastic, market rents depend on what people are prepared to pay, rather than on the expenses of rentiers, an Economic Rent Tax cannot add to prices.

    This was the Capitalist position in contrast to that of Feudalism.
     
  11. CourtJester

    CourtJester Well-Known Member

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    The current deficit is arguably due to reduction in the progressivity of the tax system.
     
  12. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    "Arguably" is the key word on that one. I know plenty who would argue the current trends walk hand in hand with the loss of workers/consumers through off shoring over the last 15 years, mixed with people who have money playing on the stock market to make more vs building businesses outside of the market, smothered in one nation's people paying for the police force of 200 nations. The government makes more than enough tax revenue to pay for everything internal and then some. You take away us paying interest on money so the Federal Reserve can back up every central bank in the world, to policing and saving the world, to the CIA agent drinking an espresso in Amsterdam, to the lack of tariffs on products coming from developing nations(which hits us two fold in damage), and America could supply a public option in healthcare while taxes its citizens less.
     
  13. Ndividual

    Ndividual Well-Known Member

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    That would be true ONLY if the massive spending increase is ignored. Federal manipulation of the money supply, having effect on the CPR, which in turn results in the illusion of economic growth keeps the working middle class in economic limbo, inflating the wealth of those in the upper classes, and costing more to provide for those who are dependent on the growing number of Federal redistribution programs.

    As a result we now have people who work to maintain a living, vote to be provided a living, and those who are able to profit regardless of the vote.
     
  14. Roy L

    Roy L Banned

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    A business is not an abstraction any more than the US Army is an abstraction. It is an entity created by law.
    By exercise of its legal capacity to do so.
    <yawn> Engaging in economic activity is not an exclusively human quality. Consider hypothetical Martians who might come to Earth to trade.

    Don't you get tired of always being proved objectively wrong every time you presume to dispute with me?
     
  15. FearandLoathing

    FearandLoathing Well-Known Member

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    Let's deal with trickle down first. I never believed in it...

    Canada elected a Conservative government in the early 2000's [a minority till 2011] and they cut income taxes across the board and began reducing the corporate rate.

    at the same time they began phasing out corporate subsidies.

    Canada's economy soared in comparison to the US and has continued to remain strong even through the 08 crash and continues to outpace the US in many sectors...

    That has been attributed to the tax cuts by numerous economists...


    So if you are saying, like global warming fanatics, that the science is "settled" on trickle down....this "socialist/********* [I get called both] needs convincing...a lot of convincing especially watching this country GROW while you guys were gutting the auto industry and laying off one in 3.7 workers. Yeah, convince me those higher taxes are working.

    BTW, Obama did NOT tax the rich. His tax hikes applied upper middle class.
     
  16. Ethereal

    Ethereal Well-Known Member

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    A "business" is just an aggregation of individuals, like the US Army. The "aggregate" is an abstract concept. Like idealized physical and chemical models, these abstract concepts can be useful for certain purposes, however, they do not fully represent or describe what occurs in reality. A "business" cannot be accurately described as perpetrating some act. Each specific act is done by a specific individual, and each act is the result of a deterministic process which can be traced back to its origins. What you are attempting to do is attribute individual qualities or attributes to an abstract collective entity.
     
  17. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    Of course what you're saying is right. But he was referring to law, which speaks volumes to the contrary of your evaluation. One does not sue the individual, when the wrong was committed under the flag of an entity, one sues the entity. Whether collectives are an abstract concept or not, they are regarded, under law, as an entity of their own. And rightly so. For a collective can act, therefore, a collective can be judged.
     
  18. reallybigjohnson

    reallybigjohnson Banned

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    I see alot of people mixing flat an progressive taxes with supply side or demand side economic policies. They have absolutely nothing to do with eachother. You can have a flat tax rate for everyone and still have lots of government spending as you method to try and grow the economy. They are separate things so people should stop mixing them together. One is just tax rates and the other is how revenue is actually spent.

    The question is answered simply by if you agree or disagree with the statement "All people should be treated equally by the law". If you agree with that statement than the flat tax is the ONLY tax you can have since everyone will have exactly the same percentage of their income taken from them. If you support a progressive tax then you believe that the law should apply to everyone differently. It is simply intellectually dishonest to say otherwise. I for one agree with the statement and thus support a flat tax. I think everyone should pay 15% with no exceptions. If you receive public assistance then the 15% comes out of two or three of your assistance checks every year.
     
  19. Roy L

    Roy L Banned

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    Neither one is just an aggregation of individuals. An aggregation of individuals would be something like all the people on a given street at a given time: they have nothing to do with each other other than the coincidence of all being on the same street at the same time. A business and the US Army are legal systems with defined purposes and powers.

    You are objectively wrong. OBJECTIVELY.
    But businesses and the US Army are not just aggregates. They are real entities.
    Yes, they do.

    You are just objectively wrong.
    Yes, it can, such as purchasing an asset or producing a product.

    You are just objectively wrong.
    That is false. When a car company produces a car, it is not done by a specific individual. Many people contribute, and the whole thing is effected by the company, not any individual.

    You are just objectively wrong. OBJECTIVELY.
    False.

    You are objectively wrong.
     
  20. Ethereal

    Ethereal Well-Known Member

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    You debate style has become such a pathetic spectacle, regurgitating the same tired and self-serving assertions over and over again. How am I supposed to respond to the intellectual equivalent of "nuh-uh!" ad naseum?

    You assert (but do not explain) that a business and the US army are both "real entities". How do you define a "real entity" in this context? What are this entity's properties or characteristics? Give me some descriptions and explanations because your empty assertions aren't cutting it.
     
  21. Roy L

    Roy L Banned

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    You are aware that when I identify facts of objective physical reality that prove your claims are objectively false, it is not the intellectual equivalent of "nuh-uh!"
    I have explained very clearly: they both have real powers and purposes defined in law and enforced by societal sanctions. You simply choose not to know the facts of objective physical reality that prove your assertions are objectively false. There is nothing I can do to make you willing to know such facts.
    It exists and acts in the objectively real physical world.
    It has physical existence, and is therefore not an abstraction.
    It is your assertions -- such as that a business is an abstraction -- that are empty. Also false, absurd, and dishonest.
     
  22. Ethereal

    Ethereal Well-Known Member

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    You mean when you claim facts of objective physical reality that are nothing more than your empty opinion.

    And how does that prove a "business" is a "real entity"?

    Blah-blah-blah.

    But only individuals actually exist and act in the objectively real physical world.

    If the US Army has "physical existence", then you should have no problem whatsoever describing its physical properties. Where, for example, would its center of gravity be located? What is its instantaneous velocity? What color is it?
     
  23. Til the Last Drop

    Til the Last Drop Well-Known Member Past Donor

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    Except people who live pay check to pay check. The great majority of the poor work. The workers with higher incomes get taxed to death for the government supplementation of the workers, who after getting their checks, are still poor. You want higher income workers to stop being taxed to death? Create a society where "work" and "poor" can't be used in the same sentence.
     
  24. Troianii

    Troianii Well-Known Member Past Donor

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    The trickle-down effect hasn't been disproven. Think for a moment (you seem familiar with US politics) the stimulus bills - did they give a big bump to economic activity? No, so you would think that they've been proven to have no effect, but the rhetorical counter is, "but it would have been *even* worse if they hadn't been done." The same rhetorical counter can be made (albeit more accurately) for trickle-down economics.

    There are a few advantages to a flat tax.

    1) a higher incentive for productivity. Under progressive taxation, the more productive you are (which translates to 'the more you earn') the less incentive there is to be further productive. Under a flat tax system, the incentive for productivity is always the same. A flat tax system would always provide better incentives for productivity.
    1b) a higher incentive for productivity due to the end of bracket incentives to stop working. It's a common error in progressive tax systems that could be more easily solved by making earnings taxed in tiers (for example, if the tax rate for incomes below $20,000 is 5%, then EVERYONE's income below $20,000 would be taxed at that level). This issue causes a disincentive to be productive, as someone nearing a bracket level could have his entire income taxed at a higher level and thus, ultimately, have a larger takehome (post-tax income) if he worked less.
    2) reduction in administrative costs. Speaking to our current system, we spend billions of dollars collecting taxes. We spend further hundreds of billions of dollars filing taxes. Our complicated system is an expensive system, and taxpayers would be saved hundreds of billions by instituting a flat tax.
    3) reduction in unproductive labor. Roughly 1% of workers are accountants or involved in tax law. Now, admittedly, many accountants do work that has nothing to do with taxes, and the profession would exist w/o taxes, but a good number exist because of complicated taxes. For arguments sake, let's assume that's 1/2, and so 0.5% of the workforce is involved in an unproductive field created by our complicated tax system. Retraining and re-employing those workers would make our economy more productive and be better for everyone.
    4) A flat tax system provides fewer artificial incentives, and so would create a system where market incentives are stronger and businesses would be more productive.
    5) In many cases, the rich would actually pay more. Consider GE, General Electric, which has paid 1.8% in federal taxes over 10yrs.
    6) Reduction in lobbying. It's no coincidence that GE is one of the biggest lobbyers. A flat tax would close loopholes and make lobbying less beneficial.
    7) A flat tax assures a more equal interest in the wellbeing of the country. When people don't serve their country, don't do any public service, and don't pay taxes, they are leeches contributing nothing. A tax system shouldn't lend itself to the breeding of leeches.
     
  25. Troianii

    Troianii Well-Known Member Past Donor

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    You, of all people, have no capacity for objectivity. I would say that your subjective assertions are the intellectual equivalent of "nuh-uh!", but I hesitate to apply the word intellectual to anything you do.


    Don't bother. "Blah-blah-blah" is more valuable than the nauseating childish whining you'll get from him, but mad props for the effort.
     

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