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Flat Tax - Pros and Cons

Blade-of-Truth
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9/26/2015 10:04:41 PM
Posted: 1 year ago
I would like to learn more about a flat tax system. There are a few presidential candidates who support such things, such as Ben Carson with his 10% flat tax. I believe another one was promoting a 14.5% flat tax.

Is this a viable system for our economy? Would it be beneficial in either the short or long-term? Perhaps both? I know little-to-nothing about these things, as evidenced, and would be greatly appreciative if someone could break it down for me.
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MeinWeltschmerz
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9/27/2015 1:18:22 AM
Posted: 1 year ago
It's hard to narrow down pros and cons of things such as flat taxes when there are monetary issues which reside over this country even larger than taxation itself. The United States runs off of a debt based Fiat economy. In 2014 the federal government spent nearly $3.5 trillion, and took in only $3 trillion in revenues. You can reform taxes all you want, but without a large cutback in government spending a long term benefit via flat taxes will still not be enough. The pros of a flat tax also depend on whether it TRULY is flat. With the vast amount of government subsidies and tax exceptions today, protests and rioting would surely follow with the revoking of such exemptions from demographics who benefit from them. When a group of people become reliant on government aid, it's very difficult to get them off of it. Personally I think a flat tax for all citizens, no matter what their income is, is a step in the right direction, but I would rather see a single state sales tax (includes exports leaving the state). No income tax, no property tax, essentially no tax on anything you already own. Only a state set sales tax. Of course, drastic government spending cuts would have to be made to support this, and government infrastructure would shrink in size, but hey, I'm a libertarian.
Benshapiro
Posts: 3,966
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9/27/2015 4:46:05 PM
Posted: 1 year ago
Flat tax pro's:

Larger economic growth
Simplified tax code (sorely needed)
"Equality"

Cons:

Less public funding (in the short run)
"Unfair" or "unethical" (law of diminishing marginal utility per dollar/income)
Exponential market share dominance by rich
Wylted
Posts: 21,167
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9/27/2015 5:29:24 PM
Posted: 1 year ago
I like a progressive tax better, but the tax system being peddled and titled "the flat tax" is a progressive taxation system, it's just a simpler one. Politicians try to keep the tax code complicated so they can punish enemies and reward political friends with it, and we probably should simplify it, to avoid the massive corruption in politics displayed by atleast 90% of elected officials
DanT
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9/27/2015 5:54:34 PM
Posted: 1 year ago
At 9/27/2015 4:46:05 PM, Benshapiro wrote:
Flat tax pro's:

Larger economic growth
Simplified tax code (sorely needed)
"Equality"

Cons:

Less public funding (in the short run)
"Unfair" or "unethical" (law of diminishing marginal utility per dollar/income)
Exponential market share dominance by rich

Actually a flat tax is by its very definition "fair", because everyone is taxed in proportion to their income, rather than arbitrary brackets that discriminate against certain professions and income levels.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DanT
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9/27/2015 6:12:09 PM
Posted: 1 year ago
At 9/26/2015 10:04:41 PM, Blade-of-Truth wrote:
I would like to learn more about a flat tax system. There are a few presidential candidates who support such things, such as Ben Carson with his 10% flat tax. I believe another one was promoting a 14.5% flat tax.

Is this a viable system for our economy? Would it be beneficial in either the short or long-term? Perhaps both? I know little-to-nothing about these things, as evidenced, and would be greatly appreciative if someone could break it down for me.

First let me explain what a flat tax is. A flat tax is a tax where the same tax rate is charged across the board. What this means is that if you make $100,000 you pay $10,000 in tax at a 10% tax rate, while someone making only $1,000 will pay only $100 in tax. This is much different from progressive and regressive tax codes, where different income levels are organized into different tax brackets. Under a Progressive tax code, someone making $100,000 who falls into a 20% tax bracket will pay $20,000, while someone making $1,000 who falls into a 5% bracket will only pay $50. Under a regressive tax code, someone making $100,000 who falls into a 5% bracket will only pay $5,000, while someone making $1,000 who falls into a regressive tax code will pay $200.

A progressive tax code tries to organize the tax burden by income level, as a means of social justice, so that the wealthy minority pays more due to their higher ability to pay. A regressive tax code tries to organize the tax burden by income level, in order to maximize revenue, so that the majority of the population pays more than the wealthy minority; the proponents of a regressive tax code often assume the rich will reinvest their revenue into the economy. A flat tax code is more objective than progressive and regressive tax codes, taxing everyone at the same rate, and reducing the complexity of the tax code.

Pros:
Simplified tax code
Better financial management throughout the country
Less tax fraud
Economic growth
Reduced unemployment

Cons:
The rich and the poor pay more, while the middle class pay less.
proponents of social justice perceive it as unethical
"Chemical weapons are no different than any other types of weapons."~Lordknukle
tejretics
Posts: 6,089
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9/28/2015 3:07:39 PM
Posted: 1 year ago
I don't really see a good reason to shift to a flat tax. It's better than the status quo, but a low two-tiered progressive tax would promote equal growth and be a more practical system. A flat tax usually results in a tax cut for rich people and tax hike for poor people. I agree with Friedman that the poor should pay a negative effective tax rate, so -- unless there are multiple loopholes involved -- a flat tax isn't really suitable. Plus, the government would *really* need to cut spending for enough revenue to be generated by, say, a 10% flat tax. Overall I'm relatively undecided, since it might be better than the status quo, but a low progressive tax is better. I lean against it.
"Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe." - Frederick Douglass
ColeTrain
Posts: 4,313
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9/28/2015 3:29:28 PM
Posted: 1 year ago
At 9/26/2015 10:04:41 PM, Blade-of-Truth wrote:
I would like to learn more about a flat tax system. There are a few presidential candidates who support such things, such as Ben Carson with his 10% flat tax. I believe another one was promoting a 14.5% flat tax.

Is this a viable system for our economy? Would it be beneficial in either the short or long-term? Perhaps both? I know little-to-nothing about these things, as evidenced, and would be greatly appreciative if someone could break it down for me.

Talk to lannan13 :)
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
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ColeTrain
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9/28/2015 6:53:00 PM
Posted: 1 year ago
At 9/27/2015 6:12:09 PM, DanT wrote:
First let me explain what a flat tax is. A flat tax is a tax where the same tax rate is charged across the board. What this means is that if you make $100,000 you pay $10,000 in tax at a 10% tax rate, while someone making only $1,000 will pay only $100 in tax. This is much different from progressive and regressive tax codes, where different income levels are organized into different tax brackets. Under a Progressive tax code, someone making $100,000 who falls into a 20% tax bracket will pay $20,000, while someone making $1,000 who falls into a 5% bracket will only pay $50. Under a regressive tax code, someone making $100,000 who falls into a 5% bracket will only pay $5,000, while someone making $1,000 who falls into a regressive tax code will pay $200.

A progressive tax code tries to organize the tax burden by income level, as a means of social justice, so that the wealthy minority pays more due to their higher ability to pay. A regressive tax code tries to organize the tax burden by income level, in order to maximize revenue, so that the majority of the population pays more than the wealthy minority; the proponents of a regressive tax code often assume the rich will reinvest their revenue into the economy. A flat tax code is more objective than progressive and regressive tax codes, taxing everyone at the same rate, and reducing the complexity of the tax code.

Pros:
Simplified tax code
Better financial management throughout the country
Less tax fraud
Economic growth
Reduced unemployment

Cons:
The rich and the poor pay more, while the middle class pay less.
proponents of social justice perceive it as unethical

Based on individuals only (not economy), a utilitarian standpoint, a flat tax is the most feasible option. By the middle class paying *less*, that benefits the large majority of the population.

"A 2005 New York Times survey found that only 1% of respondents considered themselves to be "upper class" and only 7% considered themselves part of the "lower class." The remainder said that they were either "middle class" or "working class" (Cashell, 2008). " http://www.esa.doc.gov...

Though less people identify themselves as such in modern times, the fact remains that *most* people are middle class. (http://factually.gizmodo.com...)

Social justice isn't necessarily achieved exclusively by equal taxation... The biggest majority of the working class is the middle class, so the government is getting *most* of its money from the flow of the working/middle class.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ColeTrain
Posts: 4,313
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9/28/2015 6:57:47 PM
Posted: 1 year ago
Actually a flat tax is by its very definition "fair", because everyone is taxed in proportion to their income, rather than arbitrary brackets that discriminate against certain professions and income levels.

Flat tax is the fairest taxation system one could hope to find.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ColeTrain
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9/28/2015 7:04:23 PM
Posted: 1 year ago
At 9/27/2015 4:46:05 PM, Benshapiro wrote:
Flat tax pro's:

Larger economic growth
Simplified tax code (sorely needed)
"Equality"

Cons:

Less public funding (in the short run)
"Unfair" or "unethical" (law of diminishing marginal utility per dollar/income)
Exponential market share dominance by rich

It's really not unfair. The poor pay the least, rich the most. It's all based on income, and then the percentage in correlation to that.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
Porkloin
Posts: 53
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9/28/2015 7:56:26 PM
Posted: 1 year ago
At 9/27/2015 1:18:22 AM, MeinWeltschmerz wrote:
It's hard to narrow down pros and cons of things such as flat taxes when there are monetary issues which reside over this country even larger than taxation itself. The United States runs off of a debt based Fiat economy. In 2014 the federal government spent nearly $3.5 trillion, and took in only $3 trillion in revenues. You can reform taxes all you want, but without a large cutback in government spending a long term benefit via flat taxes will still not be enough. The pros of a flat tax also depend on whether it TRULY is flat. With the vast amount of government subsidies and tax exceptions today, protests and rioting would surely follow with the revoking of such exemptions from demographics who benefit from them. When a group of people become reliant on government aid, it's very difficult to get them off of it. Personally I think a flat tax for all citizens, no matter what their income is, is a step in the right direction, but I would rather see a single state sales tax (includes exports leaving the state). No income tax, no property tax, essentially no tax on anything you already own. Only a state set sales tax. Of course, drastic government spending cuts would have to be made to support this, and government infrastructure would shrink in size, but hey, I'm a libertarian.

Good post, MK. I was thinking along the same lines - many people have concerns about "social justice," but that seems quite a small thing, especially as a flat tax is a very hypothetical thing here - what chance is there of it being a reality?

My dad worked for the Internal Revenue Service for 33 years. He had the U.S. Tax Code in his office; it occupied an entire shelf of a very wide bookcase. He was born in 1937, and the tax code was about 500 pages long at that time. He retired from work in 1992, and it was tens of thousands of pages long, probably 50,000+. Now it's roughly 75,000 pages. Much of this is due to what is essentially "vote-buying" by politicians, giving tax breaks, exemptions, etc., here and there. People think most of that could go away?

So, we have what I think is a pipedream of a flat tax, while we have the reality of massive gov't deficits and the eventual severe effect on the living standards of most Americans....

I'm usually libertarian in my thinking too. Why should I pay a higher tax rate, just because I chose not to have any kids? Why should I pay a lower tax rate because I have a house and a mortgage on it?
1harderthanyouthink
Posts: 13,102
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9/29/2015 3:30:34 AM
Posted: 1 year ago
At 9/28/2015 7:04:23 PM, ColeTrain wrote:
At 9/27/2015 4:46:05 PM, Benshapiro wrote:
Flat tax pro's:

Larger economic growth
Simplified tax code (sorely needed)
"Equality"

Cons:

Less public funding (in the short run)
"Unfair" or "unethical" (law of diminishing marginal utility per dollar/income)
Exponential market share dominance by rich

It's really not unfair. The poor pay the least, rich the most. It's all based on income, and then the percentage in correlation to that.

The idea of the unfairness in a flat tax is that the rich have less percentages of their money that goes to essentials, obviously, so they shouldn't be paying the same as someone who makes $20,000 - who needs more of their income to survive than the guy making $400,000.
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ColeTrain
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9/29/2015 3:57:10 AM
Posted: 1 year ago
At 9/29/2015 3:30:34 AM, 1harderthanyouthink wrote:
At 9/28/2015 7:04:23 PM, ColeTrain wrote:
At 9/27/2015 4:46:05 PM, Benshapiro wrote:
Flat tax pro's:

Larger economic growth
Simplified tax code (sorely needed)
"Equality"

Cons:

Less public funding (in the short run)
"Unfair" or "unethical" (law of diminishing marginal utility per dollar/income)
Exponential market share dominance by rich

It's really not unfair. The poor pay the least, rich the most. It's all based on income, and then the percentage in correlation to that.

The idea of the unfairness in a flat tax is that the rich have less percentages of their money that goes to essentials, obviously, so they shouldn't be paying the same as someone who makes $20,000 - who needs more of their income to survive than the guy making $400,000.

I understand that. However, would 10% not give them plenty of money to survive? Also, couldn't a more strict welfare mitigate these concerns?
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
1harderthanyouthink
Posts: 13,102
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9/29/2015 4:07:37 AM
Posted: 1 year ago
At 9/29/2015 3:57:10 AM, ColeTrain wrote:
At 9/29/2015 3:30:34 AM, 1harderthanyouthink wrote:
At 9/28/2015 7:04:23 PM, ColeTrain wrote:
At 9/27/2015 4:46:05 PM, Benshapiro wrote:
Flat tax pro's:

Larger economic growth
Simplified tax code (sorely needed)
"Equality"

Cons:

Less public funding (in the short run)
"Unfair" or "unethical" (law of diminishing marginal utility per dollar/income)
Exponential market share dominance by rich

It's really not unfair. The poor pay the least, rich the most. It's all based on income, and then the percentage in correlation to that.

The idea of the unfairness in a flat tax is that the rich have less percentages of their money that goes to essentials, obviously, so they shouldn't be paying the same as someone who makes $20,000 - who needs more of their income to survive than the guy making $400,000.

I understand that. However, would 10% not give them plenty of money to survive? Also, couldn't a more strict welfare mitigate these concerns?

Good luck paying for welfare without the progressive tax.
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ColeTrain
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9/29/2015 4:09:52 AM
Posted: 1 year ago
It's really not unfair. The poor pay the least, rich the most. It's all based on income, and then the percentage in correlation to that.

The idea of the unfairness in a flat tax is that the rich have less percentages of their money that goes to essentials, obviously, so they shouldn't be paying the same as someone who makes $20,000 - who needs more of their income to survive than the guy making $400,000.

I understand that. However, would 10% not give them plenty of money to survive? Also, couldn't a more strict welfare mitigate these concerns?

Good luck paying for welfare without the progressive tax.

Again, flat tax would give plenty of money. Progressive tax destroys the rich, who provide jobs for middle and lower class.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
1harderthanyouthink
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9/29/2015 4:14:25 AM
Posted: 1 year ago
At 9/29/2015 4:09:52 AM, ColeTrain wrote:
It's really not unfair. The poor pay the least, rich the most. It's all based on income, and then the percentage in correlation to that.

The idea of the unfairness in a flat tax is that the rich have less percentages of their money that goes to essentials, obviously, so they shouldn't be paying the same as someone who makes $20,000 - who needs more of their income to survive than the guy making $400,000.

I understand that. However, would 10% not give them plenty of money to survive? Also, couldn't a more strict welfare mitigate these concerns?

Good luck paying for welfare without the progressive tax.

Again, flat tax would give plenty of money. Progressive tax destroys the rich, who provide jobs for middle and lower class.

The rich don't "provide" jobs for the middle and lower class. That's incredibly naive.

The unemployment rate in the US is very, very low. The problem with our employment is that it has become diluted in its pay. So the great number of created jobs are on the lower end. This is attributable to the outsourcing of labor jobs to foreign countries for the sake of being benefitted low-wage, borderline slave labor. This hurts the US, because demand is being calmed by outsourced labor, leading to less-needed jobs being created here - and therefore less pay being given to them due to their relative lack of productivity on the larger scale.
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1harderthanyouthink
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9/29/2015 4:15:48 AM
Posted: 1 year ago
At 9/29/2015 4:09:52 AM, ColeTrain wrote:
It's really not unfair. The poor pay the least, rich the most. It's all based on income, and then the percentage in correlation to that.

The idea of the unfairness in a flat tax is that the rich have less percentages of their money that goes to essentials, obviously, so they shouldn't be paying the same as someone who makes $20,000 - who needs more of their income to survive than the guy making $400,000.

I understand that. However, would 10% not give them plenty of money to survive? Also, couldn't a more strict welfare mitigate these concerns?

Good luck paying for welfare without the progressive tax.

Again, flat tax would give plenty of money. Progressive tax destroys the rich, who provide jobs for middle and lower class.

And even in a world where many more have decent jobs, they retire at some point, and social security won't be doing great, again, without progressive taxation.
"It's awfully considerate of you to think of me here,
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1harderthanyouthink
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9/29/2015 4:19:00 AM
Posted: 1 year ago
At 9/29/2015 3:57:10 AM, ColeTrain wrote:
At 9/29/2015 3:30:34 AM, 1harderthanyouthink wrote:

These are the evaluations of a flat-tax plan from the 2012 Presidential election.

http://taxpolicycenter.org...
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ShabShoral
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9/29/2015 7:03:05 AM
Posted: 1 year ago
At 9/26/2015 10:04:41 PM, Blade-of-Truth wrote:
I would like to learn more about a flat tax system. There are a few presidential candidates who support such things, such as Ben Carson with his 10% flat tax. I believe another one was promoting a 14.5% flat tax.

Is this a viable system for our economy? Would it be beneficial in either the short or long-term? Perhaps both? I know little-to-nothing about these things, as evidenced, and would be greatly appreciative if someone could break it down for me.

I support a 0% flat tax. See: https://youtu.be...
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Blade-of-Truth
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10/3/2015 8:16:07 PM
Posted: 1 year ago
I want to thank everyone who contributed to this so far. I really appreciate all the answers I've received!

This is what I've gathered from all of your responses, please check it out and let me know what you think: https://docs.google.com...
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themightyindividual
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10/3/2015 8:16:29 PM
Posted: 1 year ago
Flat tax is the only ethical income tax. If you work harder in order to make more money, why should you have to pay more? Isn't the accumulation of wealth the purpose of you labor? And if so, isn't it wrong to reward those who work less hard?

It does decrease government revenue, but that is a good thing. The government is not a business, it should not be trying to beat it's last quarter's report. People should not be happy when they hear that tax revenue went up, they should be upset. The government should be used only for certain necessary things that the private sector cannot provide as well (public infrastructure, military, law enforcement, legal system, enforcement of private contracts, possibly investing of tax money). A flat tax can fund all of those things.

What liberals don't understand is that the government doesn't generate wealth the same way that an individual or business does. They only organize payments, they do not build. They contract construction of military objects or public infrastructure to the private sector. Thus, they should be able to subsist on a 10% income tax, a below 1% property tax, and a 5% sales tax.