What are the rebuttals for the RW flat tax idea ?

[steve2470]

It sounds so...simple. Scrap the thousands of pages of IRS tax code and Tax Court rulings. Put all the CPA's, accountants and tax attorneys in the unemployment line. However, isn't the flat tax idea terribly regressive, hurts the poor the most, and enables the rich to keep 99.99% of their wealth ?

[Nicholas D Wolfwood]

1. It's flat out unfair.

Someone making $30k shouldn't be paying the same as the someone making seven figures. The poor need the larger portion of their paychecks for mere survival. The rich do not need the vast majority of their pay to survive.

[formerrepuke]

2. ...precisely- and it's the only rebuttal. Flat out unfair.

[mknmehappy]

26. Why is it unfair?

Flat tax unfair? How, you only pay tax on what you buy, or what you earn, how is that unfair?

[SteppingRazor]

4. Exactly...

The whole idea of a progressive tax system is that the rich pay a larger portion in taxes because they can afford to.
A flat tax is the ultimate regressive tax -- except for some incredibly backwards system where the poor actually pay a LARGER percentage than the rich... I won't say more, though, for fear of giving ideas to the GOP ;)

[Orrex]

3. I love the idea of a flat tax

And here's my model: All annual income over, say, $350,000 is taxed at a flat rate of 95%. We'd erase the deficit in a matter of weeks, and then we could afford to invade every country in the world with our super-best military.

[papau]

10. Excellent - but still how do you tax the rich that become non-citizens?

and how do you define taxable income under US Tax?

Do we go the world wide income less world wide taxes route, or a variation that pretends to determine how much of the income of the currently American rich was made in America?

[zbdent]

12. Sell the vacant houses cheap

and that would fund some things . . . they're no longer "citizens" - why should they complain?

[Orrex]

14. Since I was being facetious, I didn't quite think it that far through, but

Maybe any income earned in the US or earned by a US Citizen?

And hell, let's make it retroactive, while we're at it. That way John Q. Richguy can't take his zillions and run tax-free...

[bbgrunt]

20. exactly! the problem is not the rate structure, but

the definition of income and "taxable income". The thousands of pages of the tax code are required for defining income.

For that reason, the only thing that will "simplify" the tax code is to shift the base to something like consumption.......but even that can get tricky. Do you then tax medical expenditures? stock transactions? the sale of a residence? How do you prevent fraud for underreported transactions or transactions that leave the market place? (sharing of baby sitting, trading services or goods?) Obviously, the rich will be able to avoid even many consumption taxes---making these kinds of taxes even more regressive than they are already.

Efforts to reduce the regressiveness include exempting necessities. This becomes a problem of definition again. Is raw vs. cooked chicken considered a necessity or a luxury? Is basic phone service a necessity? what about cell phone usage?

Another alternative is to exempt or give rebates to those with low income. This then requires a definition income again--basically bringing us back to the original problem.

I say reinstitute the estate tax and stick with the income tax

[bbgrunt]

22. additionally,

We suppose the definition of a consumption tax to be placed on the consumption of "final" goods and services. How do you distinguish between the hammer that is bought for personal use and a hammer that is purchased as a piece of capital for a business? (an intermediate good)

If you don't make that distinction, then you will have things being taxed at multiple levels and the effective tax rate could be prohibitive.

[lostnfound]

16. How about a flat sales tax that INCLUDES STOCK sales and property?

Sure, it would put a thousand brokers out of business, and destroy liquidity or fluidity of the economy..

Consider the alternatives to the current: "if I buy a book I pay 8.5%, but if I buy a whole bookstore (or 10000 shares of Borders stock) I don't".

[papau]

23. Every VAT/consumption tax has "zero rated" financial transactions

as moving them offshore is just too easy, and a worldwide approach would kill the export friendly "VAT refund" on all exports.

[jmowreader]

24. On second thought, let's not do THAT flat tax

We're trying to discourage the BFEE from invading every country in the world, and giving them the tools to do it won't help matters any.

[Johonny]

5. But

The total tax rate is nearly flat now thanks to payroll taxes.

[papau]

11. True - the poor pay a higher percentage than most of the rich!

:-(

[gratuitous]

6. Because it's a tax on wages

If you get your money from something other than a salaried job (clipping bond coupons, capital gains, interest, etc.) then you aren't taxed. How much of YOUR income is derived from your job's wages, and how much comes from other sources? And where do you suppose, say, Paris Hilton's income comes from?

[flamin lib]

7. Appeal to their greed. Most flat tax plans call for 17% or more.

Have them pull tax returns for the last few years and figure the actual taxes paid against the gross income before any deductions. It will come out to less than 17% in most cases.

Just point out that it's going to cost them more than they are paying now.

Did that to my neighbor about Bush's tax cut (rebate). Asked him how much it was--$600. Asked him how much his property taxes went up to pay for No Child Left Behind--$900.

Please, God, save me from another Republican tax cut!

[papau]

13. The real rate for real proposals start at 31% - the 17% was pulled out

of the air and at the time would have provided less tax to the government - a problem made up by pretend future cuts in spending..

Adding a per person and per return credits of any reasonable size so as to protect the poor and the middle clas, plus a home interest credit and health ins credits and charity credits, etc. will get the rate over 40%.

[flamin lib]

15. Thanks. The 17% was an assumption that there would be no

deductions of any kind which is completely unrealistic.

[papau]

8. It does none of the things "you" claim/listed - accountants &attorneys

continue to make the same money from tax questions.

What is income? Trust vs offshore vs "controlled", etc PLUS what is US INCOME? - the huge loophole that allows US corporations to make tons while claiming a loss on US activity.

What income is taxed? - Savings "incentives" via lower tax for a given "account"?

Gifts to the rich in not taxing capital gains or some portion of them.

Who gets a Carry-back/carry-forward so as to smooth tax for various items- everyone, no-one, only corporations?

If the rate is flat do we have tax credits that favor the middle class, or tax deductions - a method that favors the rich. The Home Loan interest "deduction" will be in any "flat tax"

Do we have large per person and per return tax credits that must be with a higher flat rate (so as to develope the total dollar tax needed) that favors the middle class, or do we have low or no per person and per return "deductions" with a low flat rate that favors the rich?

[TreasonousBastard]

9. Too many to mention here...

and I don't have time right now to dig up the references. There are, btw, a number of different "flat" tax plans out there.

Here's a few objections to start with--

A straight flat tax inequitably taxes lower wage earners at a higher effective rate.

The flat tax doesn't address paytroll taxes, like FICA, Medicare...

A flat tax doesn't take into account common deductions, such as mortgage interest, local taxes, or contibutions. Immediately, those interests, like banks and charities, will lobby to include their changes.

Depending on whose figure you believe, it might not be revenue neutral, and bring in less revenue than what we have now.

The IRS code now is so huge because everyone with access to a congresscritter has stuck in a special provision. There's no gurantee taht won't happen with any flat tax proposal. The code will undoubtedly grow to massive proportions once gain.

The huge tax code is primarily concerned with commercial stuff, and individual taxpayers are only a small part of it.

[marbuc]

17. I actually kind of like the idea of a flat tax...in theory

provided there is some sort of sliding scale for the poor. However, in reality I don't think this is practical. This idea rests on the ill conceived notion that 100 percent of income is taxable, which would mean eliminating tax breaks, havens, and dodges.

We would have to eliminate exemptions and subsidies, and figure out a way to recapture a portion of the income that has gone offshore. I do not think this is a realistic expectation; the rich will always find a way to lower their tax burden, and therefore increase the burden on the poor and middle class even further.

I say if the flat taxers want to make a gesture of good faith, they will take steps to ensure everyone pays their fair share under the current system. Only then will I consider their proposals.

[Jacobin]

18. It doesn't work

Think about it for a minute. It's simple to apply to someone making a wage, but how about a business, even small businesses?

Let's say you have a convenience store that grosses $1 million a year and after cost of goods, expenses, salaries, etc, it makes $50,000 for the owner. What are you gonna tax him on? $1 million or $50,000.

Oh, $50,000 you say? Ya mean after his DEDUCTIONS for expenses and cost of goods? Can you say, "let the games begin again?" because the whole idea of a flat tax is to end the 'deduction and expense game', which this will not do.

Doesn't work.

Talk to any CPA who is not a RW ideologue.

[1932]

19. You don't have to have one tax rate to get rid of 1000s of pages of code.

The tax tables are only about 10 pages, and it doesn't make it easier or harder to figure out your taxes if there's a different tax rate on every 5,000 dollar increment of income.

Why do flat tax proponents insist on the charade that "simplicity" and a single tax rate are the same thing?

[Ron Mexico]

21. Aside from all of the other problems with the flat tax,

remember that the one we have now started out flat. If reducing complication is the real motive of the Repugs, they'd go to a sales-only tax, but it's not what they're really after.

Go with a flat tax and within five years half of that tax code comes right back - so much for "simplification." That's the same excuse Reagan gave us with TEFRA, wasn't it?

[yankeedem]

25. This one usually stops the Wingnuts in their tracks

Flat tax=say goodbye to your home interest deduction.

[Egalitariat]

27. Flat tax has been dead for awhile. The new version is what they call

the "Fair Tax", which is a consumption tax (not income tax) with a "prebate" to ensure nobody living below the poverty line pays any taxes.

The theory is good, but the transition would be impossible.

The Internal Revenue Code is just plain awful, but it's a great tool for politicians in both parties to buy votes and solicit corporate donations that it'll never go away.

[jmowreader]

28. It will cause job loss on an unprecedented scale

Employee wages and benefits are currently "ordinary and necessary expenditures" and therefore deductible.

Revoke this deduction and a company that makes over $18,333,333 per year taxable income will see its personnel expenses go up 35 percent--because you won't be able to deduct wages and benefits from your taxable income. (Actually, I'm probably getting the math wrong, but no matter--I as your employer will still be paying taxes on your paycheck before you get to pay taxes on it.)

Now! If my name is Ebenezer Scrooge or Walton or Nardelli, if my personnel expenses were to immediately go up by 35 percent I'd have two immediate actions. The first would be to call Washington and ask them why I spent all that good money buying congressmen if this is what they're gonna do to me. The second is to lay off 35 percent of my workforce.

That's how to sell this to the freepers. Not some "your taxes will go up" bullshit--these fucknuts really believe that because the "average" tax cut was $14,000 or whatever it was, THEY got a $14,000 tax cut. No, tell them that "your boss deducts your paycheck from his taxes. If he can't do it anymore because of a flat tax system that eliminates deductions, he will fire you."