The Instigator
Pro (for)
The Contender
Con (against)

Progressive Taxation (Pro) vs Flat Taxation (Con)

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Voting Style: Open Point System: 7 Point
Started: 10/22/2016 Category: Politics
Updated: 1 month ago Status: Debating Period
Viewed: 188 times Debate No: 96331
Debate Rounds (5)
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Topic: Progressive taxation is, on balance, a more equitable, just, and fair taxation system than a flat tax.
Burden of Proof: Shared Equally
Time to Argue: Three Days

  • Please do not forfeit
  • Remain civil during discussion
  • Provide sources to defend your facts
  • Please have Con pass on arguing the the final round, as I am not arguing now



Flat taxation is better than progressive taxaion because everyone pays the same rate, so it is a more equal form of taxation.
Debate Round No. 1


Round 1.) Progressive Taxation is More Fair Than Flat Taxation

Consider the following thought experiment: We have two people in our scenario, one earning $1,000,000/year in income, who we will call Joe, the other earning $10,000/year, named Peter. Let's examine the effects of each tax plan to determine the effects of each plan on both of our citizens.

Example 1: Flat Tax

Let's take a 10% flat tax, a commonly proposed plan, for example

Joe pays $100,000 in federal income taxes, 10% of his income*. This means that he has $900,000 left, excluding state and local taxes.
Peter pays $1,000 federal income taxes, 10% of his income. This means that he has $9,000 left, excluding state and local taxes.

Now, what does this mean?

Well, we know that the poor have lower amounts of disposable income and spend a higher amount of their income on basic needs, such as food, shelter/rent, medical expenses, etc.

These are vital. The question then becomes, which means (because money has value) more: $1,000 to a poor person or $100,000 to a rich person? For Joe, that $100,000 is the difference between a vacation to Hawaii and a summer at home. Woe is he. As for Peter, that money is the difference between putting a meal on the table or not, paying the rent or going homeless, paying the energy bill, or going cold, etc. If a medical emergency happens to Peter, on the contrary, how is he supposed to pay for treatment? How is Peter to save for retirement? How is Peter to pay for his childrens' college? How is he to put food on the table? Peter needs that money to provide for his needs, whereas Joe wants it to provide for his desires. Many people do perfectly fine with $900,000 and still live lives of luxury.
If needs matter more than wants, than $1,000 to a poor person means more than $100,000 to a rich person. As such, a flat tax system is unfair.

Example 2: Progressive Tax

Under this example, Joe is taxed at 15% of his income and Peter at 5%**

Joe pays $150,000 in federal income taxes, 15% of his income. This means that he has $850,000 left, excluding state and local taxes.
Peter pays $500 federal income taxes, 5% of his income. This means that he has $9,500 left, excluding state and local taxes.

Let's revisit the effects of our tax plan on the people, because that's what really matters when crafting our plan.
Under this new progressive tax, Peter has more money, so he might be able to have a slightly easier time paying for food, affording rent, providing for his children, etc. His needs are better met under a progressive tax than under a flat tax. ***
As for Joe, he is slightly worse off, but in the grand scheme of things, $850,000 dollars can still afford a life of luxury, all of Joe's needs are met, and many of his wants are too. His needs are met.

If under a flat tax, only the needs of Joe are met, and in a progressive tax, both Peter and Joe have their needs met, the progressive tax system is obviously more equitable and fair than a flat tax system.

*Joe would likely pay less as he can exploit capital gains loopholes, deductions, etc. even in a flat tax system, which ironically might end up being regressive:
**This is just a hypothetical, and seems the most plausible as a high tax rate would likely be in effect detrimental to poorer citizens, for the reasons desrcibed in the argument
***Once again, a hypothetical, but it is true that the poor are generally better off under plans which are progressive, as they are taxed less.


Now let's examine my opponents scenario-
Say Joe earns 1,000,000$ a month and Peter earns 10,000$ a month, but this time lets account for John who earns 1,000$ a month. Joe represents the 1%, Peter the middle class and John the poorer class.
So, a liberal politician comes along and decides that John needs welfare to pay for his needs, so he sets up this progressive tax system:
Joe- 50%
John- 0%
Joe, an entrepreneur, sees that his business's earning after tax have just reduced by 400,000$, so he decides to move out of the US. This has a number of effects:
1. There are less jobs in the US, thus reducing Peters wages to 5,000$, and John most likely loses his job, as a result this liberal politician decides that taxation is the solution, and increases Peters tax rate to 60%
2. With Joe out of the picture, the liberal politician decides to raise taxes on the middle class to account for the difference.

As a result:
1. Peters wages are now reduced to 2,000$ since jobs are reduced, creating an employers marked since workers now have to compete for what jobs are left.
2. Joe will now hide his money in Bermuda, and will decide to begin employing foreign workers in China or Mexico, reducing the amount of wealth produced in the US, creating a trade deficit, removing money from circulation, increasing unemployment and decreasing wages.
3. Joe will now put thousands of dollars into congress to create all of these "tax loopholes."

Which results in:
1. Peters wages are now reduced to 1,000$ after tax as a result of higher taxes and lower wages.
2. Joe will now pay 0% taxes, while Peter and John have become both of them part of the poorer class, rather than Peter being middle class and John being lower class.
3. John's chances of becoming middle class are now just about 0 because jobs have left the country, and now the government has to fulfil more obligations, and does this by, you guessed it, taxing what is left of the middle class into oblivion until none of them are middle class anymore.
4. The entire nation becomes impoverished, and now Uncle Sam has to loan the difference from Ben Bernake. This inflates the money supply, and reduces both Peter and Johns wages via eating away at their purchasing power.

These all have further consequences as a result, but for now it can be said that Peters wages are now 1,000$, whereas without the progressive tax they would have been 9,000$, and not only that, but Johns wages would have risen to that point eventually also.

This isn't a slippery slope fallacy, this is actually how this idea has turned out in our country experimentally, I don't even want to think about what would happen if we pushed this even further.
Debate Round No. 2


Um...It actually is a slippery slope and simply inaccurate. Let's take this in two parts: examining your sequence of events, then talking about the history of progressive taxation.

I extend all arguments but also add

Part 1: Refuting Your Event Sequence

Note: You said that all the earnings in our scenario were per month, but I presume you mistaked this for per year as making $520,000 per year certainly does not qualify for middle class.


First off, taxing the middle class at 35% or the 1% at 50% is both inaccurate (in the sense that it does not reflect the current tax code) and also unrealistic. Not even liberal politicians would propose said tax for those making $10,000/year; it is actually more around 15% of income, excluding potential tax deductions on mortgages, etc.


As for Joe, the rich person our hypothetical, it is highly unlikely that he actually pays this much in taxes, due to deductions, loopholes, and the grandest of all these loopholes, the capital gains deduction. Capital gains (income earned from the sale of stocks, bonds and dividends) likely provide for a significant portion of Joe's income.


These capital gains are actually taxed at a much smaller percentage of his income, meaning in reality, a large part of his income can be taxed at a lower rate(28%), which can also be avoided by merely holding assets until death.


Although, we're not done there: Joe could also deduct up to 1,000,000 for his mortgage, among many other loopholes. In the end, he really only pays an effective tax rate of about 24.7%, or he could join over a thousand millionaire families reporting nothing in taxes.


Also, I'll bet you Joe doesn't move out of the country as things are going pretty well for him; given that 95% percent of growth in income since 2009 has gone to people like him.


Secondly, let's be sure to note that if Joe's company left the country (which is a challenge given the licensing, factory issues, etc.), it would not be because of a progressive personal income tax, which is not paid by his company. Let's not mix up our terms.


Outsourcing is NOT the fault of progressive taxation and your entire simulation is based not on progressive taxation, but the effects of outsourcing. Let's follow the scenario though, even though it would not be avoided by a flat tax. The poor man (John) is unemployed, resulting in the increase of unemployment benefits. Since the need would be higher under a flat tax for unemployment benefits (as the poor man would pay more in taxes under a flat tax system, thereby needing more to avoid bankruptcy). As such, in order to prevent John's bankruptcy, more in benefits must be provided under a flat tax. Why? Under a flat tax system, John would pay more in taxes, meaning his income is lower and he needs more help to sustain himself. Also, since reasonably rated flat taxes usually bring back less revenue to the government, the conservative politician behind the flat tax would be forced to either let John starve and go homeless or raise taxes or take on extra debt. To watch what I mean, let's follow your model based off of solely the consequence of flat taxation, without even talking about the inevitable outsourcing, which would excaberate this process.

1. John and Peter's disposable incomes are decreased, as under a flat tax system, they are forced to pay more in taxes. What is the result of this? Common sense leads us to say that they spend less money on Joe's consumer goods, so his business collaspes.

2. Joe is forced to lay off some workers because he is returning less money. It's smart business for Joe, though by this point he has lost out on plenty of profit.

3. John and Peter lose their jobs and have even less disposable income to spend on Joe's company, and the country tanks into recession.

4. Uncle Sam is probably forced to borrow money to keep the economy afloat, resulting in massive debt, stagflation, high unemployment, extreme poverty, and a lengthened second great depression.

Argument 2.) History of Progressive Taxation

The most progressive point in American tax history was back in the Eisenhower 1950s, where the top income tax rate was a whopping 91%.


During the 1950s, things were acutally going pretty well in terms of economic growth: In fact, in 1955, GDP growth was 9.37% on the year, a remarkable amount. Incomes rose across the country, middle class families were better off and the economy was rolling.

Progressive taxation has had a record of success in the American economy, and since it is the most equitable system as demonstrated in Round 2. To the contrary, flat taxation sucks purchasing power away from middle and lower class Americans, thereby weakening the whole economy.
On top of this, I extend all previous arguments.


I want to point this out before anything else, he said:
"During the 1950s, things were acutally going pretty well in terms of economic growth: In fact, in 1955, GDP growth was 9.37% on the year, a remarkable amount. Incomes rose across the country, middle class families were better off and the economy was rolling."
Actualy, ourr highest GDP growth was between 1880 and 1881 with a growth rate of 12.5%, {1} a period when there was no income tax! {2} Whereas the GDP growth rate in 1955 was actualy 7.1% {3} Strange think is I really doubt that the rich were taxed that much- here's what I think happened- the goveronment threatened the rich and the corporations with a 91% tax, so they wrote off most of their profits via investing in manufacturing or spending it into circulation, this created economi growtth because now the corporations were investing every cent they earned, which created more jobs, increasing the demand for work, and driving up wages.
Regardless I think that our economy flourished despite the massive taxes, not because of them, infact the massive increases of wages and productivity we saw from the early 1940's to the late 1960's was because of massive investments by the corporations!

Actually, a flat tax can help the people going on lower income levels if you simply raise the rate by which you measure their income. Here is what I mean=- right now, the "zero point," by which we measure someones income is 0. But if we raise this to say 20,000, and institute a 25% flat tax, then we will measure someones taxes a bit differently, i= income, t=tax:
with 0 as the "zero point:"
with 20,000 as the "zero point:"
So what does this mean for peter? Well, if we measure his tax rate according tothis negative income tax rate proposed by Milton Friedman {4}, it would look like this:
1. (10,000-20,000)(25%)=t
2. -10,000(25%)=t
3. -2,500=t
So now Peter has to pay -2,500$ to Uncle Sam, which actually means that Uncle Sam will pay Peter 2,500$, which s far more beneficial to peter than taxing him 500$, not only does he not have to pay taxes, he also has an extra 2,500$ to help himself out.
So as you can see, the libertarian flat tax system can actually be better for the working class than a progressive tax, which can only benefit eter if he is on welfare- and no onewants to be on welfare, but no one is going to refuse a tax rebate are they? This will allow Peters income to be subsidised without affecting his work incentive, and wih him retaining his dignity as a working member of society.


Debate Round No. 3
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Debate Round No. 4
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Debate Round No. 5
1 comment has been posted on this debate.
Posted by Overnight 1 month ago
This is a really good debate.
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