Well, yes, a flat tax is certainly simpler. And that would certainly be a bad thing for PWC and such, since everyone could easily do their own taxes. But the biggest point is that every flat tax scheme I've seen also drastically eliminates loopholes and deductions.

I sort of buy the argument that even though the rich theoretically max out at 35% taxes (or whatever) that most of them end up paying a lower rate than me due to deductions and loopholes, and thus a flat rate with no deductions might actually benefit me. The point where this might fail is mortgage deductions, which are a very large part of the deductions that the middle-class get, but not such a large part of the deductions that the upper class get. I think that if mortgage deductions are done away with THEN it might be a net screw of the middle class. But I know of no serious flat-tax scheme that proposed eliminating the mortgage deduction. There'd be riots in the streets.

Edited by acrosome on 11/07/2012 12:07:10 MST.

Dean,

"EDIT- Wow. Thanks for the condescension, Brad. I have thought about this a lot, y'know. Fiat trivializing my opinions is a very weak argument."

Sorry my comments where not directed at you, but the general feeling of excitement all over the web today about the election and Obama being re-elected.

I'm past the point of thinking our elected officials can solve the problems regardless of the party. All this talk about fact checking just doesn't matter to me. I'm tired of the finger pointing, blaming, etc. We have to move to what is solution and act on it.

BTW, plenty of us moderate Republicans, just not any in congress

Edited by wufpackfn on 11/07/2012 12:09:53 MST.

I just don't think a flat tax is significantly simpler. Looking up the rate based on a certain income level is the easiest part of doing taxes. It takes all of about 30 seconds for fumble-thumbed people like me. A squirrel can do it. The other parts of my taxes do take a lot of time and effort. Its mostly the work of pulling together all the data, which will be there no matter what the tax system.

When I say the rich would pay less, I mean less than they do under the current system, not less than middle class people in gross dollars. Almost by definition, a flat tax involves lower taxes on the rich than a progressive tax.

With a flat tax system, the rich pay less. That means that either the middle class will pay more or the deficit will grow faster because of decreased revenues. And a lot of the flat tax proposals do try to make up the difference with the mortgage deduction.

I'd like to pay less taxes too. But every dollar less the rich pay in taxes is a dollar that has to be made up from the middle class. And the middle class is already shrinking at an alarming rate.

"There is simply no way to balance the budget right now and talk of it is not based it reality, particularly when we talk in the same breath about tax cuts for the wealthy and a robust military. And no one is going to cut out Medicare or Social Security. If the economy gets rolling and we raise rates on higher income, I think its possible to balance the budget."

The budget could most definitely be balanced, but not by the politicians we have in DC. To make the cuts, adjust the taxes and become responsibility would impact both parties and upset the voters. It is imperative that we stop thinking that over spending 1 trillion a year is ok. How many more years are we going to continue doing this?

People keep talking about the economy rebounding, but it's not. The 3rd quarter saw the largest number of S&P companies miss earnings estimates since 2006. Also a large number of companies lowered earnings estimates for the 4th quarter and 2013. Corporate America is not buying into the recovery. Unemployment isn't moving and new hiring isn't keeping up with needed employment. Europe continues to worsen and China is seeing growth slow down. People talk about returning to the market growth we experienced before the meltdown, but that was an artificially inflated economy that eventually fell apart.

I think people forget that we haven't always been a prospers national and it has really only been since the end of world war II that we became a world leader. No guarantees that we will return to those days. We certainly will not if we continue to do nothing.

BTW most state governments are able to balance their budget and have done a good job over the past 4-5 years. Not easy and definitely changes have been made that hurt and are not ideal. However you can't do nothing.

"But I know of no serious flat-tax scheme that proposed eliminating the mortgage deduction. There'd be riots in the streets."

I did find Romney's idea of limited deductions something to explore. The tax code is the most powerful weapon that politicians have. This is the vehicle where they reward their supporters by offering credits, deductions or even increasing taxes on others. The difficulty comes when you try to change the code because some gain and some lose. By having a blanket deduction limitation you don't have to take on each group directly. I havent' though this out and I'm sure like all ideas it has holes, but at least it's thinking different.

For the record where I stand:
- eliminate all deductions for individual taxpayers
- make insurance premiums and benefits paid by your employer taxable income for everyone. (BTW I think this is the biggest tax benefit)
- take employers out of the employee benefit equation. Employers pay a straight salary and withhold taxes. All benefits (health insurance, retirements plans, etc) become the responsibility of the individual
- lower the overall tax rates some to offset some of the add'l income being reported
- provide system for individuals to purchase health insurance directly (just like car insurance, homeowners, etc)
- everyone pays some taxes, but the poor pay a very low rate. This way any time politicians want to change the rates everyone has some impact.

my two cents.

Brad

No way to ever balance the budget without massive cuts in spending. Unless you seize the assets of everyone considered rich, that would do it. Until the next budget cycle. The US can't continue spending more than it makes, any more than you or I can, and it's "fair" that cuts would be involved. And this is the tip of the iceberg. What are there, 48 states that don't have the money to fund state retirements? How long until California becomes a big Greece? Will states be too big to fail, yet too small to cut spending?

Fair is a place where grown men go to throw cow chips for blue ribbons.

@ Ben-

But why do you think it's "fair" that the rich pay 35% and the middle class only pays 15%? How is that fair? Seriously- the logic of that baffles me, but I keep hearing it squawked about by the far left. I would think that the most fair thing imaginable would be a flat tax rate.

But I'm really just puzzled by that terminology- "fair." Clearly using that word is just spin on the part on the left.

Another thing that I hear squawked a lot is that the far-left politicians are baffled about "why more people don't vote in their own self-interests", i.e. Democrat. Well, I'll tell you- just because something is in my own interests doesn't make it RIGHT. Yes, I could vote myself all sorts of entitlements and freebies, but eventually you run out of other people's money, y'know? That's like three wolves and a lamb voting on what to have for dinner...

But both the right and the left annoy me on this issue:

The Democrats want to increase taxes and increase spending. Net zero change in deficit.

The Republicans want to decrease taxes and decrease spending (unless it is pork for their own district, of course). Also net zero change in deficit.

Where are the people saying that we need to decrease spending, increase taxes, or both? If we want to curb the deficit and the debt, well, that's the way it goes.

EDIT-- Damn- I got ninja'd TWICE.

Edited by acrosome on 11/07/2012 13:03:07 MST.

"Where are the people saying that we need to decrease entitlements, increase taxes, or both? If we want to curb the deficit and the debt, well, that's the way it goes."

I'm here waving my hand......

@ Brad:

Yeah, run for office. See how far you get. Especially as a Republican. :)

Edited by acrosome on 11/07/2012 12:59:21 MST.

OK, let's derail this into a debate on Obamacare, since Brad brought the issue up. :)

This is another issue on which the Republicans annoyed the hell out of me.

Obamacare was a minor modification of a plan originally proposed by a Republican and which most Republicans endorsed, yet the Republicans fought Obamacare tooth and nail just to make Obama fail. As it is, they crippled it, then gloated that it doesn't work and blamed Obama. Huh?

A big issue was whether or not a public healthcare option would be included. One of the Republican arguments against it was that government cannot POSSIBLY run such a program as efficiently as the market, and so everyone would buy (cheaper) private insurance anyway.

Then, they complained that a public option would drive private insurance companies out of business.

Well, which is it? You can't argue BOTH.

And, frankly, I'm all for screwing insurance companies at any opportunity, anyway, along with banks and credit card companies. back when ATMs first came out the banks started charging a fee to use them. Then they started charging a fee to use a human teller ?!? The banks make enough profit that they don't need fees like this- it was all a blatant attempt to screw people out of their money. I dropped them all like hot rocks and switched to credit unions as fast as I could. Now I'm solely with USAA- hallelujah. They even pay my ATM fees up to ten times a month if I use another bank's ATM.

Ok, I'll end that non sequitur, now...

My personal opinions on the healthcare issue are complex and still unformed, but this kind of crap by the Republicans annoys me. Clearly the writing is on the wall about public healthcare funding, just as it is about legalizing marijuana- by which I mean that it is obvious that it is going to come someday, it is just a matter of time and how long the Republicans can hold out- so I guess I'd better get used to the idea.

Also, there are some essentials that I think shouldn't be sales taxed- food, for instance, and tuition and textbooks. I'd probably include healthcare, too.

On the other hand and especially if healthcare gets funded with public money I'm all for taxing the hell out of things like sugary soda and Twinkies. Heck, we tax cigarettes, right? Then again, if we ended farm subsidies and farmer welfare in the form of the Bureau of Reclamation (as I would like to) then all that sugar and corn syrup wouldn't be so cheap and the soda would cost more, anyway. While we're at it, why do we subsidize oil companies that are making record profits? Grrr.

But then, this ALL gets back to my Australian voting and Citizens United amendment. I'd also prohibit for-profit companies from donating to politicians at all, or even donating to non-profit political advocacy organizations. A corporation is not a person and does NOT have the same rights that I do- this is an obvious legal fiction. A corporation cannot vote, for instance. This also does NOT inhibit anyone's freedom of speech, as the supreme court seems to think that it does. Every shareholder is free to donate to any politicians they like- individually. I just hate that, since I have an IRA and own some stock, that there are corporations out there giving my money to politicians whom I loathe.

So much of this special interest crap would go away with those changes...

Edited by acrosome on 11/07/2012 13:34:17 MST.

"On the other hand and especially if healthcare gets funded with public money I'm all for taxing the hell out of things like sugary soda and Twinkies"

Really? Is the goal then to limit the things that are bad for you? If so then you need to tax those that don't exercise, etc. Maybe a system like insurance companies use to rate life insurance (ie preferred, select preferred, etc). Then again what do you do about hereditary problems? Slippery slope when you start doing that. Public healthcare can't be free, so maybe as you use more you pay more (consumer model). Complex issue. However as an employer get me out of the health care insurance providing business. Why should I have that responsibility? I don't help my employees with auto or homeowners insurance.

Brad

As I mentioned in my post, my argument in favor of a progressive tax was not based on fairness but on pragmatism. In short, the rich are the ones who have the money to tax. Only a small percentage of a rich man's money goes towards necessities. Almost all of the middle class income goes to necessities. If you want your government to collect money, you have to go where the money is.

I think a good argument can be made regarding the fairness of a progressive tax (i.e. the rich get more benefit from the infrastructure created than do the poor), but I'm more of a pragmatist.

Are we ready to get rid of sales tax too? There can be no doubt but that a sales tax is regressive. Poor people pay a higher percentage of their earnings in sales taxes and other taxes than rich people.

Interesting ideas bantered around "- eliminate all deductions for individual taxpayers" Would that include all business expenses so that businesses pay taxes based on gross income?

I agree we will have to go to public healthcare to remain competitive in the world. I would also agree that Obamacare is a small modification to the private system. It still has lots of problems. I guess the best I can say about it is that its a little better than what we had and its what was politically palatable at the time.

"Interesting ideas bantered around "- eliminate all deductions for individual taxpayers" Would that include all business expenses so that businesses pay taxes based on gross income?"

Doesn't work for businesses. However all the special interest credits/deduction, accelerated deductions, etc should be eliminated. At a minimum you have to allow a business to deduct the cost of the good or service they provide. Tax the profit.

"As I mentioned in my post, my argument in favor of a progressive tax was not based on fairness but on pragmatism. In short, the rich are the ones who have the money to tax. Only a small percentage of a rich man's money goes towards necessities. Almost all of the middle class income goes to necessities. If you want your government to collect money, you have to go where the money is."

However it's not their money. Just because someone is able to make more money doesn't entitle the government to take more. You are penalizing a positive behavior and rewarding a negative behavior. I'm a middle class guy and it doesn't bother me that others make a lot more money. I don't think their tax rate should be any higher than mine, but they should pay on all their income (not happening today which is back to the flat tax on all income)

"I think a good argument can be made regarding the fairness of a progressive tax (i.e. the rich get more benefit from the infrastructure created than do the poor), but I'm more of a pragmatist."

- Rich don't really benefit from social programs (welfare, food stamps, unemployment, medicaid, etc), but pay for a lot of the funding.
- Military benefit all of us equally. Maybe a business gets a greater advantage. One might argue that military spending provides a lot of good middle class jobs.
- Public transportation. Benefit the lower income more because that can't afford private transportation
- I'm sure other things do benefit them more, but in total I don't see the big advantage.

Brad "Just because someone is able to make more money doesn't entitle the government to take more." I think it does. The federal tax code specifically provides for this. And from a practical standpoint, you can't really tax the people who don't have money.

Brad "Just because someone is able to make more money doesn't entitle the government to take more." I think it does. The federal tax code specifically provides for this. And from a practical standpoint, you can't really tax the people who don't have money.

------------------

Isn't this unequal treatment?

After spending all that money in this economy, this should have been a shoo-in for the challenger. Republicans were increasingly busy throwing moderate RINOs ("Republican In Name Only") out, so that obviously hurt them in the suburbs (knowing a bit about digital maps and watching the networks try to piece scenarios together was interesting). I know many "RINOs" shaking their heads at some of the extreme statements for the past couple years but you won't see a bumper sticker on their auto.

They (the Republicans) will need to moderate their stances with this well-educated and well-travelled block before the next election.

"The federal tax code specifically provides for this. And from a practical standpoint, you can't really tax the people who don't have money."

Gives them the authority to tax to create revenue for government services. However the government doesn't own all the money and decide what individuals are entitled to keep. Big difference.

"you can't really tax the people who don't have money."

How do you define don't have money? Are these the people who receive zero wages and zero government assistance? Or some predefined number that the DC crowd determines? I'm surely for some concessions to the poor, but everyone should pay some tax that receives any form of income. Everyone has to feel some pain when politicians want to increase. You have to get people to say yes I agree with the benefit of the additional taxes. Today people are more concerned about getting some else to pay, so they can benefit.

"However the government doesn't own all the money and decide what individuals are entitled to keep. Big difference." I kind of disagree, Brad, even though that wasn't what I said. The power to tax is really the power to determine allocations of money of the citizens. That's what taxation does. I would agree that the government has an obligation to do this responsibly, as I think we all do.

Its a fallacy that poor people pay no taxes. They pay mostly regressive taxes, such as sales taxes. There are plenty of other regressive taxes paid by the poor too. They just pay no income taxes. I'm talking out of my rectum here because I have seen no data on this, but it wouldn't surprise me if people in poverty levels of income pay a larger percent of taxes than, say, Mitt Romney, when you take into consideration the regressive taxes like sales taxes.

Politicians do not want an equal tax that effects everyone the same because they lose their leverage to reward their supporters. When you have an equal flat tax everyone is effected by a change. Just imagine for a minute that we were all currently under a flat tax system. The politicians start working on the "fiscal cliff" that is staring us in the face. Now let's say they think we need to increases taxes (the flat tax rate) which would effect everyone. I think the voters might say wait a minute do we really need to do this? Could we not make some cuts to offset the increase or at least minimize it. When people are not effected by the changes they don't hold people accountable. Who cares it's someone else's money.

*Big Stretch* *Yawn*

Well, I'm back- sorry for the absence.

Believe it or not I do understand the argument that sales taxes are regressive- and I agree, they are EXTREMELY regressive. People living under the poverty line spend essentially 100% of their income, so a portion of every dollar they make goes into sales tax. The comparatively wealthy, however, rarely spend a majority of their income- they invest it instead, so a relatively small proportion of their income gets sucked into sale taxes. Seizing a larger portion of the poor's income is JUST AS UNFAIR as seizing a larger portion of the rich's income. I get it. I would not oppose drastic rethinking of sale taxes... but that's a state issue, isn't it?

I also agree that the very wealthy benefit more from infrastructure than does any individual in the middle class. They do not have to build the roads and bridges to bring materials to their factories nor ship their products to the airport, which they also did not have to build themselves. Nor do they need to maintain an air-traffic control system to make that airport useable. They do not have to hire a private security force to keep bandits from ambushing their shipments. They do not pay to send their workers to college. Etc.

But I do have to agree with Brad, Ben. When you say something equivalent to "since the rich have all the money, if the government wants money it needs to tax the rich more" it really chaps my hide. (I'm not trying to straw-man you- I'm just too lazy to quote accurately.) Just because someone possesses something does not make it RIGHT to take it from them. I still can't imagine anything more "fair" than a flat tax.

But as I said, if only for compassionate reasons there would need to be a sort of a "standard deduction" so that the poor can get some relief. This would result in a DE FACTO graduated tax scale. Thus, I guess I don't advocate a TRUE flat tax.

For instance, using totally made-up numbers:

Lets set the flat tax at 17% (just to pick a number- the same as capital gains) and the standard deduction at $30,000. You take your income, subtract $30,000 from it, multiply by 0.17 and that's the taxes that you owe. So, someone who makes $30,000 pays 0% effective tax, someone who makes $60,000 pays 8.5% effective tax, and someone who makes $1,000,000 pays 16.49% effective tax.

The only thing that would make it difficult to pick a rate and deduction that would keep tax revenue the same is the ridiculous complexity of the CURRENT system. But I am convinced that due to their special tax breaks and deductions that no large corporation pays a tax rate as high as mine. And they should. And if they did the flat rate would probably be LOWER for the majority of Americans. A flat rate with standard deduction and getting rid of all the other deductions and special breaks would make this so. My only worry is that there are some deductions- the mortgage interest deduction comes to mind- that have become so sacred that they cannot be done away with without causing riots.

As things stand NOW though, it is hard to argue that interest on a mortgage doesn't count as a "loss" but capital losses do, y'know?

EDIT-- I guess, to make Brad happy, we could make a rule like "The $30,000 of the standard deduction get taxed at 1/10th (or whatever fraction) the flat rate", so that the truly poor are still invested in careful consideration of any tax increases rather than just voting themselves entitlements paid with other people's money. But frankly, I'd be more likely to make an argument for a Negative Flat Rate Income Tax that would replace most forms of welfare. (I'm a moderate, remember?)

Edited by acrosome on 11/08/2012 09:56:18 MST.