What are the advantages and disadvantages of having a flat tax?

Question

It seems like a good idea to me, but as an economic centrist, I prefer to weigh all the options before deciding what I like.

That was TAX, not CAR.

Answer 1

Since you live in Canada, Her people could not with all the social programs and entitlements afford a flat tax. After all who would pay for that socialised Healthcare. Prices go up but the amount of tax to pay for it would not. If you look at the first answer you would read between the lines. A flat tax haults any kind of spending. The government would be able to raise taxes across the board on everyone any time they wanted with out recourse other than, ya even in Canada a national election.

Answer 2

It would lower taxes for the super rich and increase taxes for the poor and keep thing the same for the upper middle class.

Basically it follows the conservative theory that if you tax something heavily, people won't do it. If you tax the poor heavily they won't become poor. It is a bad idea in all. It isn't flexible enough for a society as complex as ours.

The "fair tax" is a little better. It will decrease taxes for the super rich and increase some tax for the middle class and not punish the poor. It would reduce the size of the controlling organizations a little. They would deal with the same number of people giving paperwork, but the paperwork would be vastly simpler. If we established a national ID system and required people to verify that ID whenever they check out at a store, then I could see a variant of the "fair tax" tied to the ID working very well for the USA. I don't like the plan they have put forward now.

Answer 3

I'll answer your question with a question. Why should someone who make a lot of money have to carry people who don't even work at all? If I make $100 dollars, in a flat tax of 10%, I'll pay $10 in taxes. If someone makes $1, they pay 10 cents. Isn't that fair?

If you want to talk about discrimination, then talk about the current tax code. The US economic department has a website that states that the top 5% of income earners in the US pay 80% of the taxes here. How wrong is that!

No, I'm not one of them, but I am in the middle section of average incomes in the US, and yes, I am a charitable type person. I'll help the truly poor in a heartbeat, but don't force the people who have applied themselves and worked 80 hour weeks for 20 years to pay such a ridiculously discriminatory tax.

Everyone in this country needs to pay the same percent of the tax burden.

Period.

Answer 4

Both taxes have got their advantages. If you take Economics, you'll know what I mean. A flat tax is a direct tax and therefore will not cause inflationary pressure. However burden of the tax cannot be shifted. A national sales tax is an indirect tax and will thus cause inflationary pressure. But it's burden can be shifted to other consumers. Yup. They've all got their own merits and dismerits. It all depends on the type of policies the country is pursuing.

Answer 5

It would simplify the tax filing process.
A questionable disadvantage would be if there was a limit on the percent taxed or not.
For example, 10% may sound good, but if it can be raised in the future, the flat tax might not be the best idea.

Answer 6

People like it because the math is simple. A flat percentage of wages is paid in taxes. Most of us (even those educated in government schools) can multiply the taxes they owe under this system.

Problem by taxing wages, taking money that has been worked for and earned, you are encouraging people to work and earn less, or at the very least make it appear that worked and earned less. e.g. under the table compensation(wages not reported to DOR or IRS), frauds on the dole who "cant" work, etc etc. The opprotunity to try and cheat the system is only dwarfed by the incentive to do so. This system also does not tax those who are not "earning" an income. For the extremely wealthy in this country (the ones who th flt tax is supposed to target cause they can afford it) do not really earn an income in a lot of cases. They have turned the corner so to speak so that their money is now doing the earning in tax shelters, IRAs, trusts, what have you. The interest income on all of this would not be taxed under the flat tax plan since it isnt earned.

The flat tax also doesnt address more serious issues of taxation. My favorite (most hated) is the biweekly in my case extortion being done by the guys with guns. Every two weeks the guys with guns (Government) tell my employer that they are going to take X% of my pay regardless of whether I owe it or will wind up owing it. If I dont play by their rules I go to jail, my employer goes to court, we all lose, except the guys with guns. Many a mobster has gone to jail for less. The flat tax as far as I know keeps the withholding process in place and the has the taxpayer file and recieve a refund or bill at the end of the year.

The fair tax removes all of this. Your employer tells you that for your new job they will pay you 50,000 dollars, guess what they will pay you under the fair tax? 50,000 dollars, pretty neat huh. There are other benifits with this plan vs current tax models or even the flat tax. There is no filing or IRS simply pay a consumption tax on the point of purchase and recive a prebate check every month for the taxes paid for essentials of life (food, medicine, etc...) at the level of the poverty line. No more audits, no more cheats, no more class warfare of the rich dont pay enough or those poor people with their EIC (Thats what politicians like you know didvide and conquer so they can buy our votes with our own money), no more death tax, no more debate over illegals getting services they arent paying taxes for since even if they are paid in cash they would still have to buy something here to live and thus pay taxes(they would not be eligible for prebates). The fairtax is the fairest and simplest tax there is. It is also only on new goods and services so that used car you wanna buy, tax free, whereas now the taxes are paid everytime it is sold, everytime it is gifted, everytime you retitle it, every year in some states and localities through personal property taxes, see a pattern here.

www.fairtax.org

Simple, fair, and just.

Answer 7

Advantages:

1. Simplified filing.
2. If you're rich, a major tax break.

Disadvantages:

1. Would need to be about 27% to replace current revenue. Only the wealthy would get a break, everyone else would pay MUCH more.

Answer 8

Flat Tax Disadvantages

Answer 9

I have thought for years that we all should be taxed at the same rate - for instance 10% - that way the people who make more money would pay a lot more than the people who make less money, and yet it would be fair, because we all pay the same percentage. That would do away with all the write offs, loopholes ------- and tax consultants, I guess.

Answer 10

Just another tax break for the rich