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Holy Sh*t

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Re: Holy Sh*t
« Reply #40 on: August 02, 2004, 03:05:14 PM »
It's ok. I know you're not trying to attack me. it's a matter of degree. Of course the flat tax is not regressive. it's just, not as PROGRESSIVE as a progressive tax. And if you look at regressive as the opposite of progressive, than one scheme that is less progressive than another scheme is also more regressive (try saying that sentence three times very quickly  :D  ). In other words, if you make more money than I do, and we're both taxed at ten percent of our incomes, than this is not regressive. But it is still more regressive than a system in which you pay fifteen percent on your top rate and I pay five percent on my bottom rate.

Gotcha. I took econ AP in high school and remember it so very little.

buster

Re: Holy Sh*t
« Reply #41 on: August 03, 2004, 05:27:56 AM »
These are good arguments in favor of some sort of flat system. The idea that basic necessities of living would be exempt is news to me, though, and from what I understand if you exempt those (or, for example, don't tax the first $x,000 of income or purchases) in order to make the system at least somewhat progressive then the overall rate has to be so high to preserve the revenue stream that virtually no one would support it. I'm not citing this as a definitive argument against these types of systems, but it's certainly a consideration.


Neither a flat tax nor a national sales tax favors the "working class." Although each has an aesthetic "fairness" appeal, both are quite regressive when compared to our current system.


I see what you're saying on the flat tax. But the sales tax? Basic necessities of living would be exempt. Likewise, you could probably make educational expenses exempt. I would think this system would be fairer because it rewards "good" behavior--ie the middle class family that saves for future educational exspenses, stays in the smaller house, buys the smaller but more environmentally friendly car, would be taxed less than the middle class family that spends every cent on vacations, bigger houses, etc. It might even discourage heavy credit purchases (as more purchases mean more taxes), which would be another benefit.

Re: Holy Sh*t
« Reply #42 on: August 03, 2004, 07:06:33 AM »
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Bman

Re: Holy Sh*t
« Reply #43 on: August 03, 2004, 07:11:11 AM »
If we adopted a flat tax, does anyone have an educated guess of what the starting rate would be?

buster

Re: Holy Sh*t
« Reply #44 on: August 03, 2004, 07:16:07 AM »
If I remember Forbes's proposal correctly, it was in the neighborhood of 18-20%. I have no idea whether or not it included any progressive measures.

If we adopted a flat tax, does anyone have an educated guess of what the starting rate would be?

buster

Re: Holy Sh*t
« Reply #45 on: August 03, 2004, 07:29:47 AM »
FYI, our current system is essentially flat when you factor in payroll tax, state income taxes, etc. I don't like it much, for primarily that reason.

Let's assume for the sake of argument, though, that our current system is somewhat progressive, which I interpret to be your understanding. If we institute a flat tax and close loopholes available to the wealthy, the result will be flat, right? It may or may not be more "fair," depending on your standards, but how is it not regressive as compared to the current system?

You're also making some assumptions that I think are unwarranted. Will we really close those loopholes? Will we really apply the same flat rate to corporate income and close corporate loopholes as well as individual ones? Is it really in our best interest to do so? (I should clarify that -- aren't tax breaks useful as incentives to act in particular ways?) What about taxes aside from income tax? What do we do about payroll, capital gains and estate taxes? What's wrong with closing loopholes within the framework of an actually progressive structure?

Okay then. Those are some of my questions. But just so you know where I'm coming from, I have no interest in "equality" when we're talking about taxes, and I suspect I'm representative of much of "the left" in that regard. I firmly and proudly support progressive taxation.

See, you're just wrong in saying it doesn't favor the working class because it's more regressive.  It favors everyone equally. It would close all the loopholes that keep big business from paying their due.  So how again does it not favor the working class?  Just because there's not a "progressive" tax in place doesn't mean that it won't actually level the playing field and be a fair system of taxation that would favor everybody, while requiring from everyone that they give back an equal amount of what they have been given. 

I ask you this: if a flat-tax system can close loopholes for the richest Americans and stop them from hiding their assets through complicated tax schemes, and if that brings more tax revenue in overall and this money can be used for social services/etc, how does this not favor the working class?  Only because they're paying the same 8% or whatever?  That logic doesn't make any sense.  Just because it's less progressive doesn't mean that it would bring in less money from the rich overall.  By closing loopholes and tax schemes, the exact opposite happens and true equality (a dream of the left) under the tax system is achieved.  Why, in this scenario, is a progressive tax system that nevertheless provides ways for the rich to get out of their rightful taxation preferable to a fair, equitable system that takes "from each according to his ability" and allows services to provided "to each, according to his need"?

I'm actually asking these questions and making these statements in the hypothetical.  I'm not sure of all the details of a flat tax, and I will admit this.  But it's my impression that such a tax would close loopholes and bring in more money overall, and would be an equal burden on everyone.

ZAP

Re: Holy Sh*t
« Reply #46 on: August 03, 2004, 07:49:52 AM »
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buster

Re: Holy Sh*t
« Reply #47 on: August 03, 2004, 08:00:15 AM »
Zap, I think you're missing part of my point. I agree that the mechanics of it are of little consequence; what matters is the net result. What I'm saying, though, is that the current net result is approximately flat. If we want "the rich" to "support most of the tax burden," why can't we close the loopholes under the current system?

The answer is that money is power in our country, and implementing a genuinely progressive tax structure is not feasible as long as that remains true. That will remain true whether we're talking flat tax, national sales tax, or our currently existing mess.

One more point -- does it strike you as plausible that Denny Hastert is out pushing for tax reforms with the "working class" in mind?

You may be representative of much of the left in that regard.  But I do know that a good amount of people would support a flat tax on both sides of the aisle if it ended up being a more equal system than we have now, that actually managed to make the rich support most of the tax burden.  That is all too hard to achieve under the tax shelters and advantages of the wealthy under the current system.   

I never said a flat tax was more progressive than the current system.  Obviously you missed it when I said just the opposite.  My point was that progressive/regressive is a bad way to look at and judge a tax system when there are so many tax breaks/loopholes/etc. under the current system.  And my point was that irregardless of whether or not it was "progressive" the wealthy would be more heavily taxed in numberical terms by virtue of the amount of money they had.  If they're theoretically paying 40% right now but manage to hide all but 15% of that (and I'm making up these numbers out of thin air, just to illustrate a point) how is it preferable for this to continue instead of asking everyone to pay 20% across the board?  Wouldn't that bring in more tax revenue, if (theoretically speaking) we could find a way to make sure they DID pony up the cash?  I don't see how this is unfair to anyone. 

Just because I am for the working class getting a fair shake of the dice doesn't mean I think it's a great idea to say they have to pay a lesser percent in taxes than the rich... they'll still pay far less in actual terms (remember how in order to do well on the LSAT you had to learn when they were trying to confuse you by mixing up percentages and real values?).  A flat tax that would fall on everyone's back equally seems to me to be fairer than a tax that supposedly is progressive but ends up being either flat or regressive once we take into account a myriad of tax breaks.

As regards tax incentives etc, I understand that this is the one big method the government has to shape the financial structure and redistribute wealth.  But I think that if more money overall were coming in, the government could redistribute this wealth itself (for the sake of argument) instead of giving people tax breaks for doing so themselves.  For example, what if all this new money meant that the Federal Government could provide a two-year tuition-free scholarship to public colleges, universities and tech schools for every American?  Or even four-years?  Remember, this is in the hypothetical.  But with more tax revenue, the government could undertake projects similar to this that would help everyone and let those who want to better themselves and find a niche in this world find a way to do so.

Maybe some of my assumptions are unwarranted.  As I freely said in the last post, I don't know a lot about how this would work out in reality... only what I've heard about in theory.  Maybe these types of loopholes would not be closed, and the rich would be able to hide their money and not get taxed somehow, and would not be brought to justice under the law for doing so.  In that case, I'd be much more loathe to embrace a flat tax.

ZAP

   

Re: Holy Sh*t
« Reply #48 on: August 03, 2004, 12:12:18 PM »
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buster

Re: Holy Sh*t
« Reply #49 on: August 03, 2004, 12:18:17 PM »
Actually, I think Hastert understands that a large part of the Republican base is composed of poor people who dislike taxes, and to whom an equitable tax structure might appeal.  So to answer your question, yes, I find that to be a plausible scenario.

Ah, good point. Even better for Hastert, he can propose a tax structure that seems equitable but will actually be worse for those people than our current tax structure. You have neatly captured the essential hypocrisy of much of the leadership of today's Republican party.


As for closing the loopholes under the current system, I'm all for it.  But I think we also need to de-complicate the entire tax process, and if that means getting rid of the IRS entirely, maybe a fresh approach is what it will take.  I don't know.

No IRS = no revenue, regardless of the tax structure. I assume you mean that the IRS will be replaced by some other agency? If that's the case, isn't saying we'll "get rid of the IRS" just a simplistic way of appealing to people's (understandable) ill will toward the IRS without saying anything substantive?