why not flat tax?

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Listen i am a reasonable person and i like to think every argument has 3 sides yours mine and what is the answer. I honestly think a flat tax would be alot less complicated.that and the “YOU HAVE MOR MONEYZ WE WNATZ IT! CUZ YOU CANT MAKE MORE THAN OTHER PEOPLES” argument pretty much justifies a communist goverment. My father dosent work overtime because after taxes its to the piont were he actually makes LESS working overtime. For those of you who do not know what a flat tax is here is how it works.
John Adam and Lucas all win money in a drawing. However in their country there is a flat tax of 10% off every dollar. Here is what each of them won before and after taxes.

John(poverty class) winnings 100$ – taxes 10% = 90$

Adam(middle class) winnings 1000$ – taxes 10% = 900$

Lucas(upper class) winnings 10000$ – taxes 10% =9000$

Everyone pays the same percent off every dollar they earn. I consider this fair.

Please someone give me a logical explation as to why a flat tax is a bad idea.

 
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Many people consider it fair until they end up in a shitty job. My non-economist take on it…

Progressive tax allows lower-paid workers a better standard of living while subsidising them by taxing the people who can most afford it. Higher standards for the lower-paid should equal less cost to the state in areas such as healthcare, justice, social services, benefits. Lots more stuff too, right down to less chance of social unrest.

It also gives a greater incentive for people who would be doing the low paid jobs to actually get a job at all, and the fact they’re working is the reason Large Company A can dump £50m of corporation tax into the system at the end of the year.

Progressive tax is better, which makes flat tax a bad idea.

 
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What do the best countries in the entire fucking world actually do? Do they use flat taxes or not? Whatever it is, it’s a pretty good answer.

 
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Originally posted by HolyLasagna:

What do the best countries in the entire fucking world actually do? Do they use flat taxes or not? Whatever it is, it’s a pretty good answer.

So, we should just continue with the status quo just because. That’s a compelling argument you make.

 
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The problem is that it takes a certain amount of money to stay alive. Depending on where you live and your familial situation this amount can vary but it remains true. But let’s say this number if 200$.
Person A earns 250$ person B earns 500$ and C earns 1250$. Now in order for the governement to function we need to generate say 500$ total from these people. This is a 25% of their earnings.
if we take a flat tax this means that person A now earns 187,5$ which means he will starve/forced out of his home. Person B 375 which means his disposable income is 175 which is sort of OK for him. And person C 937,5 which gives him a disposable income of 737,5 (notice that despite earning 2,5 times as much is disposable income is more then 4 times as much).

Now if we decide to instead tax person A for nothing person B for 25% and person C for 33% then A still has a disposable income of 175 and C now has a disposable income of 633 which is still more then 3 times the disposable income of B.

 
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NeilSenna & thijser are on the right trail of why a flat tax on INCOME isn’t as good as it appears on the surface. They’re talking about what is done w/ that income….broken down to two very crude basic accounting concepts of payouts of disposable income: subsistence (basic living expenses) and discretionary income (the fun, status, & being able to have a good retirement kind…savings).

OP, do some research into these two aspects of living on ones income.
I think ya’ll then begin to see what an UNADJUSTED for basic subsistence is tremendously unfair for those who end up w/ little to no (and even worse: NEGATIVE) happens w/ a flat tax on income.

Allow me to put it in something along the lines of a business.
It has a gross income of $1,ooo,ooo.

It has overhead An accounting term that refers to all ongoing business expenses not including or related to direct labor, direct materials or third-party expenses that are billed directly to customers. Overhead must be paid for on an ongoing basis, regardless of whether a company is doing a high or low volume of business. It is important not just for budgeting purposes, but for determining how much a company must charge for its products or services to make a profit.

Ya easily can figure out the transfer to a family’s overhead.
Those are the things that keep them from living under a bridge and begging for money.
The absolute expenditures that are pretty much fixed from month-to-month.

Then the business has direct expenses: _ expense that directly relates to a specific segment of the business operation_ These would be things that are variable…such as the labor, materials, etc. that fluctuate with the demand for the businesses’ product.

For a household….these expenses would be variables like the car breaking down, little Johnny needing new shoes, the house needing to be treated for termites, etc. Ya know, basic expense that can be seen as also being “overhead”….just not a monthly-constant ones.

NOW is where the differences of flat-taxing incomes really shows up: DISCRETIONARY income.

A discretionary expense is a cost which is not essential for the operation of a home or a business. For example, a business may allow employees to charge certain meal and entertainment costs to the company in order to promote goodwill with employees. In the home, discretionary expenses are most often defined as things which are “wants” rather than “needs”.

When a flat tax leaves a family w/ NO discretionary income (maybe even lacking….in/for basic necessities)…this includes what is called the working poor

While poverty is often associated with joblessness, a significant proportion of the poor in the US and Canada, but also Italy, Spain, and Ireland are actually employed.12 The wages the working poor receive are insufficient to provide basic necessities and lead to people making choices between having food on the table or having a table.3 Largely because they are earning such low wages, the working poor face numerous obstacles that make it difficult for many of them to find and keep a job, save up money, and maintain a sense of self-worth.

Those families that are on the bubble consist of what is known today as the vanishing middle-class in America.

On the threshold; finely balanced between success and failure; for example, if a qualifying competition for an event allowed the top eight runners to proceed to the next round then those who were close to qualification and could get through by a small increase in performance would be said to be ‘on the bubble’.

So, as my wife will tell ya….a lot of the middle class is only 6 month’s of loss of income away from being bankrupt. Or, if hit heavily w/ some large, unusual, unexpected event that wipes out even modest savings that were intended for such income loss (job layoffs, the plant burning down, etc.).

One of the reason the middle class appears so “affluent” is that it lives on borrowed money.
Money they pay huge interest on. When I was young, there were NO such thing as credit cards…no UNSECURED “loans”. The only things bought w/ borrowed money were the house & PROBABLY the car. One would contribute via a payroll deduction or banking account into a Christmas fund. In other words, what they paid for something didn’t have the added cost of interest. In fact, such savings efforts yielded some small interest.

Buying on time causes: _paying a payment every month and end up paying three times [not always] more than it originally costs.] This is what is called a decrease in purchasing power. But, it greatly increases the purchasing power of the guys who are lending that money. The more of your money they have….the more they make. The “poor” getting poorer….and the rich getting richer.

OP, I hope ya are seeing where Neil, thijser, & I are going w/ this basic concept of economic disparity in America. And why a flat tax just won’t put any real dent in cause of that disparity. Our very own GREED, GREED is what is “killing” us. Wanting things is natural. Wanting them so badly that one actually sacrifices a lot of other things is just stooooopid.
Esp. when those things are those which are the basic necessities of life instead of bullshit crap that is tossed aside so one can have the the newest, latest, bestest.

In my youth, there was something called keeping up with the Jonses
“Keeping up with the Joneses” is an idiom in many parts of the English-speaking world referring to the comparison to one’s neighbor as a benchmark for social caste or the accumulation of material goods. To fail to “keep up with the Joneses” is perceived as demonstrating socio-economic or cultural inferiority.

Today, the idea is to not keep up w/ them.
But rather surpass them, do it so well that ya leave them in your dust….but not so far behind that they can’t hear ya laughing about it.

 
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Originally posted by thijser:

The problem is that it takes a certain amount of money to stay alive. Depending on where you live and your familial situation this amount can vary but it remains true. But let’s say this number if 200$.
Person A earns 250$ person B earns 500$ and C earns 1250$. Now in order for the governement to function we need to generate say 500$ total from these people. This is a 25% of their earnings.
if we take a flat tax this means that person A now earns 187,5$ which means he will starve/forced out of his home. Person B 375 which means his disposable income is 175 which is sort of OK for him. And person C 937,5 which gives him a disposable income of 737,5 (notice that despite earning 2,5 times as much is disposable income is more then 4 times as much).

Now if we decide to instead tax person A for nothing person B for 25% and person C for 33% then A still has a disposable income of 175 and C now has a disposable income of 633 which is still more then 3 times the disposable income of B.

Which is why just about every serious proponent of a flat tax also has a negative income tax as part of the policy. That is, the government assigns a set income needed to live. If you are below that level, you don’t pay a tax. Instead, you receive an income (a negative tax) to get you or your family up to whatever that level is. That would be far more efficient than the bureaucratic nightmare that is welfare and will still allow state to supplement that income with welfare should they feel it necessary.

 
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issen, where do ya fit in the concept of minimum wage as something to help in the income disparity?

AND, while I have mixed ideas regarding this “government set income level” regarding negative tax….I mostly agree it is, at this time, the easiest least fucked up way to keep a large segment of the population from “going under”.

 
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issen, where do ya fit in the concept of minimum wage as something to help in the income disparity?

Minimum wage is really sexy politically. I mean, who doesn’t like the sound of lower-income people being guaranteed a higher wage? The issue with a minimum wage (which, subsequently will be raised due to inflation, an increase in the cost of living, etc.) is that it limits job growth. These people who want fast food workers to make $15/hour or whatever wage they’re arguing for, don’t realize there isn’t an infinite amount of money to pay people. In essence, raising the minimum wage decreases the number of jobs available because each company needs to have a greater amount of capital available to hire each individual person.

Here is how CATO views the minimum wage. I think there are really compelling arguments to be made both for and against the minimum wage. However, in my model of a flat tax with a negative income tax for low income workers, the minimum wage could be eliminated and it wouldn’t even be an issue.

I guess my personal view is I don’t really see the minimum wage helping a whole lot with income disparity, but it’s not something I’m too upset about the government having. I’d prefer an alternative, but I can live with a minimum wage.

 
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But you want to pay people until they reach a certain income and then apply a tax income? That means that people who earn less then the minimum have no reason to try and increase their income untill they reach the point they actually start to earn anything extra. What you could do is only apply a flat tax over money earned more then said bare minimum. But that would no longer be a flat tax.

 
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Originally posted by thijser:

But you want to pay people until they reach a certain income and then apply a tax income? That means that people who earn less then the minimum have no reason to try and increase their income untill they reach the point they actually start to earn anything extra.

Almost no one would be content simply living off of bare minimum needed to live. There are going to be slackers in every society, but the overwhelmingly majority of people are competitive and want to continue to increase their wages in order to retire earlier, have a better quality of life, buy new toys, etc. People don’t take their first job for, say $31,000 out of college and remain content with that total for the next 45 years. They want to advance professionally and increase their earning potential.

What you could do is only apply a flat tax over money earned more then said bare minimum. But that would no longer be a flat tax.

Correct – that’s what you would have to do. That’s is, if the government standard of living is $25,000, someone who made $26,000 would only pay tax on $1,000. Not a true flat tax, but a true flat tax is probably only achievable theoretically since a government has to maintain a minimum standard of living for its citizens. If a government didn’t have to do that, then you could just have the flat tax on all income.

 
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I think that the issue with flat taxes is that, say you make $1 over the living limit; now you owe your 10% or whatever it’s set at.

For you, that 10% in real dollars is huge. If they set the minimum income at, say, 25k/yr (pure spitballing here), then your 10% tax liability is $2,500.

That’s a few months of car payments, more than a few if you’re driving a real econobox (which you probably are at that income level).
That’s rent for multiple months, or a mortgage for a couple of months.

That’s a LOT of your real money.

On the flip side, if you’re in the upper tier, that 10%, while far larger in real terms, also doesn’t affect you nearly as severely.
Sure, that $50,000 from your 500k is a big stack of cash, but that still leaves you with $450,000 to work with and live off of.
That’s still damned close to 1/2 million dollars net.

The lower tier individual just lost $2,500 of the meager $25,000 they made.
That leaves $22,500.
$25,000 was pretty tight as it is, and now there’s even less. And when you’re making so little, every single bit counts.

Flat taxes, in this way, tend to disproportionately affect the lower classes.

 
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why not flat tax?

I’ll get around to responding once i finish laughing so hard that I vomit.

other questions:
why not take colloidal silver?
fiat currency, should it go away?
why have the federal reserve?
ron paul 2k16?

 
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I don’t think it’s fair to lump everything in together and just write it off, urine.
At least offer a solid opinion on why you think it is or isn’t a good idea.

 
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Originally posted by softest_voice:

I don’t think it’s fair to lump everything in together and just write it off, urine.
At least offer a solid opinion on why you think it is or isn’t a good idea.

flat taxes disproportionaly disadvantage the poor, who’re already shafted a fuckload by a modern aristocracy. which is p much what you already said

 
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Fair enough.
Just keep it civil :D

 
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Originally posted by urine420:

why not flat tax?

I’ll get around to responding once i finish laughing so hard that I vomit.

other questions:
why not take colloidal silver?
fiat currency, should it go away?
why have the federal reserve?
ron paul 2k16?

Im indpendent i knew flat tax was souposed to be bad but i did not know why.
Also Ron Paul should go shoot himself

 
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For you, that 10% in real dollars is huge. If they set the minimum income at, say, 25k/yr (pure spitballing here), then your 10% tax liability is $2,500.

No, your 10% liability would be 0. The taxable income would be whatever puts you above that minimum income. You would need to make $50,000 to have a tax liability of $2,500 in the 10% scenario.

Flat taxes, in this way, tend to disproportionately affect the lower classes.

I’m not sure I buy this, but let’s say it’s true. You know what else overwhelmingly affects the lower class? Cigarette taxes. Are you an advocate for eliminating them?

 
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Originally posted by issendorf:
Flat taxes, in this way, tend to disproportionately affect the lower classes.

I’m not sure I buy this, but let’s say it’s true. You know what else overwhelmingly affects the lower class? Cigarette taxes. Are you an advocate for eliminating them?

I’m not him but I’m on the same side of the argument as him.

And yes, I certainly do want to get rid of tobacco tax. Or half it, perhaps.

 
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Originally posted by NeilSenna:
Originally posted by issendorf:
Flat taxes, in this way, tend to disproportionately affect the lower classes.

I’m not sure I buy this, but let’s say it’s true. You know what else overwhelmingly affects the lower class? Cigarette taxes. Are you an advocate for eliminating them?

I’m not him but I’m on the same side of the argument as him.

And yes, I certainly do want to get rid of tobacco tax. Or half it, perhaps.

Any reasoning behind getting rid of tobacco tax other than just wanting cheaper cigs?

Personally I am happy for it to stay or increase, with all other taxes going through the roof, and government cutting services to peices, I don’t see why smokers deserve a break

 
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I’m not him but I’m on the same side of the argument as him.

And yes, I certainly do want to get rid of tobacco tax. Or half it, perhaps.

Fine, then – that’s just one example (and I would second dd’s question if you just don’t want to pay as much for your smokes or if there is some other reason).

Another tax that the left (not that you are, more in terms of softest) tend to just love are gas taxes so we can save an icecap, somewhere, allegedly or to stick it to those nasty oil companies (even though they pass on the cost to the consumer). Those hammer lower- and middle-income workers, yet we can’t pursue a tax structure that will, arguably hinder lower- and middle-income workers? The same can be said for the lottery – state projects are used and subsidized by poor people who believe they’re feeling lucky yet almost no one calls to end the lottery.

In essence: taxes that do hurt lower- and middle-income workers are fine. Taxes that may or may not negatively affect lower- and middle-income workers like the flat tax? Well, that’s just draconian! We can’t possibly do that (I say this as Obama proclaims the need for a carbon tax that will surely hammer the lower- and middle-class [ignoring the fact it won’t do jack shit for global CO2 outputs])!

 
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Problem is.
Businesses have gained too much power for their own good. The people can no longer self-govern.
If we still believe in democracy: the will of the people. Then there really need to be more checks and balances for business—who just don’t care about humanity. They are always chasing the almighty dollar. Whatever power they can appropriate: they will. If any of us found ourselves in the same position as business, we too would misuse our power. Just the way we humans are, but it’s nice to live up to an ideal where we care and try to help each other. Too bad we always get side-tracked in profits and luxury and comfort for our own individual lives that we can obtain. We don’t want to suffer so we seek as much comfort as possible once we have successfully socially maneuvered our ways into higher and higher positions. At the end of the day: it becomes about how good you are with people, alongside your own personal hard work, that translates to skills for a potential employer until you become the boss.

We do need to do something about temperature change. The way it is now: more and more elderly will continue to die due to unbearable weather. But that is a discussion for another thread. Hopefully the chemists are hard at work at stimulating the environment to suit humanity better.

On the flat tax: it’s not what it seems at face value; taking into account all the living expense each individual and family will incur.
Other posters have already pointed that out sufficiently, I think.

 
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Originally posted by dd790:
Originally posted by NeilSenna:
Originally posted by issendorf:
Flat taxes, in this way, tend to disproportionately affect the lower classes.

I’m not sure I buy this, but let’s say it’s true. You know what else overwhelmingly affects the lower class? Cigarette taxes. Are you an advocate for eliminating them?

I’m not him but I’m on the same side of the argument as him.

And yes, I certainly do want to get rid of tobacco tax. Or half it, perhaps.

Any reasoning behind getting rid of tobacco tax other than just wanting cheaper cigs?

Personally I am happy for it to stay or increase, with all other taxes going through the roof, and government cutting services to peices, I don’t see why smokers deserve a break

Yes – the tax where I live accounts for around 77% (probably close to 80% now) of the pack price, which is between £6.50-£8.50 ($9.69-$12.66) for a pack of 20, higher for posh brands.

That sort of tax burden is absurd, as a smoker or non-smoker.

But tobacco tax was always a poor example, as tobacco is a luxury item.

 
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In the interest of tobacco tax, in my state the price of cigarettes is going up around 1.50USD per pack. They’re already anywhere from $5-6 per pack, which I guess isn’t as bad as Neil’s is. I’m glad I’m not really much of a smoker or this would be really shitty.

Oh also flat tax is retarded because it’s harder for someone who makes 1,000 per month to live off 800 per month than it is for someone who makes 5,000 per month to live off 4,000.

 
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Yes – the tax where I live accounts for around 77% (probably close to 80% now) of the pack price, which is between £6.50-£8.50 ($9.69-$12.66) for a pack of 20, higher for posh brands.

Got it – you want it lowered for your own personal gain. Not especially surprising, but it’s nice to have confirmed.

But tobacco tax was always a poor example, as tobacco is a luxury item.

Then it’s the only luxury item ever that is used predominately used by the poor and you ignored gas and carbon taxes as well as the lottery.


Oh also flat tax is retarded because it’s harder for someone who makes 1,000 per month to live off 800 per month than it is for someone who makes 5,000 per month to live off 4,000.

The “The flat tax is stoopid and retarded” is a really, really uncompelling argument. Perhaps even more uncompelling is the argument that well someone who makes more has an easier time shouldering that burden. By that logic, someone who makes $40,000 and $40,001 shouldn’t have the same marginal tax rate because it’s far easier for that person who makes $40,000 to shoulder his burden. There should be a different tax burden after every dollar!

Someone making $40,000 and someone making $80,000 in your beloved progressive tax structure pay the same marginal rate is ok, but someone making $2,000 a month and $3,000 a month paying the same rate isn’t? What’s “retarded” is opposing a system for a reason that exists in a system you’re defending.