The flat tax is a BAD idea

[TheWoman]

Pulling this out of the Downsized thread since it will certainly drag it off topic



Let me break it down for you (current system, two individuals with no dependents living on their own):

$25,000 per year pre-tax income
$17,825 minimum standards living expenses
$7,175 left over
$3,844 taxes (current system)
$3,331 left over

$150,000 per year pre-tax income
$17,825 minimum standards living expenses
$132,175 left over
$22,372 taxes (current system)
$109,803 left over

flat tax system (20%):
$25,000 per year pre-tax income
$17,825 minimum standards living expenses
$7,175 left over
$5,000 taxes
$2,175 left over

$150,000 per year pre-tax income
$17,825 minimum standards living expenses
$132,175 left over
$30,000 taxes
$102,175 left over

Did you see that? $150,000 is paying 7% more of his excess, and $25,000 is paying 34.5% more of his excess.

And this is fair... how? Why would we even want to put the larger burden on the poor?



This is not fair. This is unjust, actually. Taxing everyone at the same rate puts the larger burden on the poor and middle class, because they don't have as much excess. This helps the rich get richer and we're footing the bill. I think it makes much more sense for rich people to pay a higher overall tax level that is actually a smaller portion of their excess.

I don't want to live in a country where we have tons of poor people giving their proverbial "widows mites" to the government because that's all they had left over.

The reason there are tax credits is because we tax off the gross. If we taxed off the gross minus minimum standards of living, I might be amenable to a flat tax. But it's not fair to do a flat tax off the gross.

I'm not talking about government subsidies. I'm not talking about WIC or food stamps or tax credits. I'm talking about the flat tax. It's not fair when people are taxed on the gross, which is how the current tax system works. You can't just change our tax system to a flat tax system and expect it to be fair. It's not fair for someone who has a pittance in extra annual money to suddenly lose 34% of that. How do you survive if you have to have surgery, or have to go to the emergency room and pay a huge copayment? How do you survive?

Every flat tax proposial I have seen (FAIR tax comes to mind) IS a tax on the gross minus the minimum standards of living. It includes a prebate, which will refund the taxes that would be paid on the amount considered necessary for basic necessities of life. Each proposal is a little different, but for simplicity's sake I will base it off the numbers you provided in your op--they would become:


$25,000 per year pre-tax income
$17,825 minimum standards living expenses
$7,175 left over
$3,844 taxes (current system)
$3,331 left over

$150,000 per year pre-tax income
$17,825 minimum standards living expenses
$132,175 left over
$22,372 taxes (current system)
$109,803 left over

flat tax system (20%):
$25,000 per year pre-tax income
$17,825 minimum standards living expenses
$7,175 left over
$5,000 taxes
-$3,565 prebate (the 20% tax on the minimum standards living expense)
$5,740 left over

$150,000 per year pre-tax income
$17,825 minimum standards living expenses
$132,175 left over
$30,000 taxes
-$3,565 prebate (the 20% tax on the minimum standards living expense)
$105,740 left over

Hmmmmm, using a flat tax with a prebate means that the poor person has $2409 more than with our current system, while the rich person pays an extra $4063. And you know what else? When each family has a baby, the prebate will rise to cover the minimum standard of living for a family of 3, which would probably eliminate all the tax for the poor person.

And that is why a flat tax (with a prebate for the necessities of life) helps the poor.

[beth119]

Hmmmmm, using a flat tax with a prebate means that the poor person has $2409 more than with our current system, while the rich person pays an extra $4063. And you know what else? When each family has a baby, the prebate will rise to cover the minimum standard of living for a family of 3, which would probably eliminate all the tax for the poor person.

And that is why a flat tax (with a prebate for the necessities of life) helps the poor.

Yes, while creating an entirely new "entitlement" system and new gov't agency to run it... all while "big gov't" boo hooers are stomping and screaming...

How long do you think that will last....