Speaking of taxes........
 

........I would hope that someone could logically explain to me why the "flat tax" concept is bantered about but never given a test. Does the populace not understand the meaning of percentages? Contributing a single percentage of gross income across the board is as fair as it gets and is as old as tithing. What are the arguments against a flat tax scheme?

A dollar against a donut hole says that not a single argument against will hold up to logical scrutiny.

There are actually a lot of people who are against it, I would be there would be plenty of people out of work it we adopted it. The IRS and Accountants would be heavily affected I would guess.

"In embracing a tax overhaul, Republicans will be taking on some of the most powerful interests in Washington: home builders and Realtors facing the possible loss of the mortgage interest deduction; doctors and other service providers who might have to charge sales tax; and hospitals and universities facing the loss of tax deductions for charitable contributions.

Indeed, core Republican constituents such as the home builders' lobby and the National Federation of Independent Business are already gearing up to ensure that no pure form of a national sales tax or flat tax gets enacted. The National Association of Realtors is dusting off a 1995 study by DRI/McGraw Hill that concluded that housing prices would fall 15 percent without the deduction.

A pure flat tax may be politically unrealistic because some common tax advantages are too popular to kill. With each exemption, the flat tax grows. With too many, it would fall of its own weight. Consider a 20 percent flat tax: If Congress decides to retain the earned income tax credit to counter charges that the tax hurts the working poor, the rate must bump up to 20.4 percent, according to a study by economists William G. Gale, Scott Houser and John Karl Scholz. If the powerful home building lobby saves the mortgage interest deduction and philanthropists retain the tax break for charitable contributions, the rate climbs another 1.5 percent, to 21.9 percent.

Businesses are expected to insist on maintaining the deduction for payroll taxes. If they succeed, the rate will soar to 25.1 percent. Once Congress got through all the exemptions that lobbyists would insist the country could not live without, the flat tax rate would exceed 30 percent, said Gale, a senior fellow at the Brookings Institution.

Critics say both plans would raise taxes on middle-income taxpayers, a natural byproduct of lowering taxes for the wealthiest. The flat tax, for example, would exempt investment and savings income from taxes -- lowering taxes for those who own most of those investments. A sales tax would bite hardest on those who have to spend most of their income on household expenses.

For these reasons, many lawmakers are unwilling to embrace a specific plan. Instead, the idea gaining the greatest currency is a bold -- its critics say facile -- plan to repeal the tax code and require Congress to write a new law."

http://www.cnn.com/ALLPOLITICS/1998/...cq/taylor.html

I oppose the flat tax because it would dramatically increase my taxes. I would have been in favor of it back when we were dual income, no kids, and no mortgage, but now we are single income, two kids, and a mortgage. I pay very little in federal taxes and I'd like to keep it that way.

It may seem selfish of me, and I suppose it is, but they taxed the hell out of me before, and I deserve to be able to take advantage of the tax structure now. When my kids grow up and move away, and I'm in my peak earning years, and our mortgage is paid off, they will tax the hell out of me again, so it's not like I'm on a free ride forever.

It puts much more of a burden on the poor. If you make $12,000 and they take 20%, you have $9,600 left to live on. If you make $12,000,000 you are left with $9,600,000.

The IRS and Accountants would be heavily affected I would guess...TheMercenary

I would have been in favor of it back when we were dual income, no kids, and no mortgage, but now we are single income, two kids, and a mortgage. I pay very little in federal taxes and I'd like to keep it that way.....glatt

If you make $12,000 and they take 20%, you have $9,600 left to live on. If you make $12,000,000 you are left with $9,600,000......Happy Monkey

The total number of IRS employees at all levels is approximately 115,000, making it our largest federal bureaucracy. Auditors make up 25%, collectors 15% and criminal investigators 3%. The other 57% make policy, run the computers, answer taxpayer inquiries and god only knows what else. There is talk of downsizing the IRS to 85,000 employees. The most recent IRS budget was almost $11 billion......Stand Up to the IRS
by Attorney Frederick W. Daily


Hyoi: Reducing goverment expenditure would reduce the size of the flat rate percentage. Logically, 115 thousand could adjust to the betterment of 300 million.

All flat tax proposals have one “loophole.” Households receive a generous exemp­tion based on family size. For instance, a family of four would not begin to pay tax until its annual income reached more than $30,000. For those who think the “rich” should pay a higher percentage of their income, the generous family allowance effectively creates a modest level of “progressivity.” For instance, a family with an annual income of $20,000 faces a tax rate of zero........July 7, 2005, A Brief Guide to the Flat Tax by Daniel J. Mitchell, Ph.D.

Hyoi: All plans have a minimum income level cutoff and provision for family size.


Next !

Well, there it is. Exemptions and progressive levels of taxation. Recognized as necessary in all flat tax proposals. And that's what we already have.

How long has it been since you looked at a 1040 tax table? The "level of progressivity" in flat tax schemes is practically nonexistent in comparison. Have a look at the 1040 instructions. A flat tax form might, I say might, have 9-10 lines. Post card size including instructions. No tax tables.


Next !

No, a flat tax tax table would look virtually identical. All it is for is to do the multiplication for you. The formula used to generate the table wouldn't shrink the table.

And you'd still need all the complicated instructions to determine what counts as income to input into the table.

Not in the scheme I have in mind. Once you've determined that you qualify as a taxpayer, income would be gross income....period. There would be no table at all, simply one percentage value. A fifth-grader could complete the form for you.


Next !

It's kind of pointless for us to debate a hypothetical scheme you have in your head. Once I have said scheme in front of me in black and white and I can see what it does for me, then I can comment on it.

You're right. I'll do a bit more research and get back.:redface:

Republican House Majority Leader Dick Armey and Sen. Richard Shelby have proposed a simple 17 percent flat tax plan, with no loopholes or giveaways for special interests. You could file on the postcard-sized form below. Taxpayers would no longer waste 6 billion man-hours and $192 billion just complying with our current complex tax code. The average American's federal tax burden would be reduced $1,000 per year. A family of 4, earning $33,000, would pay zero federal income tax. This is genuine tax reform, since the typical American family now pays more in total taxes than it spends on food, clothing and shelter combined.

Citizens for a Sound Economy; 1250 H St. NW #700; Washington DC 20005

Where's capital gains?

Or do you plan an even bigger giveaway to the wealthy?

At what rate would you tax capital gains? Corporate profits? The above example is for working stiffs like I was for the better part of my life. Now I'm just stiff as a result.

Something wrong with a uniform rate for ALL forms of income? That was the original question, was it not?

That's what I'm asking you. There's no line for it on your form.

Just for kicks, I pulled out the 1040 we just filed and then figured out what my tax would be with the form you posted above, and my tax would be 2.8028 times what it is now. I'm opposed to it.

If you are curious as to my economic status, our household is below the average for households in this area. I would consider us to be middle class on the national level, but slightly lower than middle class for this metropolitan area. But then we just have one income, so it's to be expected.

My taxes would increase by about 6000. And I'm not rich. Er, no, I don't think so.

Incorporations can't have children. Use your imagination and visualize the first line reading simply......Gross Profits, Cash accounting method.

Next !

Am I the only one who finds that big red 'Next!' a tad irksome?

Did you not say that you paid little or no taxes? What is 2.8028 x (little or no) ? You've argued strictly for your individual position but you've yet to state a logical argument against the fairness of the overall plan. Once a money making entity, be it family, sole proprietorship, partnership, or corporation, achieves a predetermined level of income/profit, taxes are levied on such at a single percentage rate. ALL income is equally and therefore fairly taxed. You owe me a donut hole.:eyebrow:

Next !

It's intended to invite debate, issue a challenge. Last time I checked I was told that it's o.k. to be irked, but would you prefer a different color? Maybe 3-d? Or maybe you'ld like to enter the debate?

Next !

About tax systems? No thanks. I barely understand my own country's tax codes let alone jumping into yours. Did you mean for the 'Next !' to look arrogant and aggressive ?

At a 17% rate your taxes would increase by six grand and you're not rich? Hmmm.....you need to either find a good accountant or fire the one you've got.

Next !

Challenging I think. Not arrogant, surely.

Not being able to understand the tax codes is one huge reason to simplify the bloody things. Other than eliminating taxes completely, a single rate for everybody is as simple a plan as I've been exposed to......but I'm open to alternatives, which is why I've introduced the topic.

Next ! ;)

Yey that 'next !' is much nicer *smiles*

Personally I have never been in favour of flat rate taxing. The point has alreadybeen raised i think, that taking x% from someone who's income is less than 20k will impact that person/household far more than taking the same x% off someone who earns 600k. Out of that 20k I bet every cent is needed just to keep the wolf from the door, and every cent taken in tax was a vital one for that household. That isn't the case with the household of 600k. When you are counting pennies to ensure everyone is fed, you notice that x% going out of your income; when you don't have to think before booking a table at a restaurant or a flight to the bahamas, I doubt you feel quite the same sting from that x%.

In the UK we adopted a system of low rate tax for the lowest earners, 10p in th £1. Above the threshold you get the usual rates. These rates slide according to income level. When you go from one threshold to the next, the rate at which everything you earn above that threshold is taxed, becomes that bit higher, but what you earn below that threshold stays at the lower tax rate. Of course that's just Income Tax. the Council Tax system for gathering local government funds, is much less fair generally, as it is based on the which property band your house falls into.

Even worse when you understand that the wealthiest in the country have no income to tax. Most of their salaries are insignificant and many of them earn zero dollars.

Google CEO Eric E. Schmidt earned $1 last year.

do you mean your asterisks to be *smarmy* and condescending?

But if they are selling a handful of stock options here and there for day-to-day cash, that money is still taxed as capital gains. Don't most flat-tax plans still count capital gains as income?

The problem is that "flat tax" and "a simplified tax system" do not have to go hand-in-hand at all. Hyoi's graphic of the postcard-sized tax form could easily include staggered tax rates from 0% to 40% depending on the income bracket just by adding a couple lines. But a system that simplified is unrealistic anyway--just as one example, how in the world would the self-employed prove their net versus gross income?

Yup. *grins*

I've heard both versions suggested, but I'd guess you'd have to count any and all income. This, to me, means forms quite a bit bigger than a postcard.

I, personally, don't want a simplified tax system. Deductions and the sliding scale go in my favor and will continue to do so as my life progresses, property is purchased, etc. The benefits of the current system are too great, especially for people with low incomes and those getting their lives started.

I'd be a sucker if I supported a flat tax. A flat tax would hurt me. If you were me, would you support a flat tax? I suspect that many middle class people would find themselves in the same situation if they filled out this form.

Fair? Why should I pay more taxes so Donald Trump can get a larger refund?

Corporations are irrelevant. People can have capital gains, by owning stock, among other things. The fist line specifies wages, which are often an insignificant part of the income of the wealthy.

Correction: Happy Monkey pointed it out -- this is a tax on "wages". Stock options, dividends, etc, are absolutely not wages. This is massively flawed.

Quote:

I'd be a sucker if I supported a flat tax. A flat tax would hurt me. If you were me, would you support a flat tax? I suspect that many middle class people would find themselves in the same situation if they filled out this form. Fair? Why should I pay more taxes so Donald Trump can get a larger refund?.............glatt

Answers: In a heartbeat, and you wont. I'm by no means finished with the topic, in that I'm working on an even simpler form, but I thought you and Kitsune in particular might benefit from the following:

Legacy Time: Get to Work on the Flat Tax
Marc Johnson - 1/11/2005

What do Hong Kong and Estonia have in common? Well, for starters, they're among the most economically free states on earth, according to the Heritage Foundation's 2004 Index of Economic Freedom (communist-occupied Hong Kong is #1, former Soviet Republic Estonia #6 -- consider that the United States, supposedly keeper of the capitalist flame, is #10).
Hong Kong and Estonia also have a flat tax, and they are making it work for them.

As America breathes a sigh of relief that the election is over and the administration begins to steel itself for the dizzying array of tasks ahead, there are a lot of folks out there who hope that Bush, relieved of the oppressive yoke of a looming re-election campaign, will choose as his legacy a truly revolutionary change: radical reform of the U.S. tax code and introduction of a flat tax.

U.S. income tax rules are, as most Americans know, labyrinthine, ever-changing and capricious. According to some estimates, the tax code is over 50,000 pages long, and US citizens spend a billion hours (literally) every year reading, re-reading and re-re-reading the rules as they fill out their 1040 forms.

It's a fair bet that there isn't a soul in America who knows the whole code off the top of his head. But that doesn't stop lawyers, accountants, and drive-through tax-preparation outfits from capitalizing on the confusion of Americans. Those citizens who can't afford professional assistance are left to fend for themselves -- hardly a progressive or equitable system.
What current problems would a flat tax system solve?

- Confusion: there are hundreds if not thousands of exemptions and "if this but not that except if this..." rules. They make it difficult if not impossible for ordinary Americans to get a fair shake on April 15th.

- Inequity: One rate for all. No loopholes, no dodges, no accountants, no lawyers. You and Donald Trump pay the same portion of your incomes, the same way.

- Bureaucracy: When the rules are simple enough for even mere mortals to understand, there is no need for a bloated, expensive, and often oppressive IRS bureaucracy. The IRS would continue to exist, but it would need a much smaller building and would siphon off many fewer taxpayers' dollars.

- Gamers: Why are so many companies moving their main offices offshore? Why do investors sell off stocks at the end of the year? Why do big-money businessmen open Swiss bank accounts? Because they are trying to game the system to reduce their tax exposure. With rates lowered, there are fewer incentives to play (and less effort spent playing) these games. And greater overall transparency, which exposes cheaters.

- Revenue: According to the UK's Adam Smith Institute, states that adopt a flat tax "have found the low flat rate produces more tax revenue than the complex system which went before." Low rates stimulate investment and achievement, which leads to growth, more profits, and more tax revenue.

In fact, the concept of a flat tax is gaining popularity abroad, ironically in tax-happy Europe. Despite attempts by EU heavyweights France and Germany to impose their beliefs on incoming member states, many new EU countries have moved to a flat or near-flat tax. The Adam Smith Institute's Andrei Grecu did a survey of nine countries with a flat tax, and found that almost without exception, the system has been beneficial. All three Baltic States (Lithuania, Latvia and Estonia) have a flat tax, as do Russia, Serbia, Slovakia and Ukraine. These last three are recent additions to the flat tax club, but the Balts have been making it work for a decade and have some of the highest GDP growth rates in Europe. Even Russia, the economic basket case that it is, has experienced significant GDP growth since adopting the flat tax (and, moreover, has doubled tax receipts - notable in a country where tax evasion was a popular a pastime).

Flat tax detractors will drag out the usual litany of scare tactics about poor people paying more taxes. They will complain that this is yet another example of greedy Republicans giving breaks to Corporate America. And they will worry that the flat tax won't be applied fairly. What really galls them, though, is that they believe rich people should pay more.

Which is why the Bush Flat Tax has to be done right. It must:

- Be fair: All income must be eligible. Work income, capital gains, dividends, interest, the whole lot. This was the Achilles' Heel of earlier flat tax proposals.

- Be flat: Three brackets do not a flat tax make. The code might be simpler, but it would not be flat, and it would not accrue as many benefits as a truly flat tax.

- Have a floor: Those below a minimum income level (we'll leave it to the economists to sort out where that line is) must be exempt. But nobody should be paying a larger percentage of his income when the flat tax goes into effect, least of all the working poor.

- Be reasonable: Excepting the lowest earners, a flat rate of approximately 21-24% would end up being less than most households currently pay and well within what they are willing to pay. Americans are eminently reasonable and don't expect to go from paying 28% to 5% overnight. Moreover, over time the rate will decrease as revenues rise (this assuming that Congress and the White House are able to finally exercise some fiscal restraint on matters other than the War on Terror).

On the domestic front, President Bush could do far worse than have a revitalized and simplified tax structure as the cornerstone of his second term. As in the first term, he can lower taxes for all Americans. Make payment less of a chore. Create a more equitable system; stop punishing success. And above all, stimulate growth rather than bureaucracy. All in all, not a bad legacy.

The second term hasn't begun, but the clock is already ticking.

For more information about Flat taxes, you can visit Andrei Grecu's Report on the Flat Tax

Marc C. Johnson is a consultant and freelance writer. His work has also appeared in Reason magazine, Tech Central Station, NewsMax, FreeRepublic, and the Washington Dispatch.

The Sum of All Fears.....not by Tom Clancy

June 9, 1998
The Freedom to Choose Flat Tax
by Stephen Moore
Stephen Moore is director of fiscal policy studies at the Cato Institute.

Why is an idea that is so unambiguously in the national interest -- with economic benefits that could easily raise family incomes by thousands of dollars a year -- completely stalled politically?

The answer is obvious: because the political hurdles are nearly insurmountable. The flat tax tries -- in one fell swoop -- to topple every well-funded special-interest lobby in Washington, from tax attorneys, to life insurance agents, to realtors and mortgage bankers. Each of those groups will spend fortunes to protect the hundreds of billions of dollars in tax favors and loopholes they have successfully carved out of the tax code. We got a taste of how insidious and effective the anti-tax-reform campaign can be during the 1996 New Hampshire presidential primary when the housing lobby spent millions of dollars on TV and radio ads against the Forbes flat tax.

The home mortgage interest deduction, the charitable deduction and the write-off for employer-paid health care are three of the most sacred-cow tax write-offs in the internal revenue code. They and other tax carve-outs are so imbedded in the current economic structure and political culture that trying to eliminate them is almost certainly futile -- and perhaps political suicide.

It is time for flat taxers to stop trying. ( I disagree strongly) Tax reformers must now acknowledge the message that the political marketplace has been sending us for the past few years: the flat tax has broad-based appeal to voters, but there are still many millions of Americans who are emotionally attached to tax deductions and are very suspicious of politicians who want to take them away.

This is a part of what the existing system is costing us. We're already suckers.:eyebrow:

Tax Gap

In her testimony before Congress, Nina Olson, the National Taxpayer Advocate, said the following regarding the impact of noncompliance on taxpayers, in general:

"If we divide the 2001 net tax gap estimate of $255 billion by 130 million individual taxpayers, we can see that each of those taxpayers in 2001 paid, on average, an extra $2,000 to subsidize the unwillingness or inability of some taxpayers to pay their fair share."

In 2001 the average taxpayer paid $8,265 in taxes. With an estimated tax gap - which is the difference between what taxpayers should pay and what they actually pay on a timely basis -of $345 billion, this means that the 130 million taxpayers paid on average $2,649 more in taxes to subsidize the unwillingness or inability of some taxpayers to pay their fair share.
In other words, if everyone paid the taxes they owed, average individual income taxes paid per taxpayer could have been 32.1 percent less.

Olson, Nina E., National Taxpayer Advocate, "The Tax Gap and Tax Shelters," Taxpayer Advocate Service,
Testimony before the Senate Committee on Finance, July 21,2004.

Time is money.

According to a detailed study by the Tax Foundation, in 2005 individuals, businesses, and non-profits spent an estimated 6 billion hours complying with the federal income tax code at an estimated cost of over $265.1 billion. This amounts to imposing a 22.2-cent tax compliance surcharge for every dollar the income tax system collects.

A compliance burden of 6 billion hours per year represents a work force of over 2,884,000 people: Larger than the populations of Dallas (1,210,393), Detroit (900,198), and Washington, D.C. (553,523) combined; and more people than work in the auto, computer manufacturing, airline manufacturing, and steel industries combined. Projections show that by 2015 compliance costs will grow to $482.7 billion.

Compliance costs are regressive.

Business pays 55.7 percent of compliance costs, individuals 41.7 percent and non-profits 2.5 percent.

Compliance costs are found to be highly regressive. Taxpayers with adjusted gross incomes under $20,000 incur a compliance cost of 5.8 percent of income. Taxpayers with AGI over $200,000 incur a compliance cost of only 0.45 percent. Over 54 percent of all the tax surcharge savings resulting from tax simplification would go to taxpayers with less than $50,000 in adjusted gross income.

Moody, J. Scott, Wendy P. Warcholik, and Scott A. Hodge, "The Rising Cost of Complying with the Federal Income Tax," Tax Foundation, Special Report No. 138, December 2005.

Efficiency costs.

The efficiency costs of the federal tax system dwarf compliance costs. Efficiency costs occur when tax rules distort the decisions of individuals and businesses regarding work, savings, consumption, and investment. By changing the relative attractiveness of highly taxed and lightly taxed activities, taxes alter decisions such as what to consume and how to invest. When taxpayers alter their behavior in response to tax rules, they often end up with a combination of consumption and leisure that they value less than the combination they could have achieved if they made decisions free of any tax influences. This reduction in value is a welfare loss or efficiency cost. According to research by the Government Accountability Office, efficiency costs are on the order of magnitude of two to five percent of Gross Domestic Product (GDP). Based on GDP of $13.259 trillion in 2006, efficiency costs are an additional $265 billion to $663 billion.

"Tax Policy: Summary of Estimates of the Costs of the Federal Tax System," U.S. Government Accountability Office Report No. GAO-05-878, August, 2005, p. 20.

I did not know that. You learn something new everyday :P

Right there you'll get quite a few of the 401K and associated worksheets back. Most of the form is listing all possible forms of income, and determining how much of it is taxable. You can't "flat tax" that type of complication away, as it is generating the number that is flat taxed.

Hyoi, you seem quite firm in your adherence to these terms: "flat", "fair", and "floor". Don't you see that you can't have them all?

Let's start with flat. Pick your number, doesn't matter. Let's say, 20%, ok? If it were 20% for everyone, for **all** "income", then I contend that it's not fair. Because the poorest, as others have already pointed out, will be paying their one-fifth out of the food and rent money. Not good, certainly not fair.

So, you offer to provide a floor. Right away it's not flat anymore. It's got a big honkin' step right there at the beginning, can't you see that? I mean, if you're devoted to the strict concept of flat, then someone who's income is $100 less than the floor will pay nothing, and someone whose income is $100 over the floor will pay 20%. How is that flat? It's not.

Which brings us to fair. I believe a progressive system where people with higher incomes pay higher rates is more fair than a single rate.

It really hinges on how you define fairness. The proponents of a flat tax are using a simple mathematical definition of "fairness". That's ok, I understand the reasoning, but I do not agree that 20% of $100,000 of income is the same as 20% of $25,000 of income is the same as 20% of $1,500,000 of income. It *is* the same percentage, but how does that make it "fair"?

Think of all the other situations in which "fairness" is an issue. There are none that I can think of that do describe themselves as fair, that are widely held as fair, that also apply a *single* standard of judgment. None. Not sports, where we have pro and amateur leagues, not in our justice system, where we treat differently minors and adults. Not in the marketplace, where capitalism, marketing, intitiative and luck rule the day. Not in our families or our workplaces, where what each gives and each takes is so variable that no two are even the same.

I find a more reasonable concept of fairness in the words of President Kennedy: "Of those to whom much is given, much is required." Much in taxes, much in service, much in devotion. Fair changes over time. I sometimes need more than I have, and I sometimes have more than I need. How do you associate the users of a service with the cost of that service? What about the people who don't use a given service? And what about the cost of the commons? To whom should that bill be sent? To future generations, if history is any example.

One. Size. Fits. All. Doesn't work in the real world, and you know it, I'm sure. One size fits one group. The others fit other groups. You can make it flat, but that doesn't make it fair.

I agree with progressive. It helps build a middle class, which I am in a big favor of. A good middle class means a strong economy.

The only fair tax...
 

would not be on what we earn but rather on what we spend. No Income tax just a 17% value added tax on all purchases. Advantages 1) Wal Mart does the book keeping, take all receipts and send 17 % to the government 2) No more hugh, expensive breaucracy (though some could remain in an enforcement capacity) 3) No loop holes, even drug lords would pay--you spend the money, you pay the tax 4) Conserve resources, quit printing forms and books that stack to the moon and back every year 5) Help for the poor and middle class, the first 25000 anybody earns is not taxed (you send in a W-2 at the end of the tax year and get 17% of your earnings up to 25000 back in a chunk 6) Nobody ducks it, foreign tourists, illeagals, lawyers, and trust me people with money will spend it like always.

Who doesn't like this? The super rich for starters, the crooks, and of course the tax professionals. Don't worry they could get real jobs. A flat tax is unfair to the poor, this isn't.

The super rich and crooks would love it. The rich spend a much lower amount of their income than the poor, and wouldn't have much trouble buying particularly expensive stuff outside the US anyway. Crooks would have a 17% more profitable black market to play in.

Sales tax is pretty much the most regressive tax there is. The $25000 mark might shift the burden away from the poverty-level folks lucky enough to have W2s, but the middle class also spends a much higher percentage of income than do the wealthy.

Hong Kong has both a flat tax and a progressive tax system you can choose between the two.

Texas has no income tax, only sales tax. 8.25% in most cities. No one ever complains about it. Basic needs like food and housing are exempt from sales tax, so it's not as regressive as it might appear.

We have VAT. It's charged on trasactions and services. Some stuff is zero rated (Books in the UK are zero rated for VAT purposes. Also zero-rated are newspapers, journals and periodicals; printed music and maps and charts and doesn't apply to services such as insurance, some types of education, training and loans) and some stuff is 'reduced rate', like household fuel and sanitary towels (reduced rate is 5%) Most goods and services however incur the full rate of 17.5%.

What about food? Prepared food different from ... ingredients?

In Texas, yes, restaurants do add sales tax. And some things like liquor still get taxed in the grocery store, for example.

The number, the percentage, does matter. As a matter of fact, it is one of two numbers that are crucial variables. This one should be as low as possible.

The initial portion of the curve is flat, or straight if you will, except it is simply vertical. As you stated later, we are accustomed to floors.....minimum drinking age, voting age, driving age. Contributions by those "at the border" would balance statistically, in that few would (even if they could) suppress their income to be forever below the minimum. This minimum, this floor should be as high as possible.


This time I will select a few numbers. 10% of $30,000 is $3,000. 10% of $300,000 is $30,000, or ten times more. Your argument suggests that thirty times more is fair. Oh yeah ?

The reality of the precious progressive taxation system is that, above a certain income, individuals take advantage of techniques and loopholes that are economically out of reach for those below that certain level of income. The table states that they should pay 30% of income when in reality many, many, many pay glatt's "little or nothing". You're being fooled into thinking that this system justly and fairly redistributes wealth. Those that know how to take advantage of the ridiculously complex U.S. tax code laugh at you all the way to the bank and are the ones that fight the concept more fiercely than you.

The two above mentioned variables are what I am toying with, with the premise that the floor must absolutely maximal, the percentage rate absolutely minimal. I'm convinced that a fair combination exists.

I'll admit that owning a house gives me a huge loophole and owning a house is not an option for many people of lower incomes. So you have a valid point there. But all the other loopholes that I take advantage of are available to people of any income level. Most are means of funneling off income pre-tax to pay for health spending accounts, retirement accounts, and college savings accounts. The government puts those "loopholes" there because it wants the public to have a certain behavior and it rewards that behavior. The government wants me to save for the future and it makes it easier for me to do so.