Let's have a Flat Tax

[Sandpiper]

We'll set the Tax rate at 20% for everyone.

But that 20% will cover ALL sources of income, not just earned income.

That means 20% of wages and tips

20% of commissions

20% of interest/investment income

20% of stock dividends

20% of capital gains


Think the rich will still go for it?

[ComerPerro]

1. Hmm, I am thinking the GOP might not like that

[Worst Username Ever]

2. They'd totally go for it.

The rich don't work for tips, so they won't mind that. Most investment income, commissions, etc is taxed at ordinary income, so that will be a massive tax cut going from 40% for them down to 20% for them. The sacrifice of the dividend going from 15% to 20% is minimal in comparison. I'm not sure but I think cap gains is also at ordinary income, so that would cut their tax bill in half, too.

[wicket]

4. A lot of investment income is actually taxed a lot lower than wages

Which is why I'd suspect they'd be way against this,

[fob]

3. How about 20% wealth tax, that way money is forced to be invested

somewhere or else it's all gone in 5 years! No more bushian* aristocracy. Think of the things the infusion of THAT capital will produce.

[EVDebs]

5. Overall tax-wise we ALREADY DO have a flat tax

Please read Chapters 7 and 8 of Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich -- and Cheat Everybody Else, by David Cay Johnston. And your 20% is about what everyone already pays in when state, local, and federal taxes are combined !

This is a verrrry regressive tax system as the wealthy already offshore and/or hide most of their taxable incomes; the wage earners whos income is reported directly to the IRS isn't so lucky.

Maybe if incomes were reported from the SEC and Treasury department datafiles for the wealthy to be more accurately taxed...

[Sandpiper]

7. The point is, the Flat Tax that's been bounced around by the right

Would only tax earned income, while completely exempting interest, investments, and cap gains.

It's the ultimate regressive tax, yet it's peddled to the less informed as being more "fair."

[AP]

6. Let's not and say we did! A person who makes 20k a year shouldn't be...

...charged the same rate on an additional dollar of income that a person who makes 20 million a year. That dollar is so much more valuable to the lower income person that it wouldn't be fair to value it at exactly the same level as a rich person.

The wealthier you are, the less valuable an additional dollar of income is to you (partly because it becomes easier to make another dollar, and partly because there's so little difference between the life you can enjoy as a 30 millionaire and and 30,500,000-aire, whereas there's a huge difference between the life a $10-aire and a 500,000-aire enjoys). So for the tax burden to be apportioned fairly, the person who has more dollars should pay a little higher marginal rate than the person who has fewer dollars.

Furthermore, wealth from different kinds of activities is more socially valuable, so we should reward it with lower levels of taxation. Work is the most valuable thing a person can do for money, so we should tax income from work at the lowest rates. Wealth from cashing a dividend check is much less valuable, so it makes sense to tax that at a slightly higher rate than work.

[Pithlet]

11. Yes. It's so simple.

Thank you. I don't know why we keep having to see flat tax seriously considered here. Anyone who isn't a multi-millionaire right winger should just outright laugh at the suggestion. Yet, we see it proposed seriously here time and again. I'm going to go scream now.

[bryant69]

8. How about every flat tire you get

Firestone (or any other tire company) has to pay $10,000 in Tax to the government.

I hate getting flats.

Bryant
Check it out --> http://politicalcomment.blogspot.com

[Pithlet]

9. Of course they will

Right wingers would love a flat tax. They've been pushing for it. It's about the most regressive form of taxation there is. Shove even more tax burden on the poor and middle class. Why not? If peope at DU can entertain this ludicrous idea, then hell, go for it.

[whistle]

10. And how do the numbers come out in terms of tax revenues....

...and government spending? Also, that won't eliminate state and local income taxes, property taxes, sales taxes, excise taxes, import taxes, service taxes, fees which are taxes....did I miss any? You get my point.

Suppose that from $11.5 trillion GDP:

wages and tips come to........ $3.0 trillion
commissions come to........... $1.0 trillion
interest/investment income.... $4.0 trillion
stock dividends come to....... $2.0 trillion
capital gains come to ........ $1.5 trillion

At 20% of each of these....... $2.3 trillion in revenues are created
But spending is budgeted for.. $2.6 trillion

that generates a deficit of... $0.3 trillion so the U.S. continues to be in debt for ever

[dawg]

12. And that's with no exemptions or deductions ....

which would amount to a HUGE tax increase on average workers.

[whistle]

13. well flat tax idea precludes any exemptions or special deductions

...that's the idea behind the same tax rate for everyone. It is regressive however, because we all know that lower income people are hit hardest because they are not in the same position as wealthier people to give up one fifth of everything they make. In fact, pulling a number of 20% out of the air doesn't just happen by accident. The lowest tax rate I believe is 10% for single people with taxable income of under $3,000 and it isn't until one has taxable income in excess of $65,000 that the tax rate for single filers hits 20%

<link> http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

That means that people with normal deductibles, own a home, pay interest on a mortgage, etc. probably make $85,000 in gross income before they hit a tax rate that is 20% and that is 80% of the tax payers. Thus, they are hit immediately with the heaviest burden. But, the wealthy who make more than those levels find ways to shelter much of their income and so they rarely pay over the 20% even now. So the flat tax is very regressive and for that reason could never be sustained. It would create two economic classes in the country as well, which is also unsustainable.

[LondonReign2]

14. We already have a flat tax!

[LiberallyInclined]

15. i could support it-

if there was a $35,000 personal exemption.