# Could a flat tax work?



## Ralphy1 (Mar 25, 2015)

Ted Cruz is running on the old Steve Forbes idea of a flat tax.  Forbes went no where in his effort to become prez with this proposal, but could it be a viable idea today?  I doubt it, but I am open to your thoughts for a change...:love_heart:


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## Warrigal (Mar 25, 2015)

Neither a flat tax nor a progressive tax will work if the high earners have enough loopholes to enable them to consider paying any tax a voluntary action.


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## QuickSilver (Mar 25, 2015)

No..  It's completely regressive...  It increases taxes on the poor and gives the very rich a hefty tax break.   Which I suppose is the general idea behind those that favor it.  The very poor do not pay income tax or only a small percentage.  The very rich pay a top rate of 39%...   So if the flat tax was initiated at 15% (or pick a number)..   Do the math.    I don't think that's fair at all..   If you are struggling to make ends meet and feed a family on $20,000 a year..  $3000 in taxes makes you struggle at $17,000.    If you are fortunate enought to make $2,000,000 a year, your tax burdern goes DOWN from $780,000 to $300,000.   Making you struggle to raise a family on a meer  $1,700.000 a year.   That's a real struggle..  lol!

No.. a flat tax is hardly fair.   That's why the present progressive tax code was adopted in the 16th amendment to the Constitution.  Because it IS fair..  It certainly can be simplified, but it is definately fair, where a flat tax is not.. imo..


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## Ralphy1 (Mar 25, 2015)

But at least with a flat tax you could probably save on tax prep...nthego:


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## QuickSilver (Mar 25, 2015)

I think it all hinges on what your personal philosophy of "Society" should look like.   Should a society ensure that it's most vulnerable are taken care of with dignity.. even if that means a few bad apples slip though the cracks and take advantage?   OR should a society be one in which everyone is on their own and if you do not have the means or the ability to care for yourself, then you should die, or beg on the streets at the mercy of the whims of the wealthy?   We have to make that decision and I think that there are two very clear ideologies out there for the choosing.


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## Debby (Mar 25, 2015)

QuickSilver said:


> I think it all hinges on what your personal philosophy of "Society" should look like.   Should a society ensure that it's most vulnerable are taken care of with dignity.. even if that means a few bad apples slip though the cracks and take advantage?   OR should a society be one in which everyone is on their own and if you do not have the means or the ability to care for yourself, then you should die, or beg on the streets at the mercy of the whims of the wealthy?   We have to make that decision and I think that there are two very clear ideologies out there for the choosing.




I'm with you on society taking care of its most vulnerable!  We 'grow' in direct proportion to how much we care about others.


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## Jackie22 (Mar 25, 2015)

Debby said:


> I'm with you on society taking care of its most vulnerable!  We 'grow' in direct proportion to how much we care about others.



Exactly, Debby.......I would not want to live where there was no concern or care for the disadvantage.


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## QuickSilver (Mar 25, 2015)

Jackie22 said:


> Exactly, Debby.......I would not want to live where there was no concern or care for the disadvantage.



Besides the obvious morality in caring for the poor and using tax dollars to do so, there is legitimate rational for the rich and corporations to pay a higher percentage in tax.   Elizabeth Warren pointed out some of this.   The wealthy, and corporations simply use MORE of our resources than the poor.  They use the highways more to transport their goods.. tearing them up too with semi tractor-trailers..   They use a greater percentage on non-renewable energy.  They certainly use our legal system more (which we all pay for)..with civil cases like contract disputes.   They use the educated workforce that WE as taxpayers pay to educate.  They use our police more by relying on them to protect their mansions and factories.   AND let's not forget that by living here, they were able to take advantage of a system that allowed them to become incredibly wealthy in the first place.   Shouldn't they pay that forward to help others?


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## AZ Jim (Mar 25, 2015)

Where have I heard of this asinine idea before?  It has been estimated it would take a minimum of 20% "to work".  So, person A has a gross income of $20k his tax would be $4k, leaving him a whooping $16k to live on an entire year.  The same year Mr. BigBucks grossed $5 million and his tax is 1 million, think he can make it on the remaining 4 Million bucks???


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## QuickSilver (Mar 25, 2015)

It's as asinine and regressive as using a National Sales Tax and doing away with income tax.  Since the poor and middle class spend a much higher percentage of their income to exist, they would be paying a higher percentage of money than the Wealthy.    There seem to be a multitude of seemingly "fair" schemes to facilitate the continued shift of money from the bottom to the very top.


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## AZ Jim (Mar 25, 2015)

QuickSilver said:


> It's as asinine and regressive as using a National Sales Tax and doing away with income tax.  Since the poor and middle class spend a much higher percentage of their income to exist, they would be paying a higher percentage of money than the Wealthy.    There seem to be a multitude of seemingly "fair" schemes to facilitate the continued shift of money from the bottom to the very top.



Those schemes ARE fair.....................for the rich.


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## Debby (Mar 25, 2015)

AZ Jim said:


> Where have I heard of this asinine idea before?  It has been estimated it would take a minimum of 20% "to work".  So, person A has a gross income of $20k his tax would be $4k, leaving him a whooping $16k to live on an entire year.  The same year Mr. BigBucks grossed $5 million and his tax is 1 million, think he can make it on the remaining 4 Million bucks???




Wasn't it Warren Buffet who said he paid 17% tax, less than his secretary pays?  At least at 20% he'd be paying more and if that was combined with tax credits for people whose income is under a certain level, their burden could be reduced still more, although you'd have to close rich guys loopholes at the same time.


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## QuickSilver (Mar 25, 2015)

Debby said:


> Wasn't it Warren Buffet who said he paid 17% tax, less than his secretary pays?  At least at 20% he'd be paying more and if that was combined with tax credits for people whose income is under a certain level, their burden could be reduced still more, although you'd have to close rich guys loopholes at the same time.



People that primarily make their income off capital gain and dividends pay 20% now.. That is the present tax rate and it is taxed differently than regular salaried income.    He apparently had some loopholes to add to that.

I believe the point Buffet was trying to make was that the wealthy that sit around the pool waiting for their huge dividend checks pay less than people actually working for a living.


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## Butterfly (Mar 25, 2015)

And us poor folks don't have any loopholes.


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## Ralphy1 (Mar 26, 2015)

I don't have none of those dem dividends or gamy things, just a lumpy mattress...


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## Grumpy Ol' Man (Mar 26, 2015)

QuickSilver said:


> It's as asinine and regressive as using a National Sales Tax and doing away with income tax. Since the poor and middle class spend a much higher percentage of their income to exist, they would be paying a higher percentage of money than the Wealthy. There seem to be a multitude of seemingly "fair" schemes to facilitate the continued shift of money from the bottom to the very top.



I do believe the proposed "flat tax" schemes have been nothing but a means to dig deeper into the pockets of the working class and allow the billionaires skate with yet lower taxes paid.  OTOH, I also believe a "consumption tax"... you may refer to that as a National sales tax... would be the answer if there were zero exemptions.  A corporation wants to purchase a plane or company vehicles... there is a consumption tax.  A church wants to purchase new pews... there is a consumption tax.  A "non-profit" purchases widgets for some good purpose... there is a consumption tax.  No exemptions... no deductions... every thing someone purchases has a consumption tax added.  There have been estimates that the consumption tax could be as low as 5% to 7% and totally negate the need for any income tax.  Today's tax structure allows the wealthy to write off much of their income as expenses or off-shore their revenue.  With a consumption tax, who cares how much they send off shore?  When they bring it back to purchase a yacht or a multi-million dollar home... they pay the consumption tax.
Some of the wealthy would make every attempt to get around it by purchasing planes and boats overseas and bring them here.  Any and all of those items should and would require licensing in the U.S.  If it was a new license on an item where they could not show a U.S. consumption tax had been paid, the tax would be collected at licensing time.
The ONLY exemption would be Federal, State, and local government.  That is simply due to the double taxation factor.  The consumption tax all of us would pay would be paid again when the governmental agencies purchased something.  Every other entity or person would pay the consumption tax.


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## QuickSilver (Mar 26, 2015)

On the otherhand... as I stated  a poor and middle class family, which spends nearly 100% of it's income on goods and services would then in essence be taxed on 100% of their income.   A very wealthy family, can save lots of money and stash it away in foreign accounts, making  a much smaller percentage of their income subject to the tax.


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## Grumpy Ol' Man (Mar 26, 2015)

QuickSilver said:


> On the otherhand... as I stated a poor and middle class family, which spends nearly 100% of it's income on goods and services would then in essence be taxed on 100% of their income. A very wealthy family, can save lots of money and stash it away in foreign accounts, making a much smaller percentage of their income subject to the tax.



Would not a middle class family who now sees 17% to 25% of their paycheck be deducted for federal and state income tax be better off paying 7% on what they buy?  Would that not put them significant dollars ahead of where they are now?

The poor and middle class purchase necessities... food, clothing, transportation to work.  What they save would not be taxed.  OTOH, the wealthy spend money on luxury items... high dollar jewelry, luxury autos, planes, boats, European vacations, etc.  All that would be taxed, much of which is not today.  And, we don't care how much they stash away in off-shore bank accounts. Every dime they bring back to spend on something would be taxed.  Today, if they want to dip into an off-shore account for a million dollar "toy" they find some way to charge it off as a business expense.  With zero exemptions, all that would be taxed.


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## Josiah (Mar 26, 2015)

Arriving at this thread on the late side, I see that absurd notions of a flat tax and a national sales tax have been well and properly condemned. To which I can only offer my Amen.


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## Grumpy Ol' Man (Mar 26, 2015)

Josiah said:


> Arriving at this thread on the late side, I see that absurd notions of a flat tax and a national sales tax have been well and properly condemned. To which I can only offer my Amen.



What other alternatives do you suggest?  Or, are you satisfied with the current IRS and income tax system?


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## SeaBreeze (Mar 26, 2015)

More on the Flat Tax.  http://bluenationreview.com/believing-flat-tax-like-believing-earth-flat-gop/



> Setting the tax rate low would severely shrink the revenue that the government would bring in, crippling it, and making deficits a lot bigger. Setting the tax rate high would mean the wealthy wouldn’t get the break they want, but it would also mean that most people would suffer taxes that they couldn’t even begin to afford. (As we said above, 1 percent of the population has the majority of the nation’s money.) And if we go with the middle-of-the-road rate, it would be a big tax increase on those without the funds to pay, and a big tax cut for the rich.
> 
> Yet Republican presidential hopefuls are talking about this as a _real_ option for governing our country. Cutting taxes for the wealthy and putting the burden on the rest of us. I don’t know which I hope for more: that they are simply scheming against America to fill their coffers, or that they really are crazy enough to sincerely believe that this would be good for the nation.


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## Josiah (Mar 26, 2015)

Grumpy Ol' Man said:


> What other alternatives do you suggest?  Or, are you satisfied with the current IRS and income tax system?



I don't know as much as I should about the federal income tax system. My wife did our taxes with the help of an accountant. I do favor a progressive tax rate whereby wealthier people would pay a higher rate than people with less wealth. I do support the concept of using the tax system to encourage activities which promote national well being such as encouraging the use of alternative energy sources. I realize that many tax breaks fall into what many people consider to be loopholes and I would hope that these could be eliminated. I see no way of significantly simplifying the system because of the vast complexity of the American economy. I feel that there are a great many functions are best and most fairly performed by a federal government and to perform these functions the government most have a source of revenue. I don't approve of a national lottery and can think of no fairer system than income or wealth tax paid by individual and other commercial entities. So in answer to your question I accept the current tax system generally.


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## Grumpy Ol' Man (Mar 27, 2015)

Josiah said:


> I don't know as much as I should about the federal income tax system. My wife did our taxes with the help of an accountant. I do favor a progressive tax rate whereby wealthier people would pay a higher rate than people with less wealth. I do support the concept of using the tax system to encourage activities which promote national well being such as encouraging the use of alternative energy sources. I realize that many tax breaks fall into what many people consider to be loopholes and I would hope that these could be eliminated. I see no way of significantly simplifying the system because of the vast complexity of the American economy. I feel that there are a great many functions are best and most fairly performed by a federal government and to perform these functions the government most have a source of revenue. I don't approve of a national lottery and can think of no fairer system than income or wealth tax paid by individual and other commercial entities. So in answer to your question I accept the current tax system generally.



Great answer!  Good points.  I have lived with the current IRS system for almost 70 years.  Three things really bug me about the current system.  1.)  The wealthy can avoid paying their share of taxes by hiding money off shore.  The less fortunate either don't have enough left over to "hide" or can't afford the attorney and accountant to set up off shore accounts for them.  2.)  The wealthy can purchase boats, planes, luxury cars, go on expensive vacations and charge those all off as business expenses.  That significantly reduces the amount on which they pay tax.  3.)  Churches should pay tax.  Those who legislated churches free from the tax code never envisioned today's mega-churches.  Pastors making over $1 million/year.  Pastors living in million dollar mansions.  Churches large enough to seat 3,000 to 5,000.  

If we could actually collect taxes on the real income of the wealthy, that would quickly solve the Federal budget issues.  Instead, the tax code has been authored by those in the tops tier of wage-earners and those are who gets the biggest exemptions.


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## WhatInThe (Mar 27, 2015)

I'd say a flat tax in combination with other taxes would work like a sales or consumption tax but a flat tax by itself would not please everyone. First order of business should be to get rid of the corporate loopholes that allow the mega corporations like GE not pay any tax.


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