Why does the proposal of a Flat Tax receive fierce opposition from realtors, homebuilders, and mortgage banks?

Answer 1

If you think you already pay enough taxes a flat tax or fair tax will really make you mad when you find out how much more it's going to cost you just so rich people can have a "fair" tax system

Answer 2

They're not the only opponents! Anyone who is less than very wealthy should be opposed to it as well.

If you think it's a good idea, try this: Pull out last year's tax returns. Find the total income line. If you made contributions to a retirement plan, cafe plan or had medical insurance deducted pre-tax at work, add those back to the total income. Now, take 25% of that number. Compare that to the Total Tax line on your return, before any credits. If you're like most taxpayers, it will be quite a bit MORE than you're paying now. And if it isn't, then congratulations, you're WEALTHY.

FYI, a flat tax would have to be levied at about 25% to raise the same revenue that our current graduated income tax does. The current system caps out at 35%. The wealthy would get a massive tax break in most cases, except for those for whom the majority of their income comes from long-term capital gains. When you shift the burden from one group, you must either cut services or move the burden to another group.

If the wealthy get a break, the working poor and middle class must take up the slack. The poor wout be tossed into the streets, the middle class would become the new working poor and the wealthy laugh all the way to the bank. What's fair about that??

And forget the so-called "Fair Tax." It's the most UNFAIR of all, a massively high -- 30%! -- sales tax on EVERYTHING. On top of your current state income tax. Buy a $200,000 house and pay $60,000 tax! Or a $20,000 car and pay $6,000 (plus whatever your state fees are now) to get tags for it! There's an extremely good reason that it's been dead in committee since it was introduced: It has ZERO chance of EVER being passed. It sits there so some POLITICANS can use it for their personal gain, i.e. getting re-elected by saying they're trying to "fix the system." What a laugh!

Answer 3

The flat tax continues to tax or hinder production. It is a tax on labor and capital. The flat tax retains the compliance costs of calculating the income tax.

What we need is the FairTax (H.R. 25 ) which is a consumption tax that replaces all income taxes on the production side with a single simple rate on the spending side. The FairTax now has the support of hundreds of thousands, 72 congressional sponsors / co-sponsors, and 7 presidential candidates.

Answer 4

The government gives people deductions to encourage spending in some areas. One of them is the ability to deduct home mortgage interest. The fear is that if the interest is no longer deductible people will not buy as big of a home or might not be as willing to refinance that home.