What is flat tax?

Question

explanation brief if possible.

Answer 1

The "Flat Tax" is an attempt by the ultra wealthy to cut their tax liability and transfer it to the shoulders of the middle class and working poor.

Contrary to what its touts claim such as Steve Forbes, the rate would need to be close to 27% to raise total revenues close to what the current graduated tax system generates. This would be a major tax savings for the highest income taxpayers who currently have a marginal rate of 35%.

The average working stiff would see his or her tax bite double or triple (or worse!) under a flat tax system with no deductions or other field-leveling tactics.

The working poor, who currently pay little or no income tax at all, whould be thrown into the streets by the millions as they would no longer be able to pay their rent, utilities and food bills. A single parent with 2 kids making around $16k a year barely survives. They pay no income tax. The $4k or so in EITC makes survival possible. Under a flat tax system, their take home pay would plummet by over $8k per year ($4300 in tax and no more EITC). What kind of social upheaval do you think THAT will cause?

If you don't believe my claim here, check it out for yourself on YOUR tax return. Take the total income line (before any adjustments for IRAs, alimony, etc.) and add back any 401(k) or other retirement account contributions and multiply it by .27. Compare that number to the Total Tax line on your return and you'll see that I speak the cold, hard truth.

(If you're Bill Gates, Warren Buffett, or Steve Forbes you'll LOVE the number you see. But if you're like most taxpayers, you'll get sick to your stomache pretty quickly.)

Answer 2

The web site "FreedomWorks.org" suggests this:

"The Issue
Today, Americans are paying the highest taxes in the nation's history. The current complex tax system includes several inequities. It penalizes married couples by making them pay higher taxes than single individuals. And many Americans face a death tax that claims a significant portion of their estate after they die.

The FreedomWorks Position
We want to scrap our confusing, unfair tax code and replace it with a simple flat tax of one low rate with no deductions or special interest loopholes. We also want lower taxes at the federal, state, and local levels. We want to keep the Internet free from taxes as well."

That is a decent brief account. For fuller information type "Flat Tax" into a decent search engine, like Google. Wikepedia has an note on the subject also" Hope this helps.

Answer 3

It is a plan to tax the middle classes and give the benefits to the rich. The idea is that we remove all deductions and reliefs and charge the same rate to everyone, rather than the graduated system we have now.

It fails Adam Smith's first test, that taxes should be based on ability to pay. It is also stupid beyond belief. The tax system gives reliefs very efficiently to those who need it, such as families. If families see their tax bills go up, there will be a push for more welfare, which will take a bureaucracy larger than the IRS. I know there is corruption with the Earned Income Tax Credit. If Congress would appopriate money to the IRS to allow them to stamp this out, we would all be much better off. The IRS is capable of doing a very good job in collecting taxes. It just needs to be allowed to do so efficiently.

Answer 4

a lot of things i have read, the i.r.s.,.....can;t even produce the law that saids that the people are even required to pay taxes for the work they provide,.....