How would a flat tax system improve the economy ?

Question

Recently I asked how people felt about a national sales tax to replace the current IRS system of payroll/income taxes. Someone mentioned a flat tax system - I was wondering how a flat tax system could benefit the working poor and the middle class ? Would it be better for them , or would it just save the rich more money ?

Answer 1

we would still have the IRS - no improvement

the original Income Tax WAS a flat tax - but congress changed that - no improvement

in 1986 they tried a three tiered flat tax - but congress puts in 4000 changes a year - no improvement

guess it's time for the FAIRTAX and get rid of the IRS

BIG IMPROVEMENT

takes 3% of our Gross Domestic Product just to comply with IRS regulations and rules (that's gross)

takes us 24-30 hours just to prepare our taxes - and if we make a mistake - OH how we are liable!!!

so let's all pay at the cash register! ALL! and all Americans will get a tax 'prebate' since we dop not pay on the poverty level of taxes.

so for me - about $26k salary - would get 28% MORE take home pay including the prebate.

It would bring in more taxes 1.4 trillion would go up to 2 trillion
would pay for Social Security and Medicare and the Federal Govt

And all would pay - even the visitors to the US!
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11 Trillion $$$$ comes home from overseas savings banks
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our goods cost 20% less overseas (and here) which should increase our economy WOWOWOWOWOWOW
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but we will lose our home mortgage deduction (dangle the carrot)
uhhhhhhhh remember Boss Hogg? 10% of 10% of 10%
sounds like a lot
butttttttttttttttttttttttttttttttttttttttttttttttttttttttt
only 45 % of taxpayers file a schedule A -
Anddddddddddddddddddddddddd
we can only claim that amount over the 10,000 that IRS now
gives us -
annnnnnddddddddd
we only get to keep the percentage that we go over that 10k
soooooooooo would I rather have the 2% I might get back

or the 28 % sure thing

wow - I am really confused - 2 or 28 - - - - - - - - -

let me have the cart load of carrots - and you can keep the one!

all the best

Answer 2

Well the arguments for why a flat tax is better are as follows:

1. The current coed is very complex and therefore it is very costly to comply with it. It is estimated that the nation pays about 200 billion a year in legal and accouting and tax preperation costs just to comply with income taxation. A flat tax would eliminate most of this. The result is an injection of about 200 billion into the economy to be used in other sectors. This will increase the average wage.

2. Part of the problem with a graduated income tax is that as you make more, you pay more taxes. So there is an added dicinsentive to work harder and invest more. If your a doctor for example, you may decide not to take on more patients because you are now being taxed at 50% between state and fed taxes. So by making a flat tax, you remove a lot of the disincentive. More labor and investment is suppliied and prices stay down while economic output rises, and with it wages, including those of poorer and middle class workers.

3. It reduces loopholes and reduces the ability for special interest group lobbyists to manipulate the tax code.

4. It drastically reduces the size of the IRS savig tax payer money.


There have been a number of nations that have gone over to a flat tax, mostly in Eastern Europe. And though it is difficult to issolate this one policy change from others, most of the ations that have converted have experienced much faster economic growth since they had doen so.

If you are really interested, Steve Forbes has a book explaining it called "Flat Tax Revolution"

Answer 3

A flat tax would not improve the economy it would still not capture the underground economy. It would be produce too many losers to make it politically viable. Would only income be taxed or assets as well? It would not address corporations based in the cayman islands and it would raise the tax burden on lower income workers. The easiest solution is a national sales tax. It would have the advantage of encouraging savings and discouraging consumption both issues that need to be addressed to create a stronger economy.

Answer 4

particular. A flat tax might make existence extra handy for each individual. There are additionally countless tax cuts that could be a income besides. There could be no prefer for an IRS for this reason if we've been to close down all the IRS workplaces and do away with the pointless drain on the taxpayer there could be extra funds for effective projects. the fairly some out of activity IRS workers could have concern looking common artwork after being linked with legalized theft for many of years. whilst we are at it why not repeal the sixteenth substitute to the shape which gave Congress lots extra power over the persons via permitting them to create and or boost taxes whilst ever or everywhere they desire. it could additionally be that requiring the government to artwork interior of a funds because of the fact something human beings ought to do in elevating our families might yield an excellent extra advantageous boost to the financial gadget.