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Progressive Self-Adjusting Flat Tax

Contra
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5/5/2012 8:34:54 PM
Posted: 4 years ago
I found a plan called the:

Progressive Self-Adjusting Flat Tax (PSAT)

Basically, the goal of the plan is to reduce the national debt and eventually, all of it.

The starting rates:

$0-15,000 --------------0% (keep EITC)
$15,000-30,000 -------15%
$30,000-70,000 -------25%
$70,000-150,000 ------30%
$150K - 250,000 ------35%
$250,000+ ------------40%

It remains a marginal tax rate system.

Then, the year after implemented, if the year results with a $200 billion + deficit, tax rates automatically increase. First, the top rate increases by 1% only, no other brackets are affected. If there is a second consecutive year, the top rate increases by 1% again, and the next top rate increases by 1%.

For a third consecutive year, the top, next to top, and the third highest rates increase by 1% (progressive increase in taxes). For a fourth consecutive year with deficits, the $30-70K brackets increase by 1%, and all the other brackets also increase by 1%. This cycle continues, but the lowest bracket at 15% doesn't increase. After 4 consecutive years with high deficits after implementation, the tax brackets (lowest to highest) would be 0%, 15% (these two unchanged), 26%, 32%, 38%, and 44%. After ten years with deficits, the brackets would be (not counting the 0% and 15% brackets) 32%, 38%, 44%, and 50%. The tax rates there would be capped.

So, the tax adjusts automatically to avoid political suicide. However, let's say Congress became financial prudent and one year achieved a surplus. This will likely be due to voter's frustration with higher taxes and high deficits. The surplus budget will make it so that all brackets (besides the 0% and 15%) fall 1%, assuming that previously there were 10 years with deficits. So the top bracket would fall to 49% from 50%, and all the other brackets besides the 0 and 15% brackets would fall by 1%. Each year that Congress runs a surplus, tax rates continue to fall. So, the system would be flatter.

After 20 years with budget surpluses:

$0-15K - 0%
$15-30K - 15%
$30-70K - 25%
$70-150K - 25%
$15-250K - 25%
$250K - 30%

So, lower taxes would be earned by fiscal responsibility. It would be flexible, innovative, and increase our fiscal prudence. For each year we fail to achieve a surplus or balanced budget, taxes go up gradually in a progressive tax way, and we gain when Congress does the right choices.

A dollar is taxed as a dollar. Therefore, dividends and Capital Gains are taxed as income.

http://davelockwoodforcongress.com...
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
mongoose
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5/5/2012 8:40:47 PM
Posted: 4 years ago
If it were that simple, more taxes meaning proportionally more revenue, then that could work. However, you have to a account for the Laffer Curve and decide whether it's more optimal to reduce spending or increase taxes. According to the Laffer Curve, at some point increasing taxes isn't even going to increase revenue, but rather reduce it. The marginal benefit of additional taxes gets lower and lower, while the marginal cost, especially in terms of forgone economic growth, gets higher and higher.
It is odd when one's capacity for compassion is measured not in what he is willing to do by his own time, effort, and property, but what he will force others to do with their own property instead.
Contra
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5/5/2012 8:45:52 PM
Posted: 4 years ago
At 5/5/2012 8:40:47 PM, mongoose wrote:
If it were that simple, more taxes meaning proportionally more revenue, then that could work. However, you have to a account for the Laffer Curve and decide whether it's more optimal to reduce spending or increase taxes. According to the Laffer Curve, at some point increasing taxes isn't even going to increase revenue, but rather reduce it. The marginal benefit of additional taxes gets lower and lower, while the marginal cost, especially in terms of forgone economic growth, gets higher and higher.

The Laffer Curve showed that more revenue was collected at the Clinton era tax rates.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
mongoose
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5/5/2012 8:57:17 PM
Posted: 4 years ago
At 5/5/2012 8:45:52 PM, Contra wrote:
At 5/5/2012 8:40:47 PM, mongoose wrote:
If it were that simple, more taxes meaning proportionally more revenue, then that could work. However, you have to a account for the Laffer Curve and decide whether it's more optimal to reduce spending or increase taxes. According to the Laffer Curve, at some point increasing taxes isn't even going to increase revenue, but rather reduce it. The marginal benefit of additional taxes gets lower and lower, while the marginal cost, especially in terms of forgone economic growth, gets higher and higher.

The Laffer Curve showed that more revenue was collected at the Clinton era tax rates.

You're making the assumption that everything else in the world remained constant, and the only difference between various eras are the tax rates. It's actually much more difficult to find the optimal rate, and the Laffer Curve is continuously changing due to numerous outside factors. At the point where the taxes reach 50%, it would probably be decreasing revenue, and definately hindering economic growth.

http://www.swifteconomics.com...
It is odd when one's capacity for compassion is measured not in what he is willing to do by his own time, effort, and property, but what he will force others to do with their own property instead.
darkkermit
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5/5/2012 9:06:49 PM
Posted: 4 years ago
At 5/5/2012 8:57:17 PM, mongoose wrote:
At 5/5/2012 8:45:52 PM, Contra wrote:
At 5/5/2012 8:40:47 PM, mongoose wrote:
If it were that simple, more taxes meaning proportionally more revenue, then that could work. However, you have to a account for the Laffer Curve and decide whether it's more optimal to reduce spending or increase taxes. According to the Laffer Curve, at some point increasing taxes isn't even going to increase revenue, but rather reduce it. The marginal benefit of additional taxes gets lower and lower, while the marginal cost, especially in terms of forgone economic growth, gets higher and higher.

The Laffer Curve showed that more revenue was collected at the Clinton era tax rates.

You're making the assumption that everything else in the world remained constant, and the only difference between various eras are the tax rates. It's actually much more difficult to find the optimal rate, and the Laffer Curve is continuously changing due to numerous outside factors. At the point where the taxes reach 50%, it would probably be decreasing revenue, and definately hindering economic growth.

http://www.swifteconomics.com...

^Basically what mongoose just said. Single data points can not be conclusive of everything, especially since all things being equal conditions do not apply.

The laffer curve is a simplified theoretical theory. Of course, the type of tax, how progressive or regressive the tax is, how government revenue is spent, whether the economy is near or at maximum productive capacity all make a difference.
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thett3
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5/5/2012 11:26:08 PM
Posted: 4 years ago
Thett's tax plan:

Tax Contra 10000000000000009000000000% of his income.
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: thett was right
Lordknukle
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5/6/2012 9:46:02 AM
Posted: 4 years ago
At 5/5/2012 8:34:54 PM, Contra wrote:

$0-15,000 --------------0% (keep EITC)

This is your problem.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
Thaddeus
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5/6/2012 10:03:22 AM
Posted: 4 years ago
At 5/5/2012 8:45:52 PM, Contra wrote:
At 5/5/2012 8:40:47 PM, mongoose wrote:
If it were that simple, more taxes meaning proportionally more revenue, then that could work. However, you have to a account for the Laffer Curve and decide whether it's more optimal to reduce spending or increase taxes. According to the Laffer Curve, at some point increasing taxes isn't even going to increase revenue, but rather reduce it. The marginal benefit of additional taxes gets lower and lower, while the marginal cost, especially in terms of forgone economic growth, gets higher and higher.

The Laffer Curve showed that more revenue was collected at the Clinton era tax rates.

The Laffer is a theoretical concept which illustrates that more tax does not always result in more revenue. Anyone who tries to claim that the Laffer curve can be used to show specific details such as more revenue was collected at one rate or another to try and demonstrate it is a superior rate, is either being dishonest or stupid. So no, it most certainly did not "show" that.
Of course, the government should have 0% revenue anyway, so I don't care about where on the Laffer curve we fall.
Contra
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5/6/2012 11:40:08 AM
Posted: 4 years ago
At 5/5/2012 11:26:08 PM, thett3 wrote:
Thett's tax plan:

Tax Contra 10000000000000009000000000% of his income.

I thought that voters who voted for Freedo and Thett got zero taxes.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
darkkermit
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5/6/2012 12:40:04 PM
Posted: 4 years ago
At 5/6/2012 10:03:22 AM, Thaddeus wrote:
At 5/5/2012 8:45:52 PM, Contra wrote:
At 5/5/2012 8:40:47 PM, mongoose wrote:
If it were that simple, more taxes meaning proportionally more revenue, then that could work. However, you have to a account for the Laffer Curve and decide whether it's more optimal to reduce spending or increase taxes. According to the Laffer Curve, at some point increasing taxes isn't even going to increase revenue, but rather reduce it. The marginal benefit of additional taxes gets lower and lower, while the marginal cost, especially in terms of forgone economic growth, gets higher and higher.

The Laffer Curve showed that more revenue was collected at the Clinton era tax rates.

The Laffer is a theoretical concept which illustrates that more tax does not always result in more revenue. Anyone who tries to claim that the Laffer curve can be used to show specific details such as more revenue was collected at one rate or another to try and demonstrate it is a superior rate, is either being dishonest or stupid. So no, it most certainly did not "show" that.
Of course, the government should have 0% revenue anyway, so I don't care about where on the Laffer curve we fall.

Yep, theoretically If you just tax food, then the amount of revenue the government obtains should be enormous, since food is mostly an inelastic good (people will always buy it or else face starvation). Perhaps the people can get around the tax through the black market or growing their own crops. However, the government can pretty easily enforce restriction on crop growing. However, the government could still gain a ton of revenue from the food tax.

Of course, with the food tax, poor people will not be able to afford food and will starve and die as a result. And people will probably rebel against the government If people are starving.
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Contra
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5/6/2012 7:03:11 PM
Posted: 4 years ago
At 5/6/2012 12:40:04 PM, darkkermit wrote:
At 5/6/2012 10:03:22 AM, Thaddeus wrote:
At 5/5/2012 8:45:52 PM, Contra wrote:
At 5/5/2012 8:40:47 PM, mongoose wrote:
If it were that simple, more taxes meaning proportionally more revenue, then that could work. However, you have to a account for the Laffer Curve and decide whether it's more optimal to reduce spending or increase taxes. According to the Laffer Curve, at some point increasing taxes isn't even going to increase revenue, but rather reduce it. The marginal benefit of additional taxes gets lower and lower, while the marginal cost, especially in terms of forgone economic growth, gets higher and higher.

The Laffer Curve showed that more revenue was collected at the Clinton era tax rates.

The Laffer is a theoretical concept which illustrates that more tax does not always result in more revenue. Anyone who tries to claim that the Laffer curve can be used to show specific details such as more revenue was collected at one rate or another to try and demonstrate it is a superior rate, is either being dishonest or stupid. So no, it most certainly did not "show" that.
Of course, the government should have 0% revenue anyway, so I don't care about where on the Laffer curve we fall.

Yep, theoretically If you just tax food, then the amount of revenue the government obtains should be enormous, since food is mostly an inelastic good (people will always buy it or else face starvation). Perhaps the people can get around the tax through the black market or growing their own crops. However, the government can pretty easily enforce restriction on crop growing. However, the government could still gain a ton of revenue from the food tax.

Of course, with the food tax, poor people will not be able to afford food and will starve and die as a result. And people will probably rebel against the government If people are starving.

Back on topic to the Laffer Curve; the highest rate would be at the max of 50%.

Several economists have said that the rate at which revenue collected is the highest is at a rate of about 70%.

Since the current rate is 35%, the change in the proportion of the amount of taxes collected at the top bracket would be (100*15/35) 42.86% higher.

At average, the elasticity of effort applied would have to fall more than the proportion increase for revenue to fall. The elasticity of effort would fall (100*15/65) 23.08%.

So, the revenue would increase 42.86%, and the effort of elasticity would fall an average of 23.08%. So, revenue would still increase. However, with a more generous welfare state, the effort would probably not fall as drastically.

Using the equations I have used, the top rate of revenue collection would be 70%. For the proportion of revenue taxed, the second number represents the number of points of increase, and the second number represents former rate.

For the elasticity of effort, the second number represents the number of points % taxed. The second number represents the former amount of money left over.

Regardless, the Laffer Curve is an imperfect equation, due to attitudes of the market. Still, the 50% is low enough not to decrease revenue.

http://www.motherjones.com...
http://krugman.blogs.nytimes.com...
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
DanT
Posts: 5,693
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5/6/2012 7:48:21 PM
Posted: 4 years ago
At 5/6/2012 7:03:11 PM, Contra wrote:
At 5/6/2012 12:40:04 PM, darkkermit wrote:
At 5/6/2012 10:03:22 AM, Thaddeus wrote:
At 5/5/2012 8:45:52 PM, Contra wrote:
At 5/5/2012 8:40:47 PM, mongoose wrote:
If it were that simple, more taxes meaning proportionally more revenue, then that could work. However, you have to a account for the Laffer Curve and decide whether it's more optimal to reduce spending or increase taxes. According to the Laffer Curve, at some point increasing taxes isn't even going to increase revenue, but rather reduce it. The marginal benefit of additional taxes gets lower and lower, while the marginal cost, especially in terms of forgone economic growth, gets higher and higher.

The Laffer Curve showed that more revenue was collected at the Clinton era tax rates.

The Laffer is a theoretical concept which illustrates that more tax does not always result in more revenue. Anyone who tries to claim that the Laffer curve can be used to show specific details such as more revenue was collected at one rate or another to try and demonstrate it is a superior rate, is either being dishonest or stupid. So no, it most certainly did not "show" that.
Of course, the government should have 0% revenue anyway, so I don't care about where on the Laffer curve we fall.

Yep, theoretically If you just tax food, then the amount of revenue the government obtains should be enormous, since food is mostly an inelastic good (people will always buy it or else face starvation). Perhaps the people can get around the tax through the black market or growing their own crops. However, the government can pretty easily enforce restriction on crop growing. However, the government could still gain a ton of revenue from the food tax.

Of course, with the food tax, poor people will not be able to afford food and will starve and die as a result. And people will probably rebel against the government If people are starving.

Back on topic to the Laffer Curve; the highest rate would be at the max of 50%.

Several economists have said that the rate at which revenue collected is the highest is at a rate of about 70%.

Since the current rate is 35%, the change in the proportion of the amount of taxes collected at the top bracket would be (100*15/35) 42.86% higher.

At average, the elasticity of effort applied would have to fall more than the proportion increase for revenue to fall. The elasticity of effort would fall (100*15/65) 23.08%.

So, the revenue would increase 42.86%, and the effort of elasticity would fall an average of 23.08%. So, revenue would still increase. However, with a more generous welfare state, the effort would probably not fall as drastically.

Using the equations I have used, the top rate of revenue collection would be 70%. For the proportion of revenue taxed, the second number represents the number of points of increase, and the second number represents former rate.

For the elasticity of effort, the second number represents the number of points % taxed. The second number represents the former amount of money left over.

Regardless, the Laffer Curve is an imperfect equation, due to attitudes of the market. Still, the 50% is low enough not to decrease revenue.

http://www.motherjones.com...
http://krugman.blogs.nytimes.com...

That's not how the Laffel Curve works. Noone knows what the magic rate is, only that such a rate exists.
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Contra
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5/6/2012 7:53:38 PM
Posted: 4 years ago
DanT:

My point was that they estimated the most revenue was collected at 70% or in that range. I showed how they got that in a basic equation. But yes, I agree that nobody knows the perfect rate because of factors to include such as the economic environment, the returns of the welfare state, etc.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
darkkermit
Posts: 11,204
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5/6/2012 8:16:32 PM
Posted: 4 years ago
At 5/6/2012 7:03:11 PM, Contra wrote:

Of course, with the food tax, poor people will not be able to afford food and will starve and die as a result. And people will probably rebel against the government If people are starving.

Back on topic to the Laffer Curve; the highest rate would be at the max of 50%.

Several economists have said that the rate at which revenue collected is the highest is at a rate of about 70%.

Since the current rate is 35%, the change in the proportion of the amount of taxes collected at the top bracket would be (100*15/35) 42.86% higher.

Where are you getting these numbers from? Where is the 15 from. Why 42.86% higher?

At average, the elasticity of effort applied would have to fall more than the proportion increase for revenue to fall. The elasticity of effort would fall (100*15/65) 23.08%.

What is the elasticity of effort? Again where is the 15% from?

So, the revenue would increase 42.86%,

Why 42.86%?

and the effort of elasticity would fall an average of 23.08%.

What does that even mean!?

So, revenue would still increase. However, with a more generous welfare state, the effort would probably not fall as drastically.


Using the equations I have used, the top rate of revenue collection would be 70%. For the proportion of revenue taxed, the second number represents the number of points of increase, and the second number represents former rate.

Again what are you talking about? You said the "second number" twice.

For the elasticity of effort, the second number represents the number of points % taxed. The second number represents the former amount of money left over.

what the hell is point % taxed.

Regardless, the Laffer Curve is an imperfect equation, due to attitudes of the market. Still, the 50% is low enough not to decrease revenue.

http://www.motherjones.com...
http://krugman.blogs.nytimes.com...

Basically everything you said above just sounded like complete gibberish.
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Grape
Posts: 989
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5/6/2012 8:30:18 PM
Posted: 4 years ago
The consequence of this plan would just be that he tax rate would rise continuously until reaching the cap, at which point it would still not balance the budget, and the American people (particularly the middle class, for whom this plan would be positively brutal) would be driven into the ground by taxation.

The only solution to the current problem is to dramatically cut spending, which is not going to happen.
Contra
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5/6/2012 8:30:46 PM
Posted: 4 years ago
At 5/6/2012 8:16:32 PM, darkkermit wrote:
At 5/6/2012 7:03:11 PM, Contra wrote:

Of course, with the food tax, poor people will not be able to afford food and will starve and die as a result. And people will probably rebel against the government If people are starving.

Back on topic to the Laffer Curve; the highest rate would be at the max of 50%.

Several economists have said that the rate at which revenue collected is the highest is at a rate of about 70%.

Since the current rate is 35%, the change in the proportion of the amount of taxes collected at the top bracket would be (100*15/35) 42.86% higher.

Where are you getting these numbers from? Where is the 15 from. Why 42.86% higher?

At average, the elasticity of effort applied would have to fall more than the proportion increase for revenue to fall. The elasticity of effort would fall (100*15/65) 23.08%.

What is the elasticity of effort? Again where is the 15% from?

the 15 point increase, from 35% top rate to 50% top rate

So, the revenue would increase 42.86%,

Why 42.86%?

The top tax rate would increase this much because 100*15 (increase in points from 35 to 50) divided by 35 (the former top rate) would be 42.86% (rounded).

and the effort of elasticity would fall an average of 23.08%.

What does that even mean!?

The amount of effort put in by the rich would fall to a degree as I listed. Basically saying "the rich would work on average this much less". But, as I earlier said, this is a general estimate since it doesn't account for individual attitudes. Some rich guys might work harder in order to get their fourth beach house.

So, revenue would still increase. However, with a more generous welfare state, the effort would probably not fall as drastically.



Using the equations I have used, the top rate of revenue collection would be 70%. For the proportion of revenue taxed, the second number represents the number of points of increase, and the second number represents former rate.

Again what are you talking about? You said the "second number" twice.

I was first talking about the equation to get the amount of revenue taxed, the second time I was talking about the reduction in effort.

For the elasticity of effort, the second number represents the number of points % taxed. The second number represents the former amount of money left over.

what the hell is point % taxed.

Regardless, the Laffer Curve is an imperfect equation, due to attitudes of the market. Still, the 50% is low enough not to decrease revenue.

http://www.motherjones.com...
http://krugman.blogs.nytimes.com...

Basically everything you said above just sounded like complete gibberish.

I can see, it took me literally an hour to understand this stuff. I finally got it, but it was quite a headache. The equation I used to find the proportion increase in the amount of the tax increases :

100*(increase in points higher, for example 35 to 36 would be 1)/(former base, for the example I just said it would be 35).

The second source I showed included the equations. The first source confirmed them.

Quite a headache I know
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Contra
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5/6/2012 8:32:15 PM
Posted: 4 years ago
At 5/6/2012 8:30:18 PM, Grape wrote:
The consequence of this plan would just be that he tax rate would rise continuously until reaching the cap, at which point it would still not balance the budget, and the American people (particularly the middle class, for whom this plan would be positively brutal) would be driven into the ground by taxation.

The only solution to the current problem is to dramatically cut spending, which is not going to happen.

The plan would make it so that voters contact their representatives/ senators so that they actually DO cut spending so that the voters can get some relief. Then, when spending is actually cut, the reward is a tax cut.

DK: Ok you get where I got my information
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Sophocrat
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7/23/2012 11:27:43 AM
Posted: 4 years ago
Checkout the REAL Self-Adjusting Flat Tax Model. The proposed rates are nothing like the ones discussed 2 months ago.

Checkout a video on YouTube. Here's the link: .