Because They've Earned It

[Aliantha]

My point is that if you put the 'flat rate' at a rate high enough to cover those things, low wage earners are going to suffer while the wealthy will just continue to get wealthier.

I don't believe flat tax is the answer.

How am I talking about taking anything away?
At what point did I state that the State would receive fewer taxes?... the result would be quite the opposite.
Nor did I discuss, at any time, what would be done with those taxes.
Are you sure you are reading my posts?

Per your second post (you may want to start using the Edit button), now I know you are tail-posting.
I have specifically addressed your points and how, & why, they would not happen.
I will not repeat myself other than to say the poor will pay less due to no sales tax and lower income tax and the wealthy will pay more due to no loop-holes or shelters.
Please read my posts before arguing with me... I cannot figure out why you are making assumptions without reading the posts.

[Aliantha]

I was, but I've decided to stop for today.

It is my opinion that it just bothers you, and many others, that the rich will not be taxed "more" than the poor.
You want a punitive tax, am I right?

[Undertoad]

Health care is expensive partly because is it subsidized by the government.

About half of all health care in the US is paid for by government and it is a terrible price shopper.

Take for example the prescription drug plan passed recently. Katkeeper notes that the price of her drugs rose to meet the amount of coverage she newly had. Yes, that's exactly how you would expect the market to operate. If the government gives you $2000 a month and says you can only spend it on prescription drugs, then the price of prescription drugs will rise to meet what people will now pay.

This is Economics 101 stuff, and sadly the healthcare companies have taken the course and government has not. You can see a smaller, but similar effect in the price of college tuition, which also rose (at 10%/year a few decades ago) to meet what government was putting into it.

The market forces do not go away simply because you use government to try to "fix" the inequities in them.

[Happy Monkey]

Plus, the government was explicitly prohibited from negotiating for lower prescription drug prices.

Healthcare companies have taken Lobbying 101, too.

Health care has nothing to do with how the taxes are taken initially.

[Griff]

Originally Posted by Undertoad

This is Economics 101 stuff, and sadly the healthcare companies have taken the course and government has not. You can see a smaller, but similar effect in the price of college tuition, which also rose (at 10%/year a few decades ago) to meet what government was putting into it.

The market forces do not go away simply because you use government to try to "fix" the inequities in them.

I gave my 12 year old this speech last night. She'll spring it on her very conservative civics teacher next week some time and blow her mind. (her teacher loves her willingness to argue politics even if Iraq/environmental issues create the illusion that they are always on opposite sides)

[glatt]

Originally Posted by rkzenrage

A flat tax is a "Flat Tax"... there are no loopholes, 2% or 10%, that is IT, no matter WHAT, come Armageddon, cancer, three arms, the boogie man or a "religious institution".
Income is income or paying for something is paying for something, end of story.

Just because you say it is the end of the story, doesn't make it so.

Take a look at the lesson of the movie "Coming To America" as an example of loopholes that will still exist with a flat tax. You probably have heard of this story. Paramount, the maker of the movie, was found to have stolen the idea for the movie from a script submitted by Art Buchwald. He was awarded damages. Even though the movie grossed over $350 million dollars, Paramount claimed there was no "net profit" made. They were able to use a fancy high priced accounting firm to show that the movie made no profit.

Those fancy high priced accounting firms are still going to be around after a flat tax, and they will work for the rich only, showing that they didn't make as much money as everyone assumes they did. Income is income for the poor, but income is not income for the rich.

Gross profit = end of story.
Earnings are earnings.

[Shocker]

I think there is probably a lot of misunderstanding between posters here about flat tax and how it will affect poverty, rich, etc. With a flat tax, let’s just arbitrarily pick 1% for example. Currently, we have a progressive tax system, which means the more you make, the more you get taxed. Tax rates vary from 10% for the lowest earners all the way up to 35% for top earners. Amazingly, and very few people ever realize this, but this as far as I know, the only government sanctioned discrimination written into our laws. They discriminate based on income. Now, to come up with taxable income we take all taxable earnings, and we make deductions. EVERYONE is eligible to do this regardless of how rich or poor they are. You can either itemize or take a standard deduction to find what your adjusted income would be. I mean, just by giving the option of choosing between the two, the government is allowing people right there to decide how much they can deduct to get the best benefit for the tax payer. Aliantha- you are concerned with the cost of healthcare in the U.S... Well just considering the tax consequences of healthcare, and not any of the social programs to supplement healthcare (because that is an unrelated topic), just know that because EVERYONE is eligible to make deductions, there is also a deduction for qualified healthcare expenses. So even the poor who need healthcare benefit from taking this deduction so they DO pay fewer taxes. Anyways, once you've gotten your adjusted income, you can take tax credits. These nifty little things are for lots of different things. Often, tax credits are given as a means to promote certain activities among taxpayers. There is a tax credit for driving a 'green' car, credits for teachers, for research, having children, going to college, etc. Tax credits are a dollar for dollar reduction in someone’s tax liability. Again, ANYONE who qualifies can take them, regardless of their income. Credits like the Earned Income Credit though, which is typically for lower income tax payers who meet certain criteria can actually even result in a refund for the taxpayer, which means they can get back more than what they paid into the tax system... its like welfare without the stigma! All of the 'loopholes' are not simply ways to get out of paying taxes, but if you know what you are doing and understand the tax code, you can use it to your advantage to minimize your tax liability. And I feel pretty confident that everyone who has posted here tries to find ways to minimize their liability, even if not consciously- because I am sure everyone takes all of the deductions and credits they qualify for to the limits allowed.

Now there are three alternatives that come to mind when there is talk about revamping the tax code. The first has already been talked about in detail here so I won't spend much time. It is the flat tax. Simply put- do away with all income tax withholding, sales tax, capital gains, etc. At the end of the year, you take ALL of your earnings and multiply by 15% for example. So a person who made $10000 pays $1500 in tax for the year. (Remember no sales taxes, so it isn't as bad as some may think) and a person who is a CEO making $1 million a year in salary and benefits pays $150000. Hell that’s way more than I make in a year! And there are no deductions or credits to get people out of paying. You just pay your fair share. The second option is a National sales tax. This approach is not based on income at all, but rather on consumption. In most proposals for this plan, food is considered a tax free item, so poor people are not hurt by this. However anything else spent with disposable income would be subject to a national sales tax. Again it would be a flat rate, say the 15% again. So it is still equal in that you pay your fair share, plus I'm sure we can all agree that the wealthy have more money therefore they spend more money so they pay more tax.

The third alternative and the one that I prescribe to is called the Fair Tax. I know I've rambled a lot on this one so I will just provide a handy link to a website dedicated to the Fair Tax so that you can also learn more about this plan. In short though it takes the best of the first two alternatives and combines them into one comprehensive plan. http://www.fairtax.org/fairtax/about.htm

I'm sure we can all agree that the wealthy have more money therefore they spend more money so they pay more tax.

Nope, most of the wealthy's money sits in savings, investments and in intangibles and is not spent at all... I do not agree and most who know, would find that to be part of the current problem.

[Shocker]

Originally Posted by rkzenrage

Nope, most of the wealthy's money sits in savings, investments and in intangibles and is not spent at all... I do not agree and most who know, would find that to be part of the current problem.

LOL ok rkzenrage that may be true but I guess I didn't say what I meant quite right either. What I meant, and what the national sales tax boils down to is that even if most of a wealthy person's wealth sits in the bank or some other investment house, they will still spend more than your average person. I will agree that there are some wealthy people that got that way by being frugal, but for the majority, they like to spend their money just as much as the next guy. Whether it be on cars, houses, fine dining, boats, etc... And even when they have money in savings, say under the current system, all that would be taxable would be interest, not the money they've accumulated. And when their money is in investments under the current system, they only get taxed on that when they sell the investments (capital gians). So even if most of their money is in savings or investments, the tax result from those holdings would largely remain unchanged.

I hope that clarified the point I tried to make on that one a little bit.

[Happy Monkey]

Originally Posted by Shocker

Currently, we have a progressive tax system, which means the more you make, the more you get taxed. Tax rates vary from 10% for the lowest earners all the way up to 35% for top earners.

Further note (I'm not saying you don't know this, but I have run into people who didn't): The top earners are not taxed 35% on their entire income; just the part over a certain limit. Everyone gets a certain amount of income tax-free, then a certain amount taxed at 10%, then a certain amount taxed at the next level, etc, and the remainder is taxed at 35%. There is no point, based purely on the progressive tax system, at which earning a dollar more will cause your taxes to increase by more than 35 cents. Deductions, credits, AMT, etc. can do weird stuff, though.

Amazingly, and very few people ever realize this, but this as far as I know, the only government sanctioned discrimination written into our laws. They discriminate based on income.

Heh, funny. And parking stickers discriminate based on where you live.

The biggest problem with "flat tax" discussion is that the idea of a single tax rate and the idea of eliminating deductions and credits are in no way tied together. Removing deductions and credits could be done just as easily with progressive tax rates, and removing progressive tax rates could be done while leaving deductions and credits in place. Arguing the merits of one doesn't transfer to the other.

[Flint]

Originally Posted by Happy Monkey

Arguing the merits of one doesn't transfer to the other.

Discussing flat tax means we also have to consider polygamy, because the underlying principles would make us a hypocrite othewise.