The US tax code is said to be at least 9 million words long. That is too long for us to know and understand it, if nothing else. Generally, the US tax system is too complex, too bureaucratic and a haven for special interests “clauses”, and loop-holes, neither of which are in the General Welfare (US Const. Preamble, which I take as “inalienable principle law” that all following law must abide by, such as the tax code.).

There is a concept for what is called a “Flat Tax”, first proposed by Nobel Laureate Milton Friedman in his books (3 editions, first edition in 1961)) Capitalism and Freedom, and further expounded upon in The Flat Tax by Hall and Rabushka of the Hoover Inst. It is presently endorsed by the Economist magazine, and used by several countries, apparently quite successfully and happily.

Were “We the people” to “demand it”, our income tax forms would be one page, there would be no place to hide special interest, and we would understand it. Most of us would consider it just. I personally want it, and find no fault, but only democratic benefit in it.

Questions for debate:

1. Do you know what the “Flat Tax” is and are you for or against it, verses what we have now?

2. Is any regulation 9 million words long “reasonable and just” for US citizens to have to know and follow?

1. Do you know what the “Flat Tax” is and are you for or against it, verses what we have now?

Yep. This was a hot issue during the 1990s, but now it gets little traction. I think that's because people are happy to have an income versus none. It's pretty hard to do a budget on zero income.

Another damping effect is the level of a flat tax. Proposals I've seen set it too high and scare people off. A local pol suggested 29% and the opposition uses it in the attack ads.

In the 90s, 15% was proposed and shot down as being insufficient. Thirty-some percent came along and the issue died quickly.

2. Is any regulation 9 million words long “reasonable and just” for US citizens to have to know and follow?

No, but there are accountants who specialize in taxes. This is good enough if the taxes are complex enough.

I think we're stuck with it as long as the US continues to exist.

I think a flat tax could improve the inequities of the country and help stabilize our middle class. I believe it is in the public's interest to counteract the present trend of income distribution which is sending a perverse amount of the benefits of our society to the highest .1%, 1% and to a lesser degree the top 5% of our society.

Most people think that a flat tax would work to the benefit of the wealthy and I disagree.

In my flat tax system all income would be eligible and nothing would be paid into the system until the poverty level has been reached by the household. If we decide as a society that additional steps to this floor are needed we could do that but I think as a rule additional layers on the floor will just be the beginning of a new horribly complex tax code.

All income whether earned by labor, inheritance, capital gains, or capital investment would qualify.


All federal taxes would be included. This includes the progressive income tax and the horribly regressive payroll tax system. I further advocate a Keynesian balanced budget system that allows short term flexibility of deficit spending to pull us out of recessions but also underspends government income in periods of economic expansion.

I think a billion word tax code is in the interest of the haves and it confused and confounds the free market as sophisticated methods of earning tax free income become more desirable than another purely form of income generation that doesn't use a loophole for higher net returns.

And so do I. The current system, contrary to popular perception, doesn't put high taxes on the wealthy. It puts high taxes on people who are trying to get wealthy - those who, for example, are putting in lots of overtime hours in order to buy a house or to pay for their kids' college education. Those who actually have lots of money have plenty of ways of sheltering it from the taxman under the current system. If we were truly interested in making them "pay their fair share", we wouldn't be accomplishing that by endlessly raising the top tax bracket to higher and higher percentages. The way to do it instead would be to take away their tax shelters. Once we do that, then there's no reason why we can't have a simple flat tax with a fair-sized individual exemption.

Well, I am totally for a flat tax- as long as it is on net worth, not some shadowy tax loophole "income"- for instance, a 15% flat tax on bill gates would have him paying WAY WAY WAY more money to taxes than he does not-

for once, I am in complete agreement with blackstone- the discrepency in how much taxes are paid comparing a 350k a year lawyer, doctor, engineer, welder is a huge difference than Bill gates- it is likely the professionals I sited pay the full 39% of their actual increase in net worth every year, but I am willing to bet that Bill Gates doesn't even pay 5% of his increase in yearly wealth.

I am not down on Bill Gates- I am simply using his increase in net worth since it is so large- I think Bill Gates founded an entire industry to some degree- but he certianly doesn't pay his "fair share" of taxes either!

I agree with AuthorMusician that we are likely stuck with the present monstrosity of a tax system that we have. There is an entire culture and economy that has developed around it. Like a sensitive ecosystem, if it were disturbed or destroyed millions of accountants and lawyers would go extinct.

I adore the concept of reducing complexity and making taxation easier to understand, and therefore, predict. It would make it easier for average Americans to manage their money. It would provide more stability and allow us to save more responsibly. However, as mentioned by most already, there are problems determining levels of taxation and fairness. The debate would never end.

Also, I have a natural inclination to cringe at the thought of a tax on my income. As far as I know there is at least healthy debate that at least some of our income tax is unconstitutional. Whether it is illegal or not, I simply can't abide by a tax that is levied on me prior to my making a choice, action or transaction with my money.

Although he is positively inasane, James Traficant put forth a taxation scheme that I loved. He suggested a universal (I believe 15%) sales tax on ALL purchases and the elimination of all other federal taxes. In my opinion this would do away with all arguments of fairness or special interest. Whether you are Bill Gates or Bill the shoeshine man you are taxed only according to the lifestyle you CHOOSE. If you both buy a Snickers Bar you are taxed the same. IF Bill Gates buys a yacht and the other Bill buys a rowboat the they are taxed accordingly. This scheme allows either the wealthy OR the poor to choose their standard of living.

After typing this I decided to look for Traficant's speech on this subject and, instead, found an excellent article from May of 2005 on the flat tax. It is in PDF format...be forwarned.

I think it will raise the level of this discussion. I was unaware that so much attention had been paid to the idea of a flat tax as recently as last year.

A great question, but forgive my cynicism.
There is no way, in our current system, a Flat Tax will ever be enacted.
Since the top .1% control our government (through campaign finance, lobbyists, back room deals etc...) it is not in their interest to enact a tax system where they actually have to pay their fair share. To them, their fare share is zero. They after all are the elite, the top of the economic food chain. We are just the consumables. We are the ones who make their lives of power possible through the act of buying into the concept of (among other things) trickle down economics, and economic darwinism.
Yes of course a flat tax, properly designed would benefit 99.9% of the American population. But again, it is not that 99.9% that actually have a say.
Vote however you wish, for whomever you wish, this is one issue that will not change, so long as the population is willing to sit on it's hands, thank GWB for the $600.00 check, and behave like he is some kind of holy visionary.

Simply put, a 5% flat tax on EVERYONE above the poverty level would net the Federal Government more than it currently is collecting now, if one calculates the expenditure the IRS spends just in maintaining the documentation on the current tax code (how many thousands of employess does that require anyway??), and the cost of audits and enforcement...
15% and we could clothe and feed everyone on our continent, as well as pay for the war on terror, the DOD, and more.

I for one would like to see some real math on the above, as those are just my rough mental calculations.. no real solid math involved. Anyone want to crunch some numbers???
Here are the figures I have come up with:
Using the following links:
https://www.cia.gov/cia/publications/factbook/geos/us.html
Working population of 149 million (2005 estimate)

http://www.whitehouse.gov/fsbr/income.html
Median Income at $46,326.00 (2005 estimate)
15% 0f = $6948,90 per household
resulting in
$1,035,386,100,000.00 in federal revenue.
Since I am neither a math major or an economist, I am sure there are more dynamics involved. But this very simplistic calculation does provide a very positive indicator for a flat tax, considering it does not take into account the taxes on just one multi-billionare.

Questions for debate:

1. Do you know what the “Flat Tax” is and are you for or against it, verses what we have now?

I am quite familiar with it and wish it was in place today. A flat tax would make the playing field equal making sure each person contributed their fair share. It would eliminate tax benefits to the rich, make sure illegals paid into the system and introduce a revenue stream that we have never experienced before.

2. Is any regulation 9 million words long “reasonable and just” for US citizens to have to know and follow?

I think the only reason it is 9 million words is for the fact when they amend it, they keep adding to it. A paper trail of changes. CPA's are experts at decerning what needs to be read and what they can skim through.





Forbes ran with flat tax as a staple to his campagne.

And look how far it got him. Forbes was the exception, not the rule. Had he had the backing of the real power base, he would've won. A flat tax is not in the best interest of the financial elite.

Of course it isn't. It allows more of the tax burden onto their solders. Granted I didn't like his 36,000 income tax cut off. I fet there were better work arounds

I honestly think that there is a good chance for a candidate to run and win using flat tax as their platform in todays politics. With todays division of both the Republican party and Democratic party, Forbes could steal the show.

Because of this issue- I had alot of respect for Forbes. He stood to lose lots of money with that idea- he would have paid millions more in taxes. Had he made it past the primaries and into the final show- I would have voted for him based on this issue, and a couple more smaller issues that were libertarian oriented pushed me into hoping he made it to the Repubican nominee.

However- I am totally against the national sales tax for a few reason- one, it pretty much lets the rich off the hook, is hard to track items bought and imported into America- lots of ways for rich poeple to get around from paying any taxes at all. Also, it artificially raises the prices of goods. That is another reason for a flat tax for me, with a removal of corporate taxes.

I share your cynicism, but think it is a bit misplaced. It is not so much the wealthy that are reluctant to enact a flat tax, it is the politicians. While the rich might indeed have to pay some additional tax, politicians derive a far higher percentage of their power from their ability to manipulate the current tax code. They are the ones who are reluctant to see it changed. How do you offer your constituents a tax break if none are available? So, while .1% of the population might be reluctant to enact a flat tax (which I am a bit skeptical of, anyway, as that assumes that all rich people would be against it, which is assuming quite a bit, note CruisingRam's mention of Forbes)...a far higher percentage of politicians who actually write the laws would be against it. This goes across the aisle....politicians on both sides. They both gain considerable power from their ability (or ability to claim) to manipulate the tax code in favor of their constituents. Without that, they might :gasp: be forced to actually do their jobs. None of them want that.



As compared with the current system, with tax breaks galore? I think your skepticism is a bit misplaced here. Imported goods could simply be taxed upon arrival, just as they are right now. It is easier to hide income than it is purchases.

I would concur with that 100% Hobbes - I am not sure that rich folks wouldnt' like to just total up last years stuff they owned and made money off of, add together this years, pay a flat tax on the net increase in net worth- pretty simple tax code then huh? Right now, as an upper middle class businessman with 3 businesses, and having sold one of them last year (fiscal year 2006, meaning after Jan 1 I have to do some figuring) I have to spend money for a professional tax consultant, and have an accountant audit my records, just to make sure I didn't flub something up.

With a flat tax, I would just need the accountant to check my figures, and be done with it. Overall, I would probably pay less under a flat tax, if it were 15%, because in fiscal year 2005 I paid about 21% IIRC.

Actually, the likely hood of the rich paying a higher percentage is even doubled. Think of the automobiles, planes, houses (I think there was a loop hole for real-estate) and the monthly expense to maintain those items. All taxable through sales tax. Imagine, Bill Gates spent nearly 25 million to furnish his new house in Seattle. @ 19% (random number) that alone would have gave 4,750,000 in taxes.

I also like it for the fact that illegal immigrants would be contributing since they would be buying items here and in essence, contributing to the system. People getting paid under the table would no longer be exempt from contributing.

Regarding artificially raising the price of goods, your income would also increase being there would be no longer income tax taken from your pay.

I think a flat tax would fix many issues we currently face into today’s economy. Number one I think we could really fix the healthcare situation with the increased revenue stream making government able to subsidize a portion of those cost to lower middle class.

Well first off there have been several varying proposals that have gone by the name of "FLAT TAX", so replies from different people may be their opinions of different systems. Now for mine.

1) I would be for the flat tax proposal that taxes a flat percentage of every person's gross anual earnings with absolutely NO DEDUCTIONS. Harsh, perhaps, probably for myself also. However, I would be willing to deal the burden so long as I had absolute confidance that no other person(s) had loopholes and shelters to hide behind. I hear the word fair being tossed about in many discussions - fair is subjective, "EQUAL" however, is objective, and is found in our laws and founding documents repeatedly. I would like to see congress' hands tied on budget matters, same as how every household has it's hands tied. They (congress) cannot spend more than what they have, within those confines they have to weed out the fat and pork and decide what is really worthy of the funds available and not just bring home the bacon so they get re-elected. I would also like to see the entire population (or as much of it as possible) at congress' throats every time they try to push a tax hike. Granted the wealthy could more easily absorb it, but they represent a small fraction of the overall population, so the vast majority would more likely want congress to re-prioritize the spending - which is probably what would be the better option anyway.

Now keep in mind that I consider this the way to deal with PERSONAL income tax, business taxes and other issues outside of the scope of PERSONAL INCOME is a different issue in my mind. I also am against the idea of a national sales tax, I'm also against all sales taxes, so long as there is an income tax, I believe in one or the other not both, or more. An easy solution would be to exempt residents from sales tax, but that goes outside if the scope of this subject.

2)Yes, laws should not be written so that compliance with the law should be beyond the reasonable scope of the averange person to understand or have available time to reasearch and understand.

I think you and eyore are a little misguided here. A flat tax would benefit the rich because they pay so much now it would have to be a reduction. And the ATM assures the US that the rich don’t get away. And this tax is about to snare 20 million more people in 2007 so LOOK OUT.

http://www.taxfoundation.org/publications/show/1941.html

Many reporters have settled on $200,000 as the income threshold for being “rich.” Whether this is true or not, it turns out that the $200,000-and-over crowd is the only income group to have its share of the nation’s income shrink while its share of tax payments grew.
In 2000, tax returns with an adjusted gross income over $200,000 earned 26.7 percent of all income, and they paid 47.3 percent of all income taxes. That’s a tax-to-income share ratio of 1.79. Four years later in 2004, their share of income had fallen from 26.7 to 25.5 percent, but their share of taxes had risen to 50.0 percent. That brought the ratio up from 1.79 to 1.96 in 2004. The biggest winners were in the $25,000-to-$30,000 range. If the Bush tax cuts are the determining factor, then the logical conclusion is that the new 10-percent bracket and the doubled child credit caused dramatic reductions in tax payment. As a result, the ratio of tax share to income share was cut in half.
Table 1: Federal Income Tax Has Gotten More Progressive Since 2000
Income Group (AGI) Income
Group’s
Share of AGI Income Group’s
Share of
Federal Income
Taxes Paid* Ratio of Income
Share to Tax Share Change from
2000 to 2004
2000 2004 2000 2004 2000 2004
$1 to $5,000 0.54% 0.46% - 0.16% -0.23% -0.296* -0.492** na
$5,000 to $10,000 1.51% 1.34% - 0.65% -0.90% -0.432* -0.673** na
$10,000 to $15,000 2.38% 2.14% - 0.53% -1.32% -0.223* -0.617** na
$15,000 to $20,000 3.20% 2.90% 0.22% -0.85% 0.069* -0.294** na
$20,000 to $25,000 3.53% 3.21% 1.09% -0.11% 0.311* -0.033** na
$25,000 to $30,000 3.60% 3.44% 1.65% 0.75% 0.458 0.219 - 0.239
$30,000 to $40,000 7.40% 7.11% 4.22% 3.18% 0.570 0.447 - 0.123
$40,000 to $50,000 7.31% 6.97% 4.81% 4.20% 0.658 0.602 - 0.055
$50,000 to $75,000 16.41% 16.34% 12.19% 11.86% 0.742 0.725 - 0.017
$75,000 to $100,000 11.59% 12.85% 10.51% 10.98% 0.907 0.855 - 0.053
$100,000 to $200,000 16.75% 18.98% 19.39% 22.51% 1.157 1.186 + 0.029
$200,000 or more 26.71% 25.52% 47.27% 49.98% 1.770 1.958 + 0.188
$200,000 to $500,000 9.64% 9.97% 15.42% 17.89% 1.600 1.795 + 0.195
$500,000 to $1,000,000 4.23% 4.32% 8.01% 9.17% 1.894 2.123 + 0.229
$1,000,000 to $1,500,000 1.89% 1.85% 3.70% 3.99% 1.953 2.160 + 0.207
$1,500,000 to $2,000,000 1.21% 1.15% 2.37% 2.50% 1.969 2.179 + 0.210
$2,000,000 to $5,000,000 3.13% 2.86% 6.13% 6.16% 1.957 2.151 + 0.194
$5,000,000 to $10,000,000 1.89% 1.59% 3.62% 3.31% 1.908 2.075 + 0.166
$10,000,000 or more 4.72% 3.78% 8.02% 6.96% 1.701 1.842 + 0.141

For 2002:
http://usgovinfo.about.com/od/incometaxand...whopaysmost.htm

Check out this column on John Kerry's tax hypocrisy before solidifying that conclusion. It's all about how he and his wife are filthy rich from her inheritance yet pay only a pittance in taxes (and all while he carps about "the wealthy not paying their fair share"). Definitely worth a read.

Ted, I'll watch for more information about the shifting tax burden to the rich. No sarcasm or double meaning intended.

But don't forget that there is a regressive tax system for Social Security and Disability that generates 12.4 cents for every dollar earned by an employee starting at dollar one and this tax has a ceiling that was $90,000 in 2005. So when you add this to the pile you have a different picture.

Very interesting but how do you stop this? How can a flat tax get at those accounts.
PS not at all surprised that Kerry is talking out of both sides of his mouth though!







Yes for “that” tax but for all taxes the reality is the “rich” which includes much of the middle class pay the majority of all taxes. The top 50% pay 96% of all taxes and as the table I posted above shows a flat tax would give many who now pay 30% or more a tax break.


Although reading the link above about Kerry tell me we need to tighten up on the ability of people like Kerry and his wife from moving money out of the country. Not sure how that could be done.

A flat tax, in and of itself, is no more able to do anything about abuses like this than the current graduated tax. Separate reforms are needed in order to do that. My only point is that once those reforms are in place, a flat tax can then become much more palatable politically, because the rich (by which I mean people with lots of assets, which is not necessarily the same as those with high incomes in any given year) will then be "paying their fair share".

As for how to get at those accounts, it seems simple enough to me. If the Kerrys' income is known, which it appears to be from the article, then multiply that by whatever flat-tax percentage Congress has set, and charge them that amount. No need to make it any more complicated than that.

I think the American economic system as it would relate to individual economies is far to complex to pave it with a simple system, though I also follow the idea the government cant and never will make everyone happy so hey, the reality is government should be there then for Americans in some other sense rather then for some, but its off topic, though it seems if politics truly has become that and government is code for such really.

Another idea is this. What should we tax for and not tax for, I mean if we could get this figured out alone it would help end a lot of debate on tax issues in my opinion.

As for a flat tax, well my knowledge of the subject is limited overall, so all I can say is I doubt it to be a fix all, and being political it probably has a high degree of bias in it in some regard or another.

1. Do you know what the “Flat Tax” is and are you for or against it, verses what we have now?

There have been various proposals for a flat tax. My favorite isn't a true flat tax, but a formulaic tax called the "simple tax" that almost nobody talks about, that I can find. My college economics prof talked about it. Under the "simple tax", the government automatically sets tax rates once a year by calculating the federal budget as a percentage of GDP (oversimplification), then taxes everyone based on contribution to GDP instead of separate taxes on various forms of income. Because the contribution to GDP evens out in the long run each time money changes hands (including interest deposits, etc.), you can almost build a tax into the currency, collecting the lion's share of it directly from financial institutions. The only reasons you'd need to file paperwork would be to pay taxes on barters or cash payments never deposited in a bank. Everything else would simply build the tax into the advertised prices. For example, salaries and wages would be advertised as the amount of take-home pay, while sales prices for products would include all necessary taxes. Because taxes are primarily collected directly through financial institutions, anyone who needs a tax exemption just gets a tax-exempt account, so that less is withdrawn and more is deposited than on a taxpayer account. Targeted tax incentives would work almost the same way, it's just that the street prices would be lower because the government wouldn't collect taxes on such incentives. You can know exactly how much of your money is going to taxes by looking at the mandated lines that report it on salary stubs, receipts, and bank statements.

Of course, the IRS would dwindle almost into non-existence, the budget would remain permanently balanced, no one would fear April 15th, and many forrests would never need to be cut down for paper. Ah, but it's a dream very few of us seem to care much about. We'd rather fill out the endless forms, be disappointed by our take-home pay, and punch calculators at stores, then think ourselves superior for finding some way to get a few pennies back for one targeted incentive or another, a year or more after we paid and let someone else collect interest on that money.

An objection to the simple tax is that politicians want voters to more directly feel the effects of taxes, but to me it seems that taxes are so much of a hassle that we don't always think about the real effects they cause. Under the simple tax, tax hikes (which would be synonymous with net spending increases) would affect prices much like inflation does, and we don't have to itemize inflation factors on receipts or paychecks in order for people to feel its crunch. By setting the tax rate by a formula that ties it directly to spending, Congress would have a built-in incentive to cut pork-- if they don't and their spending increases result in defacto inflation, the natives will get restless.

2. Is any regulation 9 million words long “reasonable and just” for US citizens to have to know and follow?

Nope. Especially considering that the end result is that the wealthy can usually hire the best tax attourneys to pay no more than 15%-17% in the highest tax brackets, leaving the middle class as the only group that pays more than about 17%. It just seems like the whole system would be more honest if there weren't so many loopholes that were so easy to exploit for those with the most money.

Hey I am not against a flat tax. I just don’t see how you tax “assets” as you seem to be saying, as opposed to income. And as I have shown a flat tax will only reduce some wealthy individual’s tax rate since it is quite high now.

No, if you'll look a little closer, you'll see that's not what I'm saying. I'm not advocating taxing assets. I'm advocating reforming the tax rules so that those with assets won't be able to use those assets to avoid paying taxes on their income. With such reforms in place, a flat tax will be a much easier sell.

If you think you can do away with the deduction for mortgage interest you are dreaming. Although I agree it would need to be part of the flat tax system. I still don’t get how the tax can work if ½ the “taxpayers” pay virtually nothing now. Any rate above 0% will be a tax increase and any rate below 25-35% will be a tax cut for some of the wealthy.






I was an economics (and eng) major and you have lost me here. Is this a variation of the VAT or value added tax? How do you tax someone on “ contribution to GDP “ - and what exactly is this. Salary? How about dividends, SS, etc?

If what you mean is the government just takes a % of your income (of all types) I get that.

That depends on how the deal is sweetened with a reduction in the tax rate overall.


Most flat tax proposals have an initial exemption. That is, it taxes at such-and-such a percentage for all income in excess of a certain amount. As for the idea that it would be a reduction for some of the wealthy, that depends on how "wealthy" is defined. If it's defined merely as people who have a high income in a given year, that's not necessarily the wealthy, as the column I linked to explains. There's wealth, and then there's rate of accumulation of wealth. Two different things. Those who have already accumulated lots of wealth often do not pay the sticker price on their tax rate.

It seems unfair in some ways for taxing a family that works hard to “accumulate” wealth for themselves and future generations of their family. But actually this is exactly what one of the founders of Capitalism, Adam Smith advocated.

And don't think its just "rich Republicans" that would be against this.

LOL getting folks like Teddy K or John Kerry to vote to tax themselves more. In fact they will do just the oposit while trying to tell us they are for the “little guy”. Never happen.

Tax hypocrisy


By Richard W. Rahn

Sen. John Kerry keeps telling us that "the rich" need to pay more in taxes. The senator and his wife are among the 400 richest Americans. He says that he has "a plan to tax the rich." Under the senator's tax plan, what percentage of the Kerrys' income do you think they would pay the IRS? (a) 50 percent, ( 40 percent, © 30 percent, (d)15 percent. The correct answer is (d) 15 percent.
According to an analysis by the Argus Group, a well respected tax law and economics firm, the Kerrys' average tax rate would only increase by 1.8 percentage points to 15.2 percent under the senator's plan, while many small business people would see their average rate rise by 4.0 percentage points, resulting in effective rates as high as 35 to 40 percent, including certain deduction phase-outs.
Last year, Mr. Kerry and his wife paid only 13.4 percent of their declared $5.5 million income in federal taxes. President and Mrs. Bush, whose income was only 15 percent of the Kerrys', paid a tax rate more than twice as high, 27.7 percent. Despite all of the senator's bombast about the rich paying more, under his plan he and Mrs. Kerry would still pay a lower average rate than most middle-income Americans.
As Mr. Kerry's own tax situation shows, he is not proposing increased taxes on those who are already rich — through inheritance, hard work, luck or marrying a rich woman — but is proposing increasing taxes on those who are trying to become rich. His plan proposes to make it more difficult for people to join his club of the very wealthy. If you are already rich, you can tax shelter much of your income, but if you have little in the way of assets, it is almost impossible to shelter your earnings from taxes.
Mr. Kerry's running mate, Sen. John Edwards, also shares this tax hypocrisy. Last year, Mr. and Mrs. Edwards paid an average tax rate of only 5.1 percent on their reported $434,000 of income, or less than one-third of what the average taxpayer pays.
Estimates of the Kerrys' worth range from a low of $700 million to a high of 3.2 billion dollars. How much income would you expect a billion dollars to produce? The Kerrys reported $5 million in income, which is a return of only about one-half of 1 percent, far lower than the return on even U.S. government securities. Obviously, the public is not given the full story on the Kerrys' assets and income. Mrs. Kerry did not release her full returns. For instance, she did not release the part of the return that notes whether or not she has offshore accounts. (Note: It is both legal and proper for her to have such accounts, but her husband has called others with such accounts unpatriotic. This may explain why Mrs. Kerry did not release this information.)

What, specifically, are you saying is unfair? That they should pay the same rate on their income that someone with fewer assets pays on his? I don't understand what you're driving at here.

By the way, you pasted the same column I linked to in post #17. Does this mean you agree with me?

We have taxes on assets now. If your house value goes up you pay more property tax and when you sell assets the “income” is taxed. Are you proposing taxing assets before they are sold? I don’t get where you are coming from.

Rich and poor pay taxes on income from all sources. So please define what you would ‘tax” (flat or otherwise) that is different than what is taxed today.

Again, I'm not advocating taxes on assets. I'm advocating that there should be no ability to use one's assets to reduce the taxes levied on one's income.

In other words, two persons who have the same income should pay the same amount of money in tax on that income, regardless of what either of them has in assets.

So you want to dump the deduction for the ‘home”. Other than that I see no difference to the current system. Income is taxed (often 2 or more times) from every source including capital gains.

So what exactly do you propose?

1. Do you know what the “Flat Tax” is and are you for or against it, verses what we have now?
You are talking about the flat income tax I presume. To enhance the discussion here wikipedia discusses the matter. Wikipedia discusses flat tax

I would prefer a flat income tax if we could remove all the deductions. That would mitigate the lack of fairness inherent in removing the present graduated tax.

Even more fair would be a flat assets tax. Not only do you have the advantage of simplicity (One page tax) but it is harder to cheat since your main asset would in most cases be a home or business structure which you couldn't very well hide. It seems kind of unfair that a guy with few assets but a relatively high income should be paying more than a guy who has large assets but little income. The guy with few resources is subsidizing the guy with large resources - not fair.

2. Is any regulation 9 million words long “reasonable and just” for US citizens to have to know and follow?
The whole idea of a flat tax can only become meaningful if it removes the host of tax loop holes. If you want to support something, then directly subsidize it. Tax exceptions are under the table government payments and as such tend to undermine respect for the tax system and encourage tactics to get around it.

I am not sure I can agree here. Why is it not fair? The “gain” on assets are taxed in most cases. (capital gains Tax). Are you advocating a yearly tax on assets over and above income? If so how is this fair? The person who earns money (which is taxed) then buys assets (which helps the economy) is then taxed again for the assets? Whereas the person who just spends the money or keeps it in cash pays no more tax? Makes no sense.

One guy lives in a million dollar home he inherited and makes $30,000 in interest income a year. Another guy lives in an apartment and makes $120,000 he earns, most of which he uses to help family and friends. The latter pays 4 times more. I don't think that's fair. To maintain that asset the first guy is eating up far more public resources than the high income guy. He should be paying more. On a cost/payment basis it would be far more equitable to pay a flat asset tax than a flat income tax. Plus the guy with the income is distributing his wealth which is providing a greater help to the economy. This encourages sharing rather than hoarding. Also the flat income tax has a bias in favor of inheritance over working.

And as I implied before it's easier to hide income or sales than assets so a flat assets tax has more integrity as far as the possibility of cheating.

Is that really all there is? You pasted the text of a column in your post #27. To quote: "If you are already rich, you can tax shelter much of your income, but if you have little in the way of assets, it is almost impossible to shelter your earnings from taxes." The context of this statement refers to super-rich people like John Kerry. Is the statement basically accurate? If so, then that's what needs to be corrected.

Sorry I still don’t get it. The guy with the million dollar house and 30 K interest income would pay no taxes since he can deduct his property tax (which would be 8-12K year). But are you saying he has no other income? Seems rare at best. Most people who live in million dollar houses have high incomes and pay appropriately AND pay big property taxes.

The guy in the apartment pays no real estate taxes or building up keep. And I don’t see how this would work. If you tax assets again do you drop the property tax? This is the source of nearly all school funding.


The real shelters used by the likes of Kerry etc are money in foreign banks, or from foreign sources kept in foreign banks, and trusts etc. I would stop this immediately.

A flat tax is a reduction of tax on the top 1% and an increase of tax on everybody else. Bad idea.

The flat tax would end deductions. Deductions are good things for working people. I would encourage the government to have more deductions for working people (such as commuter costs) and less for the top 1% (though most are phased out through AMT anyway).

Finally , what problem are you trying to solve with a flat tax? Most working people get w-2s and don't need to consult the IRS Code. They just put in their gross income, take their standard deduction and look up the tax owed on a conveniently provided table. So the flat tax won't make things easier for working people.

Let me guess -- your real agenda is you don't think it's fair for Bill Gates to pay a higher tax rate than his janitor. Isn't that really it









This literary makes no sense. Deductions are good things and mostly reflect economic reality. If you make $100, but it cost you $100 to make that income. You have zero cash in your pocket. So you should pay a tax on the gross $100. But you want to end the deduction for the outlays it took to make the $100. That's literary economic insanity.

Let me repeat: deductions are good things. Working people should get more of them, not less. You need to take deductions into consideration in order to determine the economic reality of the CASH you actually have, as opposed to the gross receipts. You don't buy groceries with GROSS RECEIPTS, you buy groceries with CASH, which is GROSS RECIEPTS minus DEDUCTIONS.

The flat tax is something that I support not only on economic but philosphical grounds. First, the economic:

From Milton Friedman's Capitalism and Freedom (in 1961):



While the economic benefits of the flat tax are apparent, there is an even larger philosophical reason...its the most fair.

From FA Hayek's The Constitution of Liberty (in 1960):




The flat tax allows everyone to know what it is they will be paying in taxes as they become more propserous. It is a fair way because it is not an arbitrary assignment of who should cary the burden. An increase in taxes would not be seperated by class but would affect everyone equally.

Translated you want to reduce the tax rate on the superwealthy and increase it on working Americans because you think its "unfair" that Bill Gates has marginal dollars taxed at a higher rate than his janitor.

Let me suggest your defintion of "fairness" is unique.

If I had my way, the tax rate on everyone would be less and it would also be a flat tax. My advocacy for a flat tax is directly related to the scenario that Hayek created. People will reap the benefits of work they have done and will not be punished for being successful. This measure is aimed at helping the working American, not hurting them. Everyone paying an equal percentage of their income is fair in my mind...and i dont think it is very unusual for everyone to be taxed equally.

Since 40% of the superwealthy inherit their wealth your analysis is faulty from the start.

But leaving the false morality aside, why is it "punishing" the top 1% by making them pay a higher rate, given that they benefit more from society and given that $1 to a billionaire is not the same as $1 to a minimum wage worker. Your flat tax scheme would in fact not tax people equally since it taxes lower income bracket Americans at a higher level, since they need capital to pay for the basics of life; a billionaire doesn't. (Indeed raising taxes on the top 1% has no effect whatsoever on their economic activity, since the superwealthy don't sit around waiting for a tax cut before buying a new DVD).

In addition, the lower rates on the wealthy means lower revenues, and hence less social services. This means less recycling of capital from the top bracket to the lower brackets, where real economic activity occurs.

Finally, just say it: you think it's unfair for Bill Gates to be taxed at a higher rate on marginal dollars than his janitor. Say it loud and be proud of your touching concern for the welfare of billionaires. Life is so unfair to the superwealthy.

Perhaps you could elaborate on this instead of pulling the "i'm right, you're wrong" approach.



You are discriminating against a person because of their economic status. I know that this probably sounds comical to you, but you are coercing a citizen to pay a larger percentage of there income for an arbitrary reason. A flat tax would have everyone pay an equal percentage of taxes per their income. A progressive tax system, while aimed at the superwealthy only hurts those of modest income. For a middle class worker, there is less incentive to move up the ladder of progress because it would in fact be a step backward since they are taxed more heavily.



Perhaps less revenues is a good thing. Not everyone is in agreement that more government programs is a positive. Furthermore, if we follow your logic train right into the station, then wouldn't your contention be that mass redistribution of wealth would increase economic activity since more capital would be sent to the lower bracket? I would have to disagree with that.



I will say it loud and proud because that's what I believe. A proportional tax is a principle not based in arbitrary logic. Do you agree that people should get equal pay for equal work? Then why should a person who is more successful than his/her counterpart suffer under a progressive tax system? I know you are trying to use the two extremes to make your point but you completely disregard the middle which breaks your argument. My argument has nothing to do with caring for the welfare of billionaires even though thats what you would like to make it out to be. Your problem is that you do not see income as related to the value of the services rendered but as conferring what is regarded as an appropriate status in society. Your argument appeals only to emotion and prejudice. I think that people who make $80,000 a year should pay the same proportion of their taxes as people who make $80 million. The logic being that it has both of them share an equal burden of their situation. When you analyze your argument of why the wealthy should pay a higher proportion, there is nothing there. Nothing but an arbitrary will to take more money. There is no true foundation for it.

PS- Bringing up Bill Gates is kind of weak considering he has probably spent more money in charity than any person in history.

Well, you as a typical market fundi made the silly claim that flat taxes allow people to keep their hard earned money. Now put two and two together and see how silly it is to moralize wealth accumulation, given the fact that 40% of wealth is inherited. I guess it's a great moral feat to choose rich parents.





Yep, the more money you make, the higher rate you should pay. If you think that's discrimination, I can only say, you have a wierd definition of the term.

But I'm glad you've admitted that your real concern is protecting the poor billionaires from being discriminated against. They really need your support. It's touching. If not comical.

Here's a concept: raise taxes on billionaires and help working people get more capital. Now that's something I can get behind. But of course you really don't like working people do you since you've already admitted you think the rich are morally superious.



We've already debunked this. 40% of the wealthy inherit their wealth so in what sense are they "successful". You mean lucky.

What a bizarre arbitrary system you want to support.

But even assuming the top 1% earned every dollar, so what? The fact is one dollar to a billionaire doesn't equal one dollar to a minimum wage worker. So you're whole premise is utterly flawed and completely ideological. It isn't based on reality.

But it sure is fun playing with market fundis. It's like taking candy from a baby.



As a tax lawyer, of course, I realize that the 9 million words have been put in there mostly by industry lobbyists, so it's not like the IRS went out of the way to make it complex. But giving the devil his due, most of provisions are their to reflect economic reality, and most only effect large companies. I'd say 99% of the IRC is irrelevant to W-2 workers.

So what problem are you trying to solve with a flat tax (besides reducing taxes on the wealthy)?

A progressive system would affect less people leder. Currently there are 38 million people making less than $16,000 and only 400 people making billions. Progressive taxes gets more money to the treasury and affects less people, and the people it affects are those with a great deal of superfluous income. I doubt you could find a person in poverty with superfluous income. There is no such thing as a middle class, there is a small minority of people that make the $80,000 you use as a guideline. The national average is around $46,000 per year. Meaning Bill Gates and his $42 billion + 913,042 other people with zero income make up the national average. There is a small handful of rich people and a large majority of poor people. A progressive tax takes less from people with less, and more from people with more. A flat tax does the opposite.

The underlying theme here is the Big Lie that is the American Dream. The American Dream is a myth, but there are millions of wide-eyed students reading textbooks who believe that if they get a degree and work hard they will be rich and that's not true. The truth is, if you are born rich, you will stay rich, and if you are born poor, you will stay poor.

How could you disagree with it? Based on what information or beliefs? People buy what they can afford, if people could afford more they would buy more, up until a certain threshold and then they would start to save more of their income than they spent. But it is an absolute certainty that at the lowest levels people spend everything they earn and sometimes more. To suggest that if wealth was somehow redistributed to these lower brackets and it would not increase spending means you are completely out of touch with reality. If a person in poverty at $16,000 a year receives government benefits to the amount of $5,000 annually, they would spend every penny of that $5,000. That would be an increase in economic activity, the alternative is to sit in the bank of a wealthy individual and collect interest, which is an economic leak, i.e. - bad for the economy.

If Bill Gates did not have such disproportionate income, there would be no need for charity. Bill Gates gave $1 billion dollars to his charity, leaving him with $41 billion dollars. What's the matter? Bill can't live on $20 billion? That wouldn't suit his lifestyle. The guy could give away half his money and it wouldn't change his life one bit, but it could change the life for millions if he did.

Equal pay for equal work? That's a laugher. Who makes more money? The stockholder for GM or the guy making the car? The stockholder. What's his job? Nothing. Own stock and collect while the lowest paid man works the hardest. I understand you are indoctrinated into thinking the way you do. Hopefully there comes a point in your life where you learn that what they teach you in books is different than what happens during life's journey.

Obviously you have a problem with inherited wealth. The problem you have is that you fail to take into account that the wealth came from somewhere. If I work hard enough during my lifetime to make a good amount of money, I would want whatever I earn to go to my children to ensure that they are able to live comfortably. Wouldn't you agree that is a noble goal? If you do, then how exactly are you going to set a bar for how much money that should be allowed to be left to your kids? Do you have a non-arbitrary method for doing so? Perhaps you would like to continue to appeal to emotional arguments that have no basis in reason.


Discrimination



Actually I think it fits the definition of discrimination pretty well.



My true concern is making sure that people are treated equally and that the government is not overstepping their tax authority. I know it makes it easier for you to rationalize your position on a good/evil basis. Billionaires being evil and the poor person being good. Very interesting. Perhaps you should read up on Nietzsche's Mas