Comments on: Flat Tax – Fair Tax http://www.thedebthawk.com/flat-tax-fair-tax Get Out of Debt Using Disciplined Personal Finance Sat, 06 Mar 2010 15:38:48 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: My Weekly PF Blogger Roundup » JoeTaxpayer http://www.thedebthawk.com/flat-tax-fair-tax/comment-page-1#comment-284 My Weekly PF Blogger Roundup » JoeTaxpayer Tue, 10 Nov 2009 12:05:25 +0000 http://www.thedebthawk.com/?p=312#comment-284 [...] Hawk takes another crack at the Flat Tax. I’m always interested in reading about this when the topic is raised, unfortunately, I think [...] [...] Hawk takes another crack at the Flat Tax. I’m always interested in reading about this when the topic is raised, unfortunately, I think [...]

]]> By: Bronson http://www.thedebthawk.com/flat-tax-fair-tax/comment-page-1#comment-258 Bronson Tue, 03 Nov 2009 15:33:59 +0000 http://www.thedebthawk.com/?p=312#comment-258 Will someone do me a favor and show me ANY flat income tax proposal before congress that works the way it is stated here? They all have an exemption/deduction level that is GREATER than the current system and none propose a 15% rate. They all treat wage income completely different than weath income. In his 1999 presidential campaign, Steve Forbes stated that a family of four wouldn't pay taxes on the first $36,000. At the time, under the current system the exemption/standard deduction level for a family of four, was less than $20,000. If adjusted for inflation, the family of four exemption under the Forbes plan would be $48,000 today. The lowest PERSONAL INCOME TAX rate proposed is 19%, not 15%. That is ONLY levied on wage income, not income from wealth, so many of those supporting it will pay zero as all their inocme comes from dividends and capital gains. In addition there is a 19% tax on BUSINESS income (minus wages and expenses) and the current PAYROLL TAX tax is continued...which will probably end up much higher to fund it. The combination of these taxes make the cost much, much higher than 15%. Don't get me wrong, I don't feel capital should be taxed, but to do that under an income tax means those still producing are the only ones carrying the tax burden. NO ONE has proposed an income tax system that applies an equal percentage to every citizen on all income. That is a pipe dream. So assuming we are talking reality here, the flat income tax as actually proposed will convince an even greater number of Americans that government is free which leads to bigger (not better) government and will treat the income of workers completely different than the income from wealth. Additionally, with society heading to a cashless society and electronic filing/reporting being the rage, a flat tax will leave us with the simpliest of systems; government can simple track you, tell you what you owe and take it from you with no action on your part. That might be simplicity, but it is not freedom. That is one of the biggest reasons I support the FairTax. It visibility untaxes spending on basic necessities and it does it equally for all. It taxes consumption of wealth at the same level as consumption of wages. It is clearly and equally visible to all under the bright lights of the cash register. We will not have responsible, accountable government until we have that level of visibility. Will someone do me a favor and show me ANY flat income tax proposal before congress that works the way it is stated here? They all have an exemption/deduction level that is GREATER than the current system and none propose a 15% rate. They all treat wage income completely different than weath income.

In his 1999 presidential campaign, Steve Forbes stated that a family of four wouldn’t pay taxes on the first $36,000. At the time, under the current system the exemption/standard deduction level for a family of four, was less than $20,000. If adjusted for inflation, the family of four exemption under the Forbes plan would be $48,000 today.

The lowest PERSONAL INCOME TAX rate proposed is 19%, not 15%. That is ONLY levied on wage income, not income from wealth, so many of those supporting it will pay zero as all their inocme comes from dividends and capital gains. In addition there is a 19% tax on BUSINESS income (minus wages and expenses) and the current PAYROLL TAX tax is continued…which will probably end up much higher to fund it. The combination of these taxes make the cost much, much higher than 15%.

Don’t get me wrong, I don’t feel capital should be taxed, but to do that under an income tax means those still producing are the only ones carrying the tax burden.

NO ONE has proposed an income tax system that applies an equal percentage to every citizen on all income. That is a pipe dream.

So assuming we are talking reality here, the flat income tax as actually proposed will convince an even greater number of Americans that government is free which leads to bigger (not better) government and will treat the income of workers completely different than the income from wealth.

Additionally, with society heading to a cashless society and electronic filing/reporting being the rage, a flat tax will leave us with the simpliest of systems; government can simple track you, tell you what you owe and take it from you with no action on your part. That might be simplicity, but it is not freedom.

That is one of the biggest reasons I support the FairTax. It visibility untaxes spending on basic necessities and it does it equally for all. It taxes consumption of wealth at the same level as consumption of wages. It is clearly and equally visible to all under the bright lights of the cash register. We will not have responsible, accountable government until we have that level of visibility.

]]> By: Financial Samurai http://www.thedebthawk.com/flat-tax-fair-tax/comment-page-1#comment-255 Financial Samurai Tue, 03 Nov 2009 13:47:48 +0000 http://www.thedebthawk.com/?p=312#comment-255 Good point Joe! All about a 5 year PHASE-IN process to reduce shock! Good point Joe! All about a 5 year PHASE-IN process to reduce shock!

]]> By: Tom http://www.thedebthawk.com/flat-tax-fair-tax/comment-page-1#comment-253 Tom Tue, 03 Nov 2009 13:41:10 +0000 http://www.thedebthawk.com/?p=312#comment-253 @MLR The taxes you describe as "regressive" are not in fact regressive (http://en.wikipedia.org/wiki/Regressive_tax). They are still progressive. All of those taxes are set as percentages, which means they automatically increase. A regressive tax is one where the rate decreases - usually in the form of a flat fee (e.g. everyone pays $100). A flat tax rate would still be progressive - you earn more, you pay more. It would just be less progressive than our current system. @MLR The taxes you describe as “regressive” are not in fact regressive (http://en.wikipedia.org/wiki/Regressive_tax). They are still progressive. All of those taxes are set as percentages, which means they automatically increase. A regressive tax is one where the rate decreases – usually in the form of a flat fee (e.g. everyone pays $100). A flat tax rate would still be progressive – you earn more, you pay more. It would just be less progressive than our current system.

]]> By: JoeTaxpayer http://www.thedebthawk.com/flat-tax-fair-tax/comment-page-1#comment-252 JoeTaxpayer Tue, 03 Nov 2009 13:14:11 +0000 http://www.thedebthawk.com/?p=312#comment-252 If I recall correctly, when Steve Forbes ran for president, the right number was 17% or so, just a bit higher than the 15% you suggest. As with most shifts in any financial structure, it's great in theory, but the shift itself is what's painful. What about people who in 2010 start the Roth conversion, paying 25% or 28% tax to convert, only to find years later, that the flat tax is 15-17%. The financial math of landlording is what it is. The shift to a flat tax can have an unintended consequence of trashing realestate prices for all of us (maybe) or raising the cost of rental units to make up for the tax shift. I'm in favor of tax simplification, I just am concerned about the potential shock to the system. Joe If I recall correctly, when Steve Forbes ran for president, the right number was 17% or so, just a bit higher than the 15% you suggest.
As with most shifts in any financial structure, it’s great in theory, but the shift itself is what’s painful. What about people who in 2010 start the Roth conversion, paying 25% or 28% tax to convert, only to find years later, that the flat tax is 15-17%.
The financial math of landlording is what it is. The shift to a flat tax can have an unintended consequence of trashing realestate prices for all of us (maybe) or raising the cost of rental units to make up for the tax shift.
I’m in favor of tax simplification, I just am concerned about the potential shock to the system.
Joe

]]> By: Financial Samurai http://www.thedebthawk.com/flat-tax-fair-tax/comment-page-1#comment-249 Financial Samurai Tue, 03 Nov 2009 03:54:51 +0000 http://www.thedebthawk.com/?p=312#comment-249 Hey Debt Hawk! Good to see you in support of a simple and equitable flat tax system! I could have used your backing during the ferocious battle I had over on my site. :) At any rate, it's a great discussion that just keeps on going and going and going. When I worked at McDonald's for $3.3/hr, I supported the flat tax system. Now that I make more, I'm still in support of equality for all. Hope to see you around debating our topics at Financial Samurai one day and I look forward to reading your posts too. Best, FS Hey Debt Hawk! Good to see you in support of a simple and equitable flat tax system! I could have used your backing during the ferocious battle I had over on my site. :)

At any rate, it’s a great discussion that just keeps on going and going and going. When I worked at McDonald’s for $3.3/hr, I supported the flat tax system. Now that I make more, I’m still in support of equality for all.

Hope to see you around debating our topics at Financial Samurai one day and I look forward to reading your posts too.

Best,

FS

]]> By: W G Peters http://www.thedebthawk.com/flat-tax-fair-tax/comment-page-1#comment-248 W G Peters Mon, 02 Nov 2009 22:17:44 +0000 http://www.thedebthawk.com/?p=312#comment-248 I favor a national sales tax like the Fair Tax over a flat income tax. A Sales tax discourages spending and encourages savings while a flat income tax does not. In any event, it would be good to get rid of all the hidden taxes that inflate the cost of everything we buy, such as the federal tax on tires. I also think that there should be no taxes on business since all business taxes are ultimately paid by the consumer of the product or services rendered. I favor a national sales tax like the Fair Tax over a flat income tax. A Sales tax discourages spending and encourages savings while a flat income tax does not. In any event, it would be good to get rid of all the hidden taxes that inflate the cost of everything we buy, such as the federal tax on tires. I also think that there should be no taxes on business since all business taxes are ultimately paid by the consumer of the product or services rendered.

]]> By: MLR http://www.thedebthawk.com/flat-tax-fair-tax/comment-page-1#comment-247 MLR Mon, 02 Nov 2009 20:57:23 +0000 http://www.thedebthawk.com/?p=312#comment-247 "Another problem that I have with the current tax code is that too many people pay nothing in taxes." Just to add to that: Almost nobody pays "nothing in taxes." There ARE people who pay nothing in federal income taxes, but what about payroll taxes (regressive)? State income taxes (regressive)? Sales tax (regressive)? Capital gains taxes (regressive because of the lower rate on cap gains even though the majority of people who have substantial cap gains are wealthy)? I also wrote a post as a response to FS. It's <a href="http://www.myliferoi.com/2009/10/how-much-do-the-wealthy-really-pay-in-taxes/" rel="nofollow">How Much Do the Wealthy Really Pay in Taxes?</a> When all of the data is taken together, it already seems that the tax system is progressive. So if you flatten JUST the federal income tax, the tax system as a WHOLE would actually become regressive. The only progressive tax in the system seems to be the federal income tax. Where are you getting the 15% rate? Just curious. “Another problem that I have with the current tax code is that too many people pay nothing in taxes.”

Just to add to that: Almost nobody pays “nothing in taxes.” There ARE people who pay nothing in federal income taxes, but what about payroll taxes (regressive)? State income taxes (regressive)? Sales tax (regressive)? Capital gains taxes (regressive because of the lower rate on cap gains even though the majority of people who have substantial cap gains are wealthy)?

I also wrote a post as a response to FS. It’s How Much Do the Wealthy Really Pay in Taxes? When all of the data is taken together, it already seems that the tax system is progressive.

So if you flatten JUST the federal income tax, the tax system as a WHOLE would actually become regressive. The only progressive tax in the system seems to be the federal income tax.

Where are you getting the 15% rate? Just curious.

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