Back it up with logic, please. (:
2006-12-19 10:14:05 · 9 answers · asked by ? 2 in Business & Finance ➔ Taxes ➔ United States
I would definitely support a flat rate income tax, as in a certain percentage of each person's income. Sales tax is the same percentage for every person in one city. Why shouldn't income tax be the same percentage for every person in the country?
Since the country needs a certain amount of tax dollars each year, regardless of who pays what, all they would have to do would be to calculate the budget for the next year, then calculate everyone's adjusted incomes for the year. From that they could determine what percentage they need to charge everyone to come out even.
2006-12-19 10:22:53 · answer #1 · answered by Trailness 2 · 1⤊ 3⤋
A 19% flat tax does not mean that most will pay less tax. If all deductions other than a personal exemption are to be eliminated the effective rate will be not much less than 19%. My effective rate is half that, give or take a basis point. My wife and I earn a little above average for our locality. Our tax deductions are pretty standard. We get by, without any real extravagances. Doubling tax for the majority is not a good idea. It would ruin the economy.
Remember, businesses would be similarly crippled. The hope implied by Steven F that wages would go up to compensate is wishful thinking.
We do need to simplify taxation, for sure. When we do, there will be winners and losers. If the proposal from the re-write committee gets accepted, the winners and losers will notice significant changes. Many will call that unfair, but it is no more unfair than a flat tax.
As for sales taxes, why should we impose the most regressive tax of all on society? Why should the wealthy only pay tax on what they consume? Why should minimum wage workers be expected to pay more - much more - to put food on the table. The only solution is to have credits for low earners. Hey presto! An income tax. Except we don't tax income, just give relief. And how would people prove entitlement? There would be no need for W-2's. Businesses would complain about certifying. That requires auditing.
The US tax system is not perfect. It needs an overhaul but the basic concept is fair and reasonable.
2006-12-20 00:33:41 · answer #2 · answered by skip 6 · 0⤊ 1⤋
A flat rate income tax would be much better than the mess we call the Internal Revenue Code. I prefer replacing the income tax with a national sales tax. The first answer talked about businesses and individuals paying the same rate. NEWS FLASH: Businesses may write the check, but the customers pay the tax.
2006-12-19 11:19:23 · answer #3 · answered by STEVEN F 7 · 1⤊ 1⤋
I am convinced that a flat-rate income tax along the lines of the Hall-Rabushka plan is the best one ever devised.
Robert Hall and Alvin Rabushka are, respectively, an economist and a political scientist with Stanford University’s Hoover Institution. Their flat-tax plan dates back 25 years, showing how taxes could be filed on a postcard.
The key to their system is sweeping away every deduction, exclusion, credit and exemption in the tax code with the exception of a large personal exemption of at least $5,000 per person. Businesses would not be able to deduct anything except cash wages to employees and purchases of materials or equipment from other businesses. Businesses and individuals would pay the same single tax rate.
While simple conceptually, this plan would require elimination of deductions for state and local taxes, mortgage interest and charitable contributions. Businesses also would lose the deduction for interest and no longer would be able to exclude payments for employee fringe benefits, such as health insurance, from their taxable income.
On the plus side, interest income no longer would be taxable either to businesses or individuals, nor would dividends, rent or capital gains. Hall and Rabushka concluded that a 19-percent rate on businesses and individuals alike would equal existing corporate and individual income taxes. On balance, they estimated that most individuals would pay less than they do now.
The size of the personal exemption and the rate can be negotiated. Congress could enact a higher rate and a higher exemption so that more people would pay no income taxes at all. What is not negotiable is the issue of a single rate on businesses and individuals. Take that away, and the whole system collapse.
2006-12-19 10:20:31 · answer #4 · answered by Brite Tiger 6 · 2⤊ 2⤋
Sugartopone in the post above whines that a flat tax would be unfair to low wage earners. Most flat tax proposals take care of this problem very easily: The first $40,000 or so of income is not subject to the flat tax. Everything above this level is taxed. So, poof! The problem is solved.
2006-12-19 10:39:33 · answer #5 · answered by Flyboy 6 · 1⤊ 2⤋
A flat income tax could be said to be unfair to low wage earners like wise high wage earners could be said to gain.
"Logic" the tax is flat the earning amount is not.
2006-12-19 10:30:11 · answer #6 · answered by sugartopone 3 · 2⤊ 3⤋
Hate it, I am self employed and my deductions save me 1000's per year. If I pay a flat rate, I would be broke, and I might as well get a job.
2006-12-19 11:22:02 · answer #7 · answered by act as if 4 · 0⤊ 1⤋
People make different amounts and those amounts need to be taxed appropriately!!
2006-12-19 11:24:28 · answer #8 · answered by RoRo 3 · 0⤊ 1⤋
Don't worry, Congress always carries a spare.
2006-12-19 11:42:24 · answer #9 · answered by TaxGuru 4 · 0⤊ 0⤋