[Winstonm]

mike777, on 2015-April-22, 08:24, said:

The thing is with income taxes is that defining taxable income is difficult. The definition changes all the time.

For sake of example say a flat tax on wages, but what are wages? Are health care benefits wages? Are subsidized lunch rooms, wages? Is a company rewarded fancy vacation a wage?

A flat tax is regressive. Dumb idea.

[gwnn]

Defining manslaughter and self-defence is also difficult, yet somehow still lawmakers bother to define them somehow and for better or for worse, judges (juries) use those definitions every day.

[mike777]

gwnn, on 2015-April-22, 08:27, said:

Defining manslaughter and self-defence is also difficult, yet somehow still lawmakers bother to define them somehow and for better or for worse, judges (juries) use those definitions every day.

but they dont change every month or every year. also in your example a few, very few highly trained use them in the law, not 200 million or so taxpayers. Even tax experts disagree on these definitions

[mike777]

Winstonm, on 2015-April-22, 08:26, said:

A flat tax is regressive. Dumb idea.

well most taxes are regressive but still fair point. I think those that advocate for flat taxes are also in favor of negative income taxes for many.

In any case you still have the problem of defining taxable income which is really my point.

[gwnn]

Making better, clearer definitions and a more transparent tax code is one thing. Having no tax code is another. I'm sure you know this, so I don't know what your point is.

[mike777]

gwnn, on 2015-April-22, 08:34, said:

Making better, clearer definitions and a more transparent tax code is one thing. Having no tax code is another. I'm sure you know this, so I don't know what your point is.

to repeat my point talking about taxes or tax codes aint easy, it is complicated even a simple, easy flat tax will never be as easy as those who advocate for it.

I am not sure any responsible person advocates zero tax codes.

[billw55]

Winstonm, on 2015-April-22, 08:26, said:

A flat tax is regressive. Dumb idea.

Although I often do not, this time I agree with you. A flat tax that generates the same total revenue as the current system would increase tax on the poor and decrease tax on the wealthy, which is the exact opposite of what we should be doing.

Universal sales tax is another one you hear from time to time. This might be even worse, as it would share some characteristics with the flat tax and also suppress economic activity.

The best way to tax is a difficult problem, but some bad ideas are easy to weed out.

[TylerE]

billw55, on 2015-April-22, 09:08, said:

Although I often do not, this time I agree with you. A flat tax that generates the same total revenue as the current system would increase tax on the poor and decrease tax on the wealthy, which is the exact opposite of what we should be doing.

Universal sales tax is another one you hear from time to time. This might be even worse, as it would share some characteristics with the flat tax and also suppress economic activity.

The best way to tax is a difficult problem, but some bad ideas are easy to weed out.

A flat tax done RIGHT down well might be ok.

That means - no seperate SS/Medicare taxes (which as it stands are basically THE most regressive tax ever), no deductions, and no seperate capital gains rate.

[helene_t]

TylerE, on 2015-April-22, 09:26, said:

A flat tax done RIGHT down well might be ok.

I dunno. The current US tax system probably means that the middle incomes are taxed most heavily. People with very low income don't pay tax and people with very high income know how to avoid paying tax. Warren Buffet may pay a lower rate than his secretary but he probably pays a higher rate than most people on food stamps do.

So a flat tax would be good for most people but possibly not for the very poor. This is so in most countries, I think, not specifically in the US.

Then again, I don't think an effective flat tax system would work. Some of the loopholes for high incomes would be impossible to close. So a nominally flat tax rate would effectively be regressive.

[GreenMan]

helene_t, on 2015-April-22, 09:37, said:

I dunno. The current US tax system probably means that the middle incomes are taxed most heavily. People with very low income don't pay tax and people with very high income know how to avoid paying tax.

Not so; poor people do pay taxes, especially sales taxes. Some states have no income tax and place a larger share of the burden on sales taxes, which the poor pay as a much greater proportion of their income than the rich do. The working poor also pay the regressive SS/Medicare tax.

A flat tax without loopholes for the rich will never happen, since it's the rich who control the system. Talking about it just wastes everyone's time.

[hrothgar]

FWIW, I could be easily convinced that a progressive income tax code without deductions is the right way to go.

By which I mean:

1. No deductions for anything (kids, mortgage, you name it)
2. Tax rate of -R1 for the first X1 dollars of income, 0 for the next X2 dollars of income, R2 for the next X3 dollars of income, ...
3. Income and capital gains are treated the same

You get the simplicity of a flat tax with a progressive structure

[mike777]

It seems even those that advocate for a flat tax are talking about 2 or 3 rates. The lowest rate being a negative income tax.

As other posters point out you still got the problem of defining what the heck is taxable income and politicians wanting ever changing definitions to justify keeping their job. Please note even if we get rid of all deductions we still need to define what is income such as reward vacations or cafeterias or health care or paid cars/taxis etc etc. Stuff we may get paid for in noncash.

Thus the simple flat tax code, which is the big argument in favor of it becomes complicated again

[hrothgar]

mike777, on 2015-April-22, 08:24, said:

For sake of example say a flat tax on wages, but what are wages? Are health care benefits wages? Are subsidized lunch rooms, wages? Is a company rewarded fancy vacation a wage?

Yes

[mycroft]

Also, remember road/gas taxes. No, the poor don't drive Lincolns, no matter what the scare tactics say (unless they owned one before they became poor, of course); but in many places in the U.S., no car == no job == no income. And Road vs Gas taxes (i.e. registration costs vs at-the-pump cost) can be very gameable to become highly regressive/highly tilted towards personal taxes vs corporate. I believe some state is currently thinking about moving from a gas tax to a registration fee. Somehow, detractors of the bill don't think that the trucks that do proportionately significantly more miles and even more significantly more gallons of fuel are going to pay anywhere near that much in bigger registration fees (never mind the fact that many of the trucks are registered out-of-state). So guess who wins from this, and who loses?

[billw55]

TylerE, on 2015-April-22, 09:26, said:

A flat tax done RIGHT down well might be ok.

That means - no seperate SS/Medicare taxes (which as it stands are basically THE most regressive tax ever), no deductions, and no seperate capital gains rate.

All of which would make it less regressive. But still regressive.

helene_t, on 2015-April-22, 09:37, said:

... People with very low income don't pay tax ...

I am surprised to hear that from you. It is a common falsehood preached by the R and T parties. Greenman explained well.

[blackshoe]

Give the government the power to tax, and it will tax. Inevitably, eventually the taxing rises to the level of abuse. There is no way, as far as I can see, to avoid that.

Quote

Extreme libertarianism such as eliminating the IRS altogether, going back to the gold standard…

I don't recall either Paul advocating eliminating the IRS, although I suppose either of them might have done. I do recall Ron in particular advocating eliminating the Fed, an idea with which I have some sympathy. As for the gold standard, well, if you believe Austrian economic theory is a crock of s**t, then I suppose that would be an extreme idea. Personally, I think it's Keynesian economic theory that's the crock.

I still don't see anything that qualifies as "creepy".

[gwnn]

Google "ron paul irs", it's really the first or one of the first ones that come out (on his own website!). Whether or not you recall it, you might have done the chore yourself before you challenge my assertion. Anyway, generally what happens when you defend your libertarian ideals is that the rest of the water cooler asks you uncomfortable questions and you stop answering them because you can't or won't. I wonder if this is the post after which this happens or a few more down the thread.

[gwnn]

And the question is not whether or not the gold standard per se is a good idea but whether going back to the gold standard (destroying the vast majority of money in circulation) is plausible or would be a good idea.

[kenberg]

This is an interseting thread. How do we decide who to vote for, that's a good question.

Here is part of the salon article Helene posted:

Quote

Clinton personifies the meritocracy that to an angry middle class looks increasingly like just another privileged caste. It’s the anger captured best by the old ‘Die Yuppie Scum’ posters and in case you haven’t noticed, it’s on the rise. Republicans love to paint Democrats as elitists. It’s how the first two Bushes took out Dukakis, Gore and Kerry — and how Jeb plans to take out Hillary. When she says she and Bill were broke when they left the White House; when she sets her own email rules and says it was only for her own convenience; when she hangs out with the Davos, Wall Street or Hollywood crowds, she makes herself a more inviting target.

Is this an accurate assessment? I am not so sure. I think Dukakis took himself out. Certainly the Willie Horton ad was vicious. But did it portray him as an elitist? And he put himself in that tank. And when some reporter asked him, referring to the WH ad, how he would feel if his wife were raped, he alone decided how to respond. "Ordinary people" certainly understood that George Bush I was from the elite in a way the Dukakis could never be. But bush looked competent, and I would say he turned out to be competent.

I am certainly "middle class". Not "angry middle class" but perhaps "skeptical middle class".

How about "ordinary Americans"? Who are they? Well, I am. And my parents were. My father belonged to a labor union and I expect that he mostly voted Democratic. In 1952 he voted for Eisenhower as did a lot of others. The Korean war was on, Ike said "I will go to Korea" and "ordinary Americans" understood this to mean "I will take care of this". And he did.


Liberal pundits like to explain away the failure of their candidates by suggesting that "ordinary Americans" are on a hate binge. If they actually want to win an elction instead of explain why they lose one, they might want to re-think that.

[ArtK78]

It seems clear that some of the terminology being used in this thread is not being understood by all of the posters.

1. A "regressive" tax structure is one that imposes a higher effective tax rate on those with less wealth in proportion to their income. So, for example, a sales tax, which is imposed as a tax on purchases of goods and services at a single stated rate, is regressive because the poor purchase more goods and services relative to their wealth than the wealthy.

2. A "flat" tax structure is one that imposes a single stated rate of tax on all income classes (or, in the case of sales tax, on all sales transactions). For example, if all income is taxed at 5%, that is a flat tax. That does not mean that such a tax structure is regressive or progressive. As with the sales tax, the effect of a flat tax structure may be regressive, progressive or neutral. A flat tax cannot have multiple tax rates as one poster stated.

3. A "progressive" tax structure is one that imposes higher rates at higher levels of income or wealth. The US federal income tax is a progressive tax structure in that the marginal tax rates on higher incomes is higher than the marginal tax rates on lower incomes. This does not take into account deductions, credits, and other tax breaks available in various situations.

The federal estate tax (the so-called "death tax") is a very progressive tax, as it does not apply to anyone who has an estate valued at less than $5.4 million.

Note that while regressive and progressive are terms describing two sides of a spectrum, a flat tax structure is not a middle ground between the two. The "flat" in "flat tax" refers to a single rate of tax. It has nothing to do with its impact on various classes of taxpayers. Flat tax structures may be regressive, as with the sales tax, or they may be neutral, as with income tax if there are no deductions and all income is subject to tax. Or they may be progressive, as with the federal estate tax (the tax rate on wealth of a decedent valued at over $5.4M is flat, but is zero at all valuations below $5.4M). But most so-called flat tax structures tend to be regressive due to deductions and the failure to tax certain types of income which tend to allow wealthy individuals to avoid the tax to some extent.