Fair Tax

[stuckincincy]

I sure don't have the exact figures, but it's something like 40% of Americans pay no income tax, and many get other taxpayer money given to them. No?

[DC Tom]

I agree with the equal percentage - after a certain portion of wage is excluded.  No one should pay any taxes on the first $25K of their income.  Then their wages only would be taxed at a certain percentage to infinity.

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But you have to consider that $25k in Anchorage isn't the same as $25k in DC or NYC...

[OGTEleven]

Taxes are a burden that has to be carried.  Some people are bigger and stronger than others and can carry more weight than those who are smaller and weaker.  Lets say you have 10 people and a tax burden of 100 pounds to be carried by them.  An equal distribution, equal not fair, would be 10 pounds each.  However, if 5 of them can carry 15 pounds just as easily as the other 5 carries 5 pounds, wouldn't a "fair" distribution be 15 pounds for the stronger 5 and 5 pounds each for the weaker 5?

 

What is actually done with that tax money in terms of government expenditures is a different issue from distribution of the tax burden.

9302[/snapback]

How does this relate to my example?

 

Mr. Smith and Mr. Jones had equal "strength" thorugh their whole lives. Mr. Smith is now being milked by Mr. Jones.

 

How does your weight example refute the usefullness of the original post in the thread? When taxes are paid solely on purchases, he who purchases more carries more of the weight.

[VABills]

I sure don't have the exact figures, but it's something like 40% of Americans pay no income tax, and many get other taxpayer money given to them. No?

9347[/snapback]

I believe it's higher. I think it's 80% pay no federal income taxes.

[MichFan]

I agree with the equal percentage - after a certain portion of wage is excluded. No one should pay any taxes on the first $25K of their income. Then their wages only would be taxed at a certain percentage to infinity.

 

That's how I feel too, except there needs to be a way of ramping in on the lower end or else you'd be better off makng $24,900 than $25,000.

[Mickey]

We already do that Mickey....that's why we tax a PERCENTAGE of income.  If we had a TRUE fair and equal tax, each individual would be responsible for $XXXX (total federal budget / 280,000,000).  It's pretty easy to defend why each individual should contribute an equal dollar amount to highways and nat'l security, etc.  But since we allow for your "burden" theory, we decide to take a percentage of each person's earnings;  thus, someone earning ten times more than you pays ten times more taxes.  Of course, that isn't good enough for you, so we have to put in discriminatory rates so that someone who makes ten times more than you pays twenty times as much in taxes.  And you STILL complain that it isn't 'fair' enough.

 

Your analogy is very nice, but what happens when someone decides they don't want to carry ANY of the weight?  What happens when HALF the people decide they don't want to carry any of the weight?  That is exactly what has happened in this country, with a tiny segment of the population carrying almost the entire load.

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So on that theory, we should tax the wealthy at much lower rates inorder to have a truly flat, fair tax system?

 

Lets use some real numbers from the CBO for 2001. The top fifth in income numbered 22.5 million people making an average of $182,700/yr before taxes and $133,700 after taxes. On average they each paid $49,000 in federal taxes, an effective rate of about 26.8%. The second lowest fifth numbered 21.1 million people who made an average of $34,200 before taxes and $30,000 after taxes. They paid an average of $4,000 in taxes, an effective rate of 11.6%. This is the system about which you complain and presumably want to change.

 

That top fifth generated 1.1 Trillion in tax revenue while that second lowest fifth generated only 84.4 Billion dollars. You appear to be advocating that they all pay the same percentage and that, itself, is progressive enough. All told, those two groups generated 1.184 trillion in revenue. How much would be generated if they were taxed at the same rate and what rate would we have to use to generate the same amount of revenue?

 

Lets say, for example, that we hit both groups at a rate of 18%. The top fifth would each pay about 32,900 per year and the second lowest fifth would pay 6,156 each. The after tax income of the upper group would be 149,800 as compared to the 133,700 under the old rate. They would get a $16,100 tax cut. Yippee for them. The lower group however would see their after tax income go from 30,200 to 28,044, a tax increase of $2,156, youch.

 

How much revenue would we have generated? I'll spare you the math to get there but in the end, its about 314 Billion Dollars less than was generated under the actual system. So if you wanted to do that and balance the budget, all you have to do is come up with about 314 Billion in cuts. You can add in all the other income groups and the number just get worse. I am as big a fan of budget cutting as the next guy but 314 billion is just not going to happen. I beleive that total defense spending before 9/11 was in that range so imagine trying to elmenate the entire defense budget or the equivalent in other programs. It aint going to happen.

 

Any idea what rate you would need to generate the same revenue with both groups all paying the same rates? About 24.5% would do it. That would mean that the lower group would have their taxes go from $4,000 to $8,379 reducing their after tax income from $30,200 to $25,821. Their taxes have been more than doubled. The good news though is that the top fifth would have their taxes lowered from $49,000/yr to $44,761/yr. That is a modest savings of $4,239.

 

The question then is whether it is fair to double the taxes of 21.1 million people who are just scraping by on 30k after taxes inorder to give a lousy 4k boost to 22.5 million people who are coasting along at 133k+ per year after taxes as it is? The alternative would be to just scrap 314 billion off the budget and if you have a realisitc idea on how to do that, fine, I'd love to hear it. Do that first and there will be no need to argue the rest of this.

 

Even if I were to agree that there is a progressive component in using percentages, that isn't progressive enough nor even practical unless you have no interest at all in a balanced budget on the one hand or see no problem in doubling the taxes on people trying to get by on 34k/yr.

 

There is right, there is wrong, there is fair, there is unfair and then there is what's possible.

 

Effective Federal Tax Rates 1979-2001

[stuckincincy]

I suppose the Federal Government backing out of the affairs of the People and reverting to our Framers and Founder's intent against an overreaching presence is out of the question...

 

There is little future possible for a government and society that diverts resources to nourishing the weeds instead of the productive crops, because that makes weeds grow in profusion out of proportion than nature would dictate, but it certainly keeps the weed tenders in office and in positions of privlege and power. Ultimately, society suffers from a tyranny of the weeds, and falls from the overgrowth...

 

Tending the weeds is best accomplished by the religions, the private sector, that will with time turn them into productive crops.

[Mickey]

I believe it's higher.  I think it's 80% pay no federal income taxes.

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According to the CBO, the top 20% in income paid 65% of the federal tax burden and the bottom 80% paid 35% of the taxes. The top 20% was made up of 22.5 million households and the entire country had 109 million households. Taxwise, they don't really deal with individuals, just households. Those kinds of numbers are thrown around to try and demonstrate that their are tons of poor people out there making out like bandits, not paying any taxes. That is more than a little misleading. Kids count as much as you or I on a population table but they don't pay taxes and I don't think they should be included but they have to in order to get that kind of stat. The same is true for the unemployed or the disabled. My other post has a link to the CBO numbers, check them out if you are really, really bored and want to see if you can bore yourself just a little more.

[Mickey]

I suppose the Federal Government backing out of the affairs of the People and reverting to our Framers and Founder's intent against an overreaching presence is out of the question...

 

There is little future possible for a government and society that diverts resources to nourishing the weeds instead of the productive crops, because that makes weeds grow in profusion out of proportion than nature would dictate, but it certainly keeps the weed tenders in office and in positions of privlege and power. Ultimately, society suffers from a tyranny of the weeds, and falls from the overgrowth...

 

Tending the weeds is best accomplished by the religions, the private sector, that will with time turn them into productive crops.

9506[/snapback]

 

Yes, we should just let the economically weak die so that they won't reproduce because economic productivity is a matter of genetics. We should let the infirm die, rip out those weeds. We should let the poor starve, rip out those weeds. We should let the sick who can't afford their own medicine suffer and die, rip out those weeds. Children who are born to parents who can't afford them, let them die lest they too reproduce, rip out those weeds. Let nature take its course.

 

They are people, not weeds. There is a word for people who take care of those less fortunate: blessed.

[stuckincincy]

You missed the point. Entirely. Don't lecture me about care for others. I've squeezed pus out the ailing. Your world contains the term, "au pair", as you once mentioned.

[Alaska Darin]

But you have to consider that $25k in Anchorage isn't the same as $25k in DC or NYC...

9348[/snapback]

I imagine I would. That wasn't a fair number anyway - it should probably be based on realistic COLA standards. I've said a few times here that $200K in a major met is alot different than $200K in Fargo, ND. I'm not sure the best way to do it, but there isn't much worse than the current system...

[GG]

Mickey's simplified analysis misses the critical factor of the current tax code - deductions. It's safe to assume that the top 20% naturally has more deductions, thus the progressive tax code is gamed to try to maximize the revenue take from the top 20%.

 

What proponents of rasing the top tax rates conveniently forget in their public pronouncements is that as the rates rise, the cost of tax avoidance goes down. (Could that be the reason why Kerry won't release Teresa's financial records?)

 

That's why a fair tax should be a low flat tax that takes all gaming out of the equation.

[DC Tom]

Has anyone yet suggested slashing about 90% of the tax code, which would drastically reduce both the number of loopholes and the cost of actually collecting the taxes in the first place? That'll probably net the government a relatively painless three or four hundred billion annually.

[KRC]

Has anyone yet suggested slashing about 90% of the tax code, which would drastically reduce both the number of loopholes and the cost of actually collecting the taxes in the first place?  That'll probably net the government a relatively painless three or four hundred billion annually.

9650[/snapback]

 

...but you would put all those CPA's out of work.

[DC Tom]

...but you would put all those CPA's out of work.

9654[/snapback]

 

Well, then I'll increase taxes on the middle class. After all, Kerry says that's the key to job growth...

[GG]

...but you would put all those CPA's out of work.

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and put them into a productive use in society

[swede316]

I'd be in favor of a 15% flat tax. Let's say I make $100,000....I've worked throughout life, went to college and am finally able to make some nice money. I pay 15% of $100K....My tax would be $15K.....Now someone else drops out of high school gets a job at BK and makes $10,000 a year. He pays $1500. How is this not fair to everyone? The harder you work, the more you apply yourself...The better off you'll be, in other words the American Dream.

[blzrul]

I liked the Fair Tax proposal, from what I read, and then I found out that Tom DeLay supported it. That man is not to be trusted, so I'm a little suspicious now.

 

There is an interesting treatise out there titled "The Least of These" which was written by a theologian regarding fair taxation in a Judeo-Christian society. I think that's what we're supposed to be, at least that's what I hear. In any event, I won't go into it too much because neocon heads might explode, but it it rather interesting. Basicially WWJT (who would Jesus tax) and what would He do with it...it would make for an interesting discussion with someone like DeLay who purports to be Christian and anti-tax.

 

It's still packed away in my boxes somewhere, I don't think you can get it at bookstores since I had to go to the university press and get it, but it's quite interesting. If anyone wants the name of the press PM me.

[DC Tom]

I liked the Fair Tax proposal, from what I read, and then I found out that Tom DeLay supported it.  That man is not to be trusted, so I'm a little suspicious now.

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Unbelievable. An idea you would otherwise think is credible is suddenly questionable because someone you don't like supports it. Objectivity, thy name is most certainly NOT blzrul.

[swede316]

Yeah...really makes you think about some of the people who post here.....They have no original thoughts....They blindly follow the party line.