What's wrong with implementing a flat income tax?

Question

Why is it so hard to have a fair tax system? There shoud be NO write offs for anyone. There should be no incentive one way or the other for anybody. Just pay 15%. Whether you make 1,000.00 or 1,000,000.00. It's the same burden, and it's fair. Oh yeah, the rich would actually have to pay taxes. That's why it won't work. It's up to us commoners earning 50k to bear the tax burden for society.

Answer 1

Well, for one thing, 15% wouldn't be enough to match what comes in today. See fairtax.org - even these people, who are pushing the flat tax, estimate a much higher percent even if it's applied at the retail level, an alternative to paying on reported income.

Most people currently pay much less than 15% of their income for federal income taxes. You can't just look at your bracket, which is the percent paid on the highest dollar, but at the total income vs. the total tax. Looking at total taxes collected vs. what's paid by low and middle income people should tell you that your assumption that the rich don't pay taxes is not correct - in fact, the upper income people on average pay a significantly higher percent of their income than the middle class, than the guy earning 50,000. And the Alternative Minimum Tax, established years ago, has pretty much eliminated the ability of high (and even middle) income people to avoid taxes altogether.

If you made $50,000 last year, worst case (single, no dependents, no extra adjustmemts or deductions) you'd have paid $7121 in tax. That's less than 15% of $50,000. If you were married filing jointly with $50K income for the year, with no additional dependents, adjustments or deductions, you'd have paid $4314, less than 9%. Are you really asking to have your taxes raised?

Under the current system, the lowest income people pay no federal income taxes, and in fact if they're working are often eligible for the Earned Income Credit, where they are given additional money over what they might have had deducted. Are you suggesting that the lowest income people should pay taxes that they don't now?

If you tax reported income, the underground, "under the table", paid in cash with no paperwork issued, economy isn't taxed. A huge number of people are escaping paying taxes at all (both currently, and if a flat rate was applied to all reported income).

Your proposal of a flat 15% on all reported income gives a huge tax break to high income earners, and hits the low and middle income people much harder than currently. Fair? Well, maybe - my personal opinion is that it isn't, that even though the current system doesn't have absolutely everyone paying a share, it's better than a regressive "fair" system.

Answer 2

Because it is a regressive tax system. With graduated rates the poor pay not tax or at a minimum 10 or 15% of their income in taxes. The rich pay 30% or more. If you put in place a flat tax as previously proposed the rate was 23%. So the poor would pay 23% and the rich would pay 23%. In additional the proposal was to not tax dividends but keep the tax on interest and wages. The rich live off of their dividends, so by not taxing them the rich would save even more in taxes.
No system is fair but I think that a system that has everyone complaining about taxes is probably more fair than a system where part of us don't complain.
Also keep in mind that the payroll tax is not part of the income tax and even in a flat tax regime this tax would still be there.

Answer 3

Because some people think that the poor have a right to leach off those who make more money. It's called socialism and carried to its ugly conclusion it leads to more poverty. It doesn't make the poor strive to work harder since the harder the poor work the more they are taxed and it provides disincentives for the rich to work since if they work less they pay less taxes.

The trick is to game it to the point where the rich still keep enough money to continue working so that you can rob from the rich and give to the poor (who are mostly poor because they don't work in the first place).

Addiction, disease and other boo-hoo cases are usually thrown into the mix to make it seem more emotional but logically everyone should pay their fair share. Imagine going to Starbucks and then paying more just because you make more.

The counter-argument for this is that those who make more consume more. Yes, when you go to Starbucks and have the money you can buy two lattes so that makes sense too. What doesn't make sense is Starbucks making you pay double for one latte than the next guy just because he is poorer.

Answer 4

back in my country, we have a flat income tax system, at a 16% rate. it was implemented about 2 years ago, everything is @ 16%, both corporate income tax and personal income tax, withholding tax, dividend tax...whichever (of course, except for social contributions, which take you skyhigh). however, this system is apparently working. the state gathered more money than ever, both companies and individuals actually started paying their taxes (for a change).

however, now we're about to join the EU and, apparently, we intend to go back to progressive tax rates. this is "the way"... not sure it's gonna be the way for us though... i mean, it was so easy preparing tax returns, for a change. :)

Answer 5

Please stop the liberal soundbites and go to rushlimbaugh.com where you will see, at the bottom of his home page, the pie chart from the IRS showing that the rich pay the bulk of the taxes in this country.

Answer 6

because it's too easy for the government