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Originally Posted by KMA-628
to everybody, thanks for the input, I took a few days off for the holiday (with another break coming up for my son's b-day on Sun.)
I have not had a chance to check out any of the links posted, but I will as soon as I can.
Smooth -
I read your post, but haven't had time to draft an appropriate response.
Sob -
Thanks.
A couple of quick things:
1) I had a talk with an old "friend" who is an economist in the academic sense. I don't really talk too much to the guy because we differ on many different aspects of the economy. Anyway, I asked for his opinion regarding the "regressive" idea of a consumption tax. His answer, and he is a decidedly liberal economist, is that regardless of how it looks, the low income riders make the plan progressive. The theory behind it is that most affluent people will always pay a higher proportion of their taxes because of the free ride that the lower incomes would get. A half of a percent would still be higher, propoertionally, to zero percent.
I kind of look at it this way: if it looks like a duck, walks like a duck, quacks like a duck, it must be a penguin.
2) As is obvious, I am in favor of taking strong looks at any proposal that involves replacing our current system. The evidence is just too vast against giving our system another "chance". At the onset of my research, I would have to say that I leaned towards the consumption tax as opposed to the "flat tax". I think my biggest reason had to do with the potential of the IRS to be abolished; that made any proposal look good in my mind.
That being said, after several discussions over the holiday with some extremely bright, but very liberal family members, I think that the "flat tax" needs to be looked at closely as well. I am wondering if it would be an easier transition as compared to a consumption-based system.
Anyways, it is better to be openly discussing the options rather than to be silently accepting a system that is flawed down to its very core.
Also, I found a couple of studies related to potential economic benefits. The numbers looked very good and I will post the study info when I have more time. The only problem I had with the studies is that they were not very current (i.e. pre-recession and pre-9/11).
Oh yeah, one more thing:
Smooth -
I only keep receipts related to my taxes, nothing else. The (what seems like) daily trips to Wal-Mart get discarded once I see that nothing needs to be returned.
On that note, I would like to look into maybe getting a research grant to do a long-term, in-depth study of the idea. I would like to have a cross-sampling of people who's finances would be scrutinized (over, maybe, five years) to see how they would be affected by (a) the current system, (b) a consumption-based system and (c) a flat tax.
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Just to reiterate so we aren't talking past one another:
Your initial source was claiming that flat taxes weren't inherently regressive. They are, however, and that's why patches need to be implemented to make them resemble a progressive tax structure.
Once those patches are in place, even liberal economists (and perhaps some of us other social scientists
)can be mollified. But the riders make it so, not the structure itself. So a couple of things:
a) I agreed that if we were to implement this new kind of structure, I would compromise in the following way--by making sure our measurement of low income people was accurate. That is, a self-sufficiency standard rather than our current outdated poverty threshhold.
b) we need to be watchful that those riders are swept out from the bill in its last implementation and/or taken out in the future when the public isn't paying attention and the code can be changed. Because the tax is regressive, but the riders correct it.
You may not have all your receipts, but the article I posted from the Progressive Institute claimed that even $75K families would benefit. If you're married and making dual income or something, you probably fit around there somewhere.
I would be concerned if I made between 18K (current poverty threshold for family of 4), 38K (self-sufficiency standard for my area), and 75K. My guess is a lot of people fall in the $30K to $75K income bracket, but I haven't looked it up on the census data.