Is a flat tax a fair tax???

Question

I'm doing a position paper on whether a flat tax is a fair tax or not..... And I'm having a hard time finding information on this subject online.

I wanted to know where I could get any articles.... preferably magazine or newspaper articles..... in favor of the flat tax. I need to be able to quote them as sources.

opinions are welcome too. : )

Thanks

Answer 1

A flat tax is the ultimate fair tax, as long as you don't fiddle around with it. If truly flat, each person would pay the same percentage of income regardless of source and regardless of age, marital status, income bracket, or occupation.

The first problem is introducing zero brackets for poor people, exclusions for certain types of income (such as pensions), higher exclusions based on being married or having children, or offering deductions for certain occupations (such as an educator's credit or student credit or something for farmers).

Congress loves to use the tax code to adjust the behavior of citizens; some say that's what the tax code is for, and so even a flat tax will never remain "fair", regardless of what anyone says now. Each of these items will cause different rates for different classes of people.

Bostonian above is not discussing whether it's fair, he's discussing the impact it will have on society. We have a "progressive" tax system, meaning the higher your income, generally, the higher % of tax you'll pay.

Right now, if you're dirt poor, you not only don't pay an income tax, you could possibly get something back through the EIC. If you're in the lowest tax bracket, you'll pay 10% of your income, highest tax bracket, 35%.

Shifting to a flat tax will relieve wealthy Americans and penalize lower income brackets, which is easy to see. If Congress chooses 15% rate, everyone in the 10% or zero bracket will pay more, everyone in the 25%, 28%, 33% or 35% brackets will pay less.

As it stands right now, our progressive tax is not even close to "fair", but it has a light impact on the poor, lower class, and working class families, and this is going to be a very difficult benefit to give up.

It used to be worse.

In 1944 and 1945, there was a 90% tax bracket! Since then, we've been trending to a more and more level playing field:

1950, highest bracket was 80%
1965, highest bracket was 70%
1982, highest bracket was 50%
1993, highest bracket was 39%
2003, highest bracket was 35%

Answer 2

A flat tax is anything BUT a fair tax.

The so-called Flat Tax is a ploy by the wealthy to transfer their tax burden to the shoulders of the middle class and working poor. Why do you think that folks like Steve Forbes like it so much?

For a flat tax to raise the revenue that the current graduated income tax raises would require a rate of around 25% - 27%. The wealthy pay a marginal rate of 35% so they'd see a nice fat tax cut. Steve Forbes, Bill Gates, and Warren Buffett would pocket MILLION$ on a flat tax.

Most middle-class working stiffs -- folks like you and me -- pay a total tax rate of between 10% and 20% of our total income. Pull out your tax return and compare the Total Tax line to the Total Income line -- and don't forget to add back any 401(k) contributions and your pre-tax medical insurance deductions -- and see what your total effective tax rate is. If you're like most folks, it will be a LOT less than 25%

Now, what would it do to the working poor? Let's have a look. Take a single parent supporting 2 kids on around $16k a year. They don't pay any tax at all and get about $4k in EITC payments. That makes for a little under $18.8k a year when SS and Medicare taxes are considered. They survive, but just barely. With a flat tax, the EITC would disappear and the tax bite would rocket to over $5,500 for them, including SS and Medicare. Take home pay would drop from from $18,800 to about $10,450. They'd be tossed into the streets by the millions. All so Steve, Bill, and Warren can have even more money than they could ever reasonably need.

The Flat Tax and the so-called "Fair Tax" -- a hugely expensive national sales tax -- both violate the first rule of taxation: Make sure that the taxpayer can afford to pay the tax. Our current graduated income tax does just that -- everyone pays their fair share and the poorest get an assist from those of us who are better off.

The impact of the "Fair Tax" on the working poor would be just as devastating as the Flat Tax since nearly every penny they earn goes to pay for essentials. The wealthy spend a far smaller portion of their total income and would get a major tax break.

Worse yet, the "Fair Tax" would require just as much work by the IRS to ensure that all sales were properly taxed and that the funds were rendered. Black marketing of untaxed goods would go through the roof. Look what is happening with tobacco and liquor in high-tax states right now. And we all know the type of element that black marketing attracts -- organized crime and gangs. Wouldn't THAT be nice, getting a TV or your Captain Crunch from the local gang-banger. No thanks!

Answer 3

Flat tax. i've got labored 30+ years, paid taxes on that earnings, and stored for my retirement and that i don't choose to be taxed back once I spend the money I even have stored up. to boot, the honest tax would discourage spending and be undesirable for the economic equipment. With the flat tax, people who earn extra will nevertheless pay extra, however the disincentives to earn extra would be bumped off as greater earners will now not be punished by utilising greater rates and absence of deductions (on the grounds that there is not any deductions). It would not precisely eliminate the IRS however the 20,000 pages of tax code would desire to get replaced by utilising one line. Your earnings x tax fee= your tax.

Answer 4

Yes but only when it replaces all other taxes, especially including the highly regressive and very unfair social security tax. Millionaires only pay social security taxes in January - most everyone else has to pay them January through December.

The monies collected from social security taxes have been given back to the wealthy in the form of tax cuts. Now, the wealthy are attempting to get those social security IOUs forgiven or repaid with new taxes they will not have to pay.