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Flat Taxation  
User currently offlineCfalk From , joined Dec 1969, posts, RR:
Posted (13 years 3 months 3 weeks 2 days 17 hours ago) and read 809 times:

This topic popped up in another string, but should be seperated, I think.

What does everyone think about flat taxation?

The current Income Tax standard, used in most countries, is for an increasing tax rate, with higher rates for the rich, but with a ton of loopholes. The net result is that the rich actually pay much less than their rate would imply, because they can afford top-notch tax advisors who know where all the loopholes are. The other 99% of the population does not have this advantage, and have to pay more in order to make up for the difference.

What if everyone had a flat tax rate. 15% for everyone. No loopholes, no deductions. 15% of whatever you make - period.

What do you think?

Charles

37 replies: All unread, showing first 25:
 
User currently offlineDesertJets From United States of America, joined Feb 2000, 7780 posts, RR: 16
Reply 1, posted (13 years 3 months 3 weeks 2 days 16 hours ago) and read 750 times:

The long and short of it is that it wouldn't work. Revenues would fall VERY short... and the wealthiest would receive a huge tax cut. In the US the top bracket is 39%. You could argue that then the wealthy would then go and reinvest that money elsewhere... but there is still the issue with social welfare programs and the like that don't really get invested in in that manner.


Stop drop and roll will not save you in hell. --- seen on a church marque in rural Virginia
User currently offlineCfalk From , joined Dec 1969, posts, RR:
Reply 2, posted (13 years 3 months 3 weeks 2 days 13 hours ago) and read 746 times:

The Arguement is however that wealthy people never pay 39%. Once they have parked their money in tax shelters and other legal loopholes, they end up paying an even lower rate than the middle class. I doubt that Bill Gates pays more than 10-15% right now.

Charles


User currently offlineCapt.Picard From , joined Dec 1969, posts, RR:
Reply 3, posted (13 years 3 months 3 weeks 2 days 12 hours ago) and read 745 times:

Interesting topic Charles.

I'm not sure where I stand on your proposition; on the one hand you state that many people in the top end of the income bracket get away with paying less than they should; but again on the other hand, there are probably just as many who do pay their income tax in full, regardless of their income level.

As I don't as yet need to pay Income tax (student), the subject is a fairly grey area for me.

It really depends upon how widespread the problem you describe above is-it may not be as prevalent in the UK, I really don't know.

Apart from all the "it's not fair" issues flat taxation would raise, there might be a problem in raising sufficient tax revenues, if all members of society were only obliged to pay 15%, for investment in health, education, and what have you (etc.)

Surely the present system, although imperfect, at least raises higher revenues than any flat tax rate would raise?

As I said, I'm no expert, but those are the sorts of questions that come into my head when discussing flat taxes etc.

Rgds,
CP


User currently offlineCorey777 From , joined Dec 1969, posts, RR:
Reply 4, posted (13 years 3 months 3 weeks 2 days 7 hours ago) and read 732 times:

Instead of a flat-tax per se, I would simply eliminate the tax-return and deductions BS. You get a percentage deducted from your paycheck, stock dividends, interest, etc. and that's it. But the wealthier you are, the more you pay, ie:

<$20000-10%
$20K-$40K-20%
$40K-$80K-30%
$80K-$100K-40%
>$100000-50%

Corey777


User currently onlineSuperfly From Thailand, joined May 2000, 39879 posts, RR: 74
Reply 5, posted (13 years 3 months 3 weeks 2 days 7 hours ago) and read 730 times:

I had stated this in the other topic about the 'Senate'.

I agree 100%.

Problem is, getting rid of the homeowners intrest tax deduction would be a tough sell.

Banks would have a fit because there would be less of incentive for people to buy property.
The 'family values' conservatives would have fit because there would be no right-off for every child you have.

There will never be a flat tax here in the United States at least.
There is just too much at stake if the current system goes under.



Bring back the Concorde
User currently offlineMbmbos From United States of America, joined May 2000, 2597 posts, RR: 1
Reply 6, posted (13 years 3 months 3 weeks 2 days 7 hours ago) and read 729 times:

If you're talking about a flat tax rate for federal income taxes, I'm all for it. I agree with CFalk that given all the tax hedges, a flat tax rate would more than make up revenues lost to our present progressive system.

As for progressive taxes, I think there's a place for them. Property taxes, luxury taxes, makes much more sense for a progressive tax rate since you're addressing greed directly.

- MBM


User currently offlineCfalk From , joined Dec 1969, posts, RR:
Reply 7, posted (13 years 3 months 3 weeks 2 days 7 hours ago) and read 726 times:

Then you have the big bracket bumps.

Someone who makes $19,000 per year pays $1,900 in tax, therefore has $17,100 net after tax income.

He gets a pay raise to $21,000, pays $4,200 in tax, and therefore has $16,800 net income - less than before.

That's hardly fair, is it?

What can be more fair than everyone paying the same percentage rate?

If you want to have an effectively low rate for the very low earners, you can apply the following: The first $10,000 (for example) you make is tax free. The flat rate (15% for example) applies on everything therafter.

So for someone making $10,000, he pays nothing.

$20,000, effective rate is 7.5%.

$50,000, effective rate is 12%

$1,000,000, effective rate is 14.85%

So you can have your "progressive" taxation, and with this system, you don't get penalized if you get a salary raise which bumps you into the next bracket (this has happened to me a couple of times). Of course, the level of the deduction is a political game.

Comments?

Charles


User currently offlineD L X From United States of America, joined May 1999, 11336 posts, RR: 52
Reply 8, posted (13 years 3 months 3 weeks 2 days 6 hours ago) and read 721 times:

Nope, CFalk, progressive rates do not mean bumps, at least not the way the US System is set up.

I think the lowest bracket currently is 15%. So, everyone pays 15% of their first $20,000. If you make more than that, you pay 28% of the NEXT $40,000, 31% of the next $40,000 etc. (All of these break numbers are approximate. I don't know exactly where they are.)

Off topic somewhat, but this is also key in the Bush tax cut. The lowest bracket is to get a retroactive cut from 15% to 10%. That means that EVERYONE who pays taxes will get a check in the mail. If you make more than $20,000, you'll get $1000 off this year.



Send me a PM at http://www.airliners.net/aviation-forums/sendmessage.main?from_username=NULL
User currently offlineCapt.Picard From , joined Dec 1969, posts, RR:
Reply 9, posted (13 years 3 months 3 weeks 2 days 5 hours ago) and read 717 times:

Hi Charles,

If it is indeed true the same, or higher revenues can be generated by the system you propose, it does sound like quite a good idea; however, I haven't heard all the arguments, and my opinion is of somewhat limited validity, considering I don't actually have to pay any income tax yet.

Rgds,
CP


User currently offlineDesertJets From United States of America, joined Feb 2000, 7780 posts, RR: 16
Reply 10, posted (13 years 3 months 3 weeks 2 days 4 hours ago) and read 708 times:

Regarding the difference between marginal and effective tax rates, I really don't know how much the wealthiest folks shave off of their income taxes, somehow I doubt Bill Gates effective tax rate is less than 15%. If someone can get a hand on his yr 2000 1040 and prove me wrong...  Smile/happy/getting dizzy.

The thing with tax rates and tax laws is that you can cook your books to show what you want to show.

Maybe I am just bitter b/c I owe the IRS $240 in taxes. My paychecks from work were all tax exempt... I think my income from salary was $4300, which is all exempt. Except the fact that I have investments in my name, all from gift money from deceased grandparents, which I had a capital gain on.

But write-offs are an important part. The government wants to incourage homeownership b/c (besides being part of the great American dream :-\) it is a sound investment for an individual to make. Write-offs for children and college education are designed to help defray the costs of having kids, turns out we aren't cheap.



Stop drop and roll will not save you in hell. --- seen on a church marque in rural Virginia
User currently offlineCapt.Picard From , joined Dec 1969, posts, RR:
Reply 11, posted (13 years 3 months 3 weeks 2 days 4 hours ago) and read 709 times:

Hi Charles,

I raised your idea at dinner today in College, and it met strong opposition (the "that's simply not fair" brigade), plus a few economist students remarked that flat taxation would never generate more revenue than staggered/income-based taxation.

Both may be wrong, just letting you know what the arguments are.

From my personal moral standpoint, your idea seems a fair one, and I don't necessarily see the reason behind the "it's not fair" attitude.

BTW, you're right about progressive taxes biting into incomes, but that's just the way it works I suppose.

Cheers,
CP



User currently offlineDG_pilot From United States of America, joined Sep 1999, 856 posts, RR: 2
Reply 12, posted (13 years 3 months 3 weeks 2 days 3 hours ago) and read 703 times:

I have never seen the the logic behind the "it's not fair" attitudes. Rich people earn their money somehow--just like everyone else, so why tax their financial success? Just because they have more money?

You know--if liberals just happened to be against income tax--they would complain that it "discriminates" against wealthy people. You think?


User currently offlineN400QX From , joined Dec 1969, posts, RR:
Reply 13, posted (13 years 3 months 3 weeks 2 days 2 hours ago) and read 698 times:

While I am against the income tax (and the Sixteenth Amendment) in the United States, I would much rather see a flax tax than a progressive tax if we're going to have one at all. It is simply the ONLY fair way to tax income - everyone pays the same portion of their income. Someone making a decent income of $100,000 at 15% would pay, obviously, $15,000. Someone making much less at $33,000 would also pay 15% which is $4,950. You make three times as much as someone else, you pay three times as much in taxes. Simple as that.

I'd say thats pretty fair, wouldn't you say?

In response to someone else's post about people making six figures having to pay 50%... that is HORRIFIC. The government should NEVER take anything near half of your income. That is simply confiscatory. So is 39.6%, but 50% is WAY over the top... thats Europe-like.

And everyone whining that it "wouldn't bring in enough revenue".... WAKE UP! Thats a GOOD thing.

Ya know, everyone- if we just repealed the 16th, we wouldn't have to worry about this stuff.  Big thumbs up


User currently offlineCapt.Picard From , joined Dec 1969, posts, RR:
Reply 14, posted (13 years 3 months 3 weeks 2 days 2 hours ago) and read 696 times:

Why is not bringing in "enough" revenue a good thing?

Surely the more money the Goverment has (to invest in education, health etc. etc.), the better?

Rgds,
CP


User currently onlineSuperfly From Thailand, joined May 2000, 39879 posts, RR: 74
Reply 15, posted (13 years 3 months 3 weeks 2 days 1 hour ago) and read 686 times:

A Flat Tax in the United States will never happen!
What is the point in arguing about it?
There is too much at stake with the current tax laws.
The left and the right will scream if they’re ever to be a flat tax.
The 'family values' right will have a fit because it would discourage marriage and having children. It would also discourage homeownership because there would be no tax right off.
The left wouldn't be happy because it would decrease funding for Social Security, Public Health and Education.
It's interesting how our Government always finds money to waste in our 'Offense' (not Defense) Industry and Israel. Regardless of how tight funds are here.

 Smile



Bring back the Concorde
User currently offlineCapt.Picard From , joined Dec 1969, posts, RR:
Reply 16, posted (13 years 3 months 3 weeks 2 days ago) and read 683 times:

Hi Superfly,

I don't know much about the American political system, but why should the funding of education, health and the social services system be the sole preserve of the "left"?

In the UK, ALL parties (whether "left", "right" or "centre"), make the funding of such resources a top priority, and rightly so.

The only way to develop, in every sense of the word, is to provide EVERYONE with as good an education as is possible.

I am sure both the Republicans & Democrats realise the importance of having an educated society, and adequate provision of other services (health, minimum income, adequate pensions etc.).

Rgds,
CP


User currently offlineSccutler From United States of America, joined Jan 2000, 5519 posts, RR: 28
Reply 17, posted (13 years 3 months 3 weeks 1 day 21 hours ago) and read 676 times:

To everyone out there, don't be deceived when you read about the marginal tax rates, since no one ever seems to talk about the "hidden tax"- before you EVER get to the graduated "income" taxes, you also pay- off the top, no deductions, 15.3% payroll taxes for Social Security (FICA) and Medicare (you may only see the 7.65% that is shown on your paycheck, but since your employer has to pay the same amount besides, it's really 15.3% of your income). So if you are in the 31% tax bracket, you're really paying 46.3%- before you ever get to any state income taxes you may have to pay, or gas taxes, or sales taxes, or excise taxes, or tolls or user fees.

Superfly-

A flat tax would be simple, straightforward, easily-administered, [relatively] fair... so you're right, it will never happen. Legislators would be struck dumb by the prospect of not being able to use tax policy to attempt to regulate behavior of which they do not approve.

PS- come on over to Dallas one of these weekends and help me work on the brakes on the Caddy (I almost plowed into a rice-burner at an intersection last week!)... and the A/C (have you priced R-12 lately? Ouch!); and I need to put a new convertible top on it - that's some work! Owning these big ol' beasts is a responsibility, sure enough.

CP-

As you are in the UK (right?) you may not be aware of one fundamental principle here- the federal government is not the dominant provider of services here in the US (or, is not supposed to be). In our system of government, under the Constitution, the states are supposed to be dominant, with Washington providing the things that it is uniquely capable of providing (like protection of constitutional freedoms, delivering the mail, defense of the national borders, protection of interstate commerce rights). Thus, denying the federal govenment much of the money which it now collects doesn't mean government cannot spend money on common good things like education, etc.; rather, it means that the taxing for such programs (and the decisions regarding implementation of such programs) can be doen at the state or local level, where (by the way) the elected representatives are more likely to be (1) knowledgeable about; and (2) responsive to; the needs of their constituents.

The federal government has used its ability to tax and spend with substantial effect, resulting in the growth of government as an industry (as opposed to being a service to the people and to the states). Unfortunately, the further-removed government is from the people (eg, federal vs. state, county, city or precinct), the less-efficient or responsive it tends to be in the dischrage of its duties.

Now, I have to go and discharge some of my duties as a parent. I am the weakest link. G'bye.



...three miles from BRONS, clear for the ILS one five approach...
User currently onlineSuperfly From Thailand, joined May 2000, 39879 posts, RR: 74
Reply 18, posted (13 years 3 months 3 weeks 1 day 21 hours ago) and read 675 times:

Capt.Picard:
That's exactly what I wanted to point out.
The right could care less about those programs. That's the problem with the right here in the US. The conservative parties in Europe are more open-minded than the ones here in the US.

Sccutler:
I'd love to help you out with your Caddy next weekend.
Problem is, I'll be in Cancun Mexico relaxing in the sun.  Sad



Bring back the Concorde
User currently offlineDeltaRNOmd-80 From , joined Dec 1969, posts, RR:
Reply 19, posted (13 years 3 months 3 weeks 1 day 21 hours ago) and read 673 times:

I agree with DG_Pilot and N400QX, why penalize the rich just because they earn more? Did they not have to earn their success? Basically, life is what you make of it. You get the poor slobs and you get the successful people. Letting the poor slobs off the hook for the opportunities they didn't take advantage of (slacking off in school, etc) is ridiculous. I would support a flat tax, it is the only fair way.

User currently offlineJwenting From Netherlands, joined Apr 2001, 10213 posts, RR: 18
Reply 20, posted (13 years 3 months 3 weeks 1 day 19 hours ago) and read 667 times:

There has been a proposal leaked in the Netherlands by one party (maybe testing the waters for the next election) that proposes a flat income tax of 35%, combined with higher direct taxes (sales tax, etc.) and an almost complete elimination of tax-cuts (or else making taxcuts available only to low-income people).
In theory, this would mean no drop in revenues (according to their calculations).
It sounds like a fair plan, if that is all there were to it... I do object though to the "income dependent" cuts that are proposed. If you advocate a flat rate, everything should be flat and people with lower incomes should not get larger breaks (in percentages).



I wish I were flying
User currently offlineDG_pilot From United States of America, joined Sep 1999, 856 posts, RR: 2
Reply 21, posted (13 years 3 months 3 weeks 1 day 19 hours ago) and read 667 times:

""That's exactly what I wanted to point out.
The right could care less about those programs. That's the problem with the right here in the US. The conservative parties in Europe are more open-minded than the ones here in the US.""

The Conservatives care about all that, it is just that we like to see individual responsibility, personal freedoms and liberties, and accountability. We like to have control over our own affairs--rather then some politician.

I have never understood why some are against government at the local levels--where it is more efficient, accountable, flexible, and responsive to the constituents.

That is another thread however.

Once again Superfly, just because Conservatives do not agree with your platform, DOES not make us closed minded. Such a thought is moronic.


User currently offlineArchie Bunker From United States of America, joined Jul 2000, 401 posts, RR: 0
Reply 22, posted (13 years 3 months 3 weeks 1 day 19 hours ago) and read 668 times:

 Sleepy


User currently offlineCfalk From , joined Dec 1969, posts, RR:
Reply 23, posted (13 years 3 months 3 weeks 1 day 18 hours ago) and read 665 times:

Flat Tax of 35% in Holland, + VAT etc.?!? What a ripoff!

I remember a few years ago a study that if a flat tax was imposed in the U.S. at 17%, The revenues would be virtually the same as was at the time. In fact there would have been considerable savings because the IRS could be dramatically downsized, since tax returns suddenly get very, very simple.

That in fact is the whole problem. Can you imagine the disruption a flat tax and a 1-page return would cause to the industry that has grown up around tax advisory and accountancy? I know my parents, who live in the U.S., have to file around 250 pages each year, and of course, he can't do it himself, and pays a company like HR Block or Merrill Lynch to do it for him.

These companies' lobbying against any simplification would be tremendous.

Charles


User currently offlineCapt.Picard From , joined Dec 1969, posts, RR:
Reply 24, posted (13 years 3 months 3 weeks 1 day 16 hours ago) and read 659 times:

Charles,

As I said before, the flat taxation idea seems a good one.

Scuttler & others,

Thanks for your info on the American political system; much appreciated-I had forgotten that each state set it's own taxes-I suspect there are some Federal Taxes too though-especially the ones I will be paying to fly within the US this summer! Big grin

As regards social services, I do agree with the accountability argument, but one must remember that there are a huge number of people out there that depend on social services for reasons unrelated to "dropping out" and "being lazy" etc. etc.

And let's not even get started on the similar, but much greater problems the US faces (resulting in very strict entry regulations-thankfully as a Brit, I don't need a visa).


As some of you will no doubt know, Britain receives a HUGE number of asylum seekers every day, as well as immigrants form a large number of our ex-colonial possessions & the Commomwealth.


Most of them, inevitably, will have come with little or no money at all-and we are then obliged to provide these people with a whole host of services-the Human Rights convention that was fully adopted by Britain in 1997, demands that the Government provide society with the resources to "exercise their rights & live a good life-regardless of origin".

Whichever way you interpret that, it is still an incredibly expensive bil to conform to-and the money needs to come from somewhere; as I said, I agree with Charles' proposition, as long as it does not impair my country's ability to provide our society with the resources to excercise their rights & liberties........etc. etc. etc. Big grin

Rgds,
CP


25 Post contains links Capt.Picard : I recommend watching this recent feature on CNN; it describes some of the issues addressed here-primarily it's relevance is linked to the importance o
26 JetService : One thing no one has mentioned that should be mentioned; with the flat tax proposals, generally the first $30,000 is not taxed at all. After that, aro
27 Post contains images N312RC : I think Im gonna join the Anarchy movement!!
28 Capt.Picard : N312RC, Strangely enough, many fear that "too much" democracy ultimately leads to anarchy; which is why all critical laws are enforced-and thus one co
29 Superfly : JetService, I guess you didn't read my post. I specificly addressed the mortgage tax deduction and the 'family values' conservatives having a fit beca
30 Cfalk : Superfly, I'm a conservative, and I have absolutely no problem with eliminating those and every other exemption. Flat taxes for the 21st century! Char
31 Post contains images D L X : You're not the kind of conservative he's talking about. You're a fiscal conservative. (Like me.) He's talking about the religious conservatives that l
32 Maniac : From an economic standpoint: Do not confuse marginal tax rate with "real" tax rate. The rates you hear mentioned in the Bush tax cut proposal are marg
33 Pba_durst : Taxes can be debated ad infinitum with little actual difference being made. However, I did want to refute an earlier suggestion in this thread that a
34 JetService : Superfly, sorry bub. I did read your post, but I guess I did misunderstand. I was thinking you meant homeowners wouldn't want a flat tax simply becaus
35 FlyBoeing : Here're my two cents: 1) Flat taxes on top of all income over a certain base (realized capital gains plus wages) are a good idea. There is no marginal
36 Cfalk : Other than perhaps donations to charity, I would argue against ANY deductions. The idea behind the flat tax is simplicity. Anyone with a 3rd grade edu
37 Post contains images Corey777 : In response to someone else's post about people making six figures having to pay 50%... that is HORRIFIC. The government should NEVER take anything ne
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