Quote:
Originally Posted by Derwood
flat tax and fair tax are two different things. this chart shows that a fair tax (ie only taxing spending above the government issued prebate) is actually regressive, as the rich spend a far smaller % of their income on living expenses. Someone making $40k probably spends close to 100% of their yearly income on expenses, meaning they are being taxed on nearly all of their income. The rich are saving a lot of their income and spending a smaller % of it on expenses, and are thus paying taxes at a lower rate (though are being taxed more total dollars)
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It is true that someone who is making say 100,000 dollars a year and only spends 50,000 a year will pay a lower percentage in taxes....that year. But when he eventually takes that money out of savings and spends it, BAM! he pays tax. There is no escape.
But what if he invests that money and makes a profit? Then when he tries to spend those profits they also get taxed!
I realized what the 8,000 dollar figure was, and it is misrepresented in that graph. The 8,000 dollars represents the amount of money reimbursed by the government...it is a reimbursement for taxes paid on poverty level spending, which makes spending up to about $25K/year tax free which your chart fails to accurately reflect. That chart makes it look like every dollar over the first 8,000 is taxed which, I think, is deliberately misleading.
Additionally, someone who makes 50,000 per year will, after the prebate, only pay taxes on about half their income, so they will be paying a rate of approximately 12% whereas someone who is making a million a year will pay the full 23%.