Times are tough all over

[DanaC]

*Smiles at Lookout* you do realise, of course, that from my perspective the 'flat tax' system is a weapon of class war.

The higher up the income scale you go, the less impact that 15% tax will have on you and your life. If a household has a single earner bringing in $55k a year, 15% of the $20k higher bracket income impacts on decisions about some fairly basic household needs. When someone is paying $4 million in tax as 15% of their earnings above $35k, that doesn't leave them wondering if they can afford to put both their kids through college.

[eta] there's no need for progressive taxation, or anything else, to box us into class warfare. Class conflict is an inherent part of a class based society. You guys may define class differently, but it is there. And the conflict exists when the needs of those classes collide and conflict.

[HungLikeJesus]

But Dana, you can make that statement about every financial decision and purchase between those two groups.

[lookout123]

The purpose of the tax isn't to ensure everyone feels the same weight of burden, it is to raise money for necessary government functions. Penalizing someone for making more doesn't help those that make less to feel better about anything.

More importantly a system like this eliminates the millions upon millions of dollars spent every year trying to beat the tax system. (beat = not pay extra, not pay so little you get audited and penalized)

Most middle class Americans pay in the hundreds of dollars each year for an accountant to make sure they're doing things right and all they while they keep their fingers crossed hoping they don't get audited.

The very wealthy pay thousands up thousands to build tax shelters and bend the system to benefit them.

Who do you think feels the burden of that cost more sharply?

Two men go to a car dealership to replace their old vehicles. One makes $50,000/year the other makes $350,000/year. Who feels the pain more when they purchase a $30,000 car? Should we lower the price for one and raise it for the other so they feel pain equally?

Our government is not meant to make sure we all experience the same pain and joy in equal amounts.

[TheMercenary]

We pay an accountant to keep us out of trouble and to find ways to pay less tax legally. That is the way it is set up. If we all pay the same rate regardless of income not only would they get more money to run the government, we could make things simple for even the common man.

[BigV]

Originally Posted by lookout123

15% Capital Gains tax is ok, but lower would be better because the big players move their money and pay their 15% because they are looking at the big picture. Joe Six pack quite often makes horrible investment decision because he doesn't want to "lose" 15% of his gains to the government, thus setting himself up for a crushing when the market turns.

Joe Sixpack can certainly be a doofus, we agree. But having capital gains taxed at a different rate than other "income" flies directly in the face of your warning in the last paragraph here. Clearly, those with capital gains at all are a minority, and those with a substantial capital gains exposure are a fraction of a fraction of the rest of the flat tax rate paying population.

Originally Posted by lookout123

In the end I don't think any of those numbers actually matter so long as they are clear, strict, and enforced. There are two sides to every equation and the income side is less important than the expense side.

What?! I agree with you that 15 vs 14 vs 16 vs some other dang number is minutiae. But do you seriously mean that one side is more important than the other? YIN vs yang? How can expenses be more important than income?

Originally Posted by lookout123

The budget should absolutely be balanced and we should absolutely ditch the obscene "progressive" tax system we use. It is simply a political tool to enslave us in class warfare.

Good observation, see my first comment.

[lookout123]

Keeping in mind that this will not come to be for the simple reason too many people in powerful positions see this as an loss for them.

Accountants - oops, not as much demand

IRS - oops.

Politicians - Uh oh. There goes a major table slapping terrifying subject to rally the troops with.

[Aliantha]

Originally Posted by lookout123

I see where you're going and let me assure you that I know none of my ideas will ever be accepted and put into practice. I like simple, well defined laws that don't require an advanced degree and legal representation to enforce. That doesn't play well with lawmakers.

That being said, I've stated my position here before. Overhaul the immigration system here to allow anyone in who can actually find a job. No job? No entry. That is step one. Step two involves enforcing that legal process by absolutely destroying any company willfully employing illegals. Dry up the income which is the motivation for illegals coming in the first place. Step three involves creating truly painful penalties for those caught here illegally. Incarceration? Yep, in tent cities. When they are released they will be returned to the airport within their country of origin that is furthest from US borders.

I wasn't actually going anywhere in particular with that post. I just think it's an ethical and moral dilemma caused by laws which don't allow for such borderline (literally) issues.

Personally, I think it'd be better if we had a ship patrolling the straight in order to stop Papuans from making landfall in Australian territory, however the issue is not just about a boat to stop illegal landfall.

Anyway, I'd rather the disease be stopped where it enters than to be permitted to flourish in our tropical climate.

[TheMercenary]

Originally Posted by lookout123

Keeping in mind that this will not come to be for the simple reason too many people in powerful positions see this as an loss for them.

Accountants - oops, not as much demand

IRS - oops.

Politicians - Uh oh. There goes a major table slapping terrifying subject to rally the troops with.

Which is why none of this will ever make it past any house of Congress. So basically we are stuck with the same ole system and making any attempts to legally shelter money, get tax breaks, or do what ever you can do to avoid wealth redistribution.

[TheMercenary]

Originally Posted by lookout123

Two men go to a car dealership to replace their old vehicles. One makes $50,000/year the other makes $350,000/year. Who feels the pain more when they purchase a $30,000 car? Should we lower the price for one and raise it for the other so they feel pain equally?

Our government is not meant to make sure we all experience the same pain and joy in equal amounts.

More importantly the person who makes 50k a year needs to recognize that they cannot afford a 30k car and needs to get a car that costs 12k. That is what gets people in trouble. Living outside their means. They have this sense of entitlement to "stuff" ownership. The real estate mess is a large part of this as well. Now we have to pay for their bad decisions? I don't think so. Let them go bankrupt. Same for the big corps. And then you will get "what about the children!?!?!?" Sorry, ask mommy and daddy why they bought a Car/house/whatever they could not afford.

[lookout123]

Joe Sixpack can certainly be a doofus, we agree. But having capital gains taxed at a different rate than other "income" flies directly in the face of your warning in the last paragraph here. Clearly, those with capital gains at all are a minority, and those with a substantial capital gains exposure are a fraction of a fraction of the rest of the flat tax rate paying population.

Anybody who owns a little bit of a mutual fund outside of their retirement plan has to consider the capital gains tax at some point. That is more than half the country. (not going to pull the stats) Like I said 15% is acceptable. 0% would be better simply because I see what stupid tax-avoidance decisions do to individual retirement plans. Either way as long as it is standardized and "flat" I don't really care.

What?! I agree with you that 15 vs 14 vs 16 vs some other dang number is minutiae. But do you seriously mean that one side is more important than the other? YIN vs yang? How can expenses be more important than income?

How are expenses more important than income? Simple answer - my wealthiest client is a retired letter carrier. We all know they don't make a lot of money so his secret to success wasn't earning vast amounts of money - it was wisely managing the money he did earn so that it would meet his needs now and into future generations. It isn't what you make that matters, it is what you spend.

I picked the numbers I used based on some old back of the napkin stuff I did a long time ago. If 15% is insufficient to meet our initial needs - then start with 17%. I don't care so long as it is across the board. It is up to the government to prioritize our spending needs within the very real limits of the income that is generated. I cannot spend more than I make, neither can you, neither should they.

[lookout123]

Originally Posted by TheMercenary

Which is why none of this will ever make it past any house of Congress. So basically we are stuck with the same ole system and making any attempts to legally shelter money, get tax breaks, or do what ever you can do to avoid wealth redistribution.

Absolutely. That is the part that upsets me. I see politicians touting more "progressive" tax systems knowing damn good and well it benefits no one but themselves. they're power brokers, nothing more nothing less.

[dar512]

Originally Posted by TheMercenary

That was a pretty stupid statement on your part, but hey, that's cool.

Really? I thought it was rather clever.

[Aliantha]

This is a question for Dana and Sundae.

Is the social services system in the UK means tested? The reason I ask is this.

My Dad has worked his guts out all his life in average income jobs, first as an electrician and then in sales. He's now 60 and comfortably retired with a business he still draws an income from, and several investment properties which he owns outright.

ETA: It's actually two businesses if you count the mangoe farm he owns and lives on.

My fathers question recently has been that he's contributed to our social security here in Australia for about 40 years, and continues to do so, but he can't even get a pension card so he can get a half price fare on a bus. He doesn't want health care or anything like that. He really just wants someone to acknowledge that he's been a valuable member of society.

Incidentally, from my observations of my father, it's what you spend that's far more important than what you earn.

[TheMercenary]

I don't really have a lot of options. Other than maxing out my SEP contributions to the tune of 30k per year there is not a lot left over. I claim as much business deductions as I can but there is a limit to that as well. I am thinking about just becoming incorprated and funneling all my purchases of anything into that and claiming it, legally as a business deduction.

[DanaC]

You're right, taxes are there to pay for what is needed. The act of class war comes in when the legislative class orchestrate a tax system which is inadequate to the country's needs and justifies it by reducing what is considered necessary. The clear winners in this scenario are not just those in jobs paying less than $50k, they're also the billionaires on Wall St. The clear losers: anybody who is economically and socially vulnerable.

Tax the wealthy at a higher rate than the poor, and ensure everyone has access to healthcare, free at the point of need, schools for their children, a comfortable retirement and dignity in the difficult times.

The tax burden on your wage packet doesn't weigh so heavy when you don't have to try and do everything with it.