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Originally Posted by n0nsensical
A flat tax with a large income exemption of maybe $25,000-$35,000. That is plenty of money to live on and it's a progressive tax: say the exemption is $30,000 and the tax rate is 24%. You make $30,000, you pay 0%. $60,000, 12%. $100,000, 17%. $1,000,000, 23%. That seems pretty fair to me. Obviously the numbers may need some tweaking as I just pulled them out of thin air. The richest end up paying more than what they pay now and still have millions left over, and the poorest pay equal or less by definition, 0% (unless we start PAYING them for making less money, oh wait, we already do). Also, capital gains are not taxed under a different system, all income is income, which I imagine would make up some of the difference created by the exemption as the current capital gains rate is ridiculously low. My logical mind can't seem to pick a hole in this, so tell me why Congress, which as we all know ALWAYS acts in the best interest of the people without any regard for political goals, wouldn't want to implement this.
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Well, first, as was already pointed out, what you describe is not a "Flat Tax". Basically, you are describing the current system, with different numbers.
You do not mention deductions? Leave them out or leave them in?
Also, just giving this a cursery going-over, I don't see the math working out. I think this idea would fall far short of current revenues.
Mainly because you have the "rich" paying less under your system than they do under our current system. Kinda hard to prove unless you do an in-depth model based on how many people reside at what income level.
Also, is this per person? What if two people are married? What about kids? What about "head of household"?
You should also note: As capital gains tax rates went down, the amount of money received by the gov't from capital gains taxes have gone up. Historically, you can watch the shift as equilibrium was attempted. No sources, only my own research which I have put together in an Excel graph--if you want to see it PM me--I collected the data and then made a visual chart that helped my understand the trend even more (and yes I did it just for fun). It is very interesting to see how capital gains revenues reacted to capital gains tax rates....if you look really close, you can see how we have almost achieved an "ideal" number (i.e. any more results in a loss in revenue and any less results in a loss of revenue).
From your second post:
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Originally Posted by n0nsensical
By "plenty to live on," I mean enough to survive in reasonable conditions. That is the same for everyone. You're not going to be homeless on the street and starving if you can't afford three new PS2 games a week. Anyway, the point is not that the exemption should be the exact amount you need to survive, I'm just saying the exemption is sufficient such that people with a lower income should have nothing to complain about.
How it's different from the current structure is that it's EXTREMELY simplified. This is one of the major reasons always cited by Republicans who want to shift to a flat tax (and whether my model is a flat tax by definition, I don't know and it doesn't matter, I just meant there is only one tax rate). No more exemptions (other than the one), deductions, and you don't need to be a tax attorney to do your own taxes.
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What if I want 3 new PS2 games per week? Who are you to tell me I shouldn't? If I do my job well, I am successful at it, why should you dictate how my money is spent?
Just to clear this up, because you seem to misunderstand: Your proposal is not a flat tax. There is not "only one tax rate", but several.
I do, however, agree with you about the part about not needing a tax accountant in order to do taxes.
One of the ideas behind a true "Flate Tax" is that everybody would have the same tax return and it would be postcard-sized.
Also, you should note: Certain benefits under the current plan allow many, many people making under $30K to receive back more money than they pay--in essence, your plan would cost them money (money they don't deserve, IMO, so I kinda support you on that point).
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Originally Posted by n0nsensical
No more exemptions (other than the one), deductions, and you don't need to be a tax attorney to do your own taxes.
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What about kids?
We pay a lot for the upkeep of these little monsters, getting a bit off of the taxes is very helpful.