I don't hate all your ideas. I think your ideas other than creating a flat rate are all fine and dandy.
Here are my problems with a flat tax:
1. It doesn't simplify. As you said, its all the rules and deductions that make it complex. A flat rate doesn't fix that. That's a whole other issue.
2. The sum of a flat tax and existing regressive taxes yields a net regressive tax scheme, whereby the poor are paying a higher tax. Sure, your big deduction(ok by me) is fine but its a different issue than a flat tax rate.
3. Virtually all models involve lower revenues total and a higher tax burden on the middle class. When you look at figures on how fast our middle class has been shrinking the past 15 years, its a little scary. That kind of wealth distribution is what a third-world country looks like: small number of ultra-wealthy, lots of poor people, and very little middle class. A successful economy requires a thriving middle class. Putting a higher burden on the middle class seems to work against that purpose.

And hey Dean, you're the one using the "fair" word now; I thought you didn't like it.

What really chaps me is that Mitt Romney (and his Dem equivalents)pays a lower tax rate than I do. That's because "unearned" income is taxed at a lower rate than "earned" income. I know, low taxes on unearned income causes investment. Under that theory, we shouldn't charge rich people any taxes because they are the ones who invest. There's a better argument that earned income goes back into the economy better than waiting for this unearned to trickle back down.

And now I will go back to your fairness argument, Dean. To me, it feels really unfair that I am fully taxed for my income because I actually earned it through work. But people who just get money because they already have money and get income through investments get a tax break. I think its great they have made all this money, but I shouldn't be taxed more because my money was through actual work.

And this "unearned" income is clearly a regressive tax.

@ Ben- Well, yes. My whole point in using the word "fair" is to emphasize how SUBJECTIVE it is. You keep using it, but your definitions of fair are clearly different than mine, eh?

And, recall that I agreed with you about the capital gains tax- I don't like that it is taxed at lower rates, either. All I said was that it may be a necessary evil.

When I'm in one of my more fanatical moods, though, I tend to say "to hell with them." We can't sustain growth forever, and our economy is predicated upon growth. Eventually we'll run out of resources, space, etc. Thus eventually our (western) quality of life MUST fall relative to the rest of the world, anyway. We'll become another Brazil, probably.

I'm all for expensive gas- hopefully we'll then reduce our reliance upon it. The solution is NOT to extract more fossil fuels- the solution is to reduce use of fossil fuels. (All those "clean coal" ads enrage me.) This will lead to everything else being more expensive, too, especially food- and I'm all for that, as well. The cheap food tend to be the least healthy stuff. (End farm subsidies by the way- why should I subsidize ADM and Monsanto?) Suburbs should be outlawed- live in the city or a town, or be a farmer.

Actually, if I was able to snap my fingers and fix the world one step I would take would be to cause negative population growth. All of our problems ultimately stem from overpopulation. But then our current economic systems would be nonviable.

I mentioned that I tend to be very green, didn't I?

Edited by acrosome on 11/08/2012 10:09:59 MST.

Ben,

My approach to flat tax makes it much easier. Understand I'm not saying jut layer flat tax on our current system because that is like putting lipstick on a pig. I'm saying you do away with all individual deductions and credits. All income wages, capital gains, dividends, business income, etc fall into one taxable bucket. You then tax the total income at the flat tax rate. Make some concession for the poor at a lower rate (I know not truly flat for everyone). This also includes the elimination of sales tax.

I realize this would probably never happen, but it surely makes things easier and more equal.

Dean, I don't buy the argument that businesses/rich receive more benefit. You have to look at the total federal spending and not just pick some items. Also many of the items you picked liked roads and airports assess fees/taxes based on consumption. Have you looked at the fees on an airline ticket, hotel, rental car lately. Businesses sure pay a lot of social security taxes, medicare taxes, sales tax, property taxes, etc that benefits everyone.

Doesn't sound like you guys love the flat tax so much as getting rid of a lot of other problems. I'm good with that.

I know enough about taxes, though, to think that the tax system can ever be made simple. Financial issues are complex by their nature. Things are not always black and white. While I agree it would be nice to simplify where we can, making simple rules often just leads to broader gray areas.

And Dean, I never knew you were such a radical hippie. Right on!

Were you picking on coal because you know I live in Kentucky? Fair enough.

Yes you have to pay for an airline ticket- this is to pay for fuel, aircraft maintenance, profit for the airline, and a few fees. But, brother, if you try to tell me that the airports and the air traffic control system in this country aren't HEAVILY subsidized by the federal government I'll call you out on it.

Toll highways in this country are rare, and the tolls are almost never used for upkeep of the roads. They STARTED that way, but once the road construction had been paid off the politicians simply couldn't bring themselves to end that revenue stream. The PA turnpike is a GREAT example. trying to argue that the miniscule road tolls you pay cover the cost of the roads you use is farcical.

The government, to my knowledge, does not generally build hotels nor rent cars, and I certainly never mentioned them.

Those taxes you mentioned come out of my pay, as well, eh? Moot point.

As a thought exercise, I'll tell you what... Would you be willing to have your business pay ZERO taxes with the caveat that you could then NEVER use a public thoroughfair, airport, or subsidized utility (pay to build your own generator, find your own oil), and that all of your property would be fair game to be stolen or destroyed at will by anyone and the police wouldn't help you? And any foreign government could seize your assets if they chose to? And, to boot, you couldn't hire anyone who had attended public education or ever gotten a Stafford loan- you had to find children, raise them, and educate them to be your workers yourself?

OF COURSE NOT. Because your business BENEFITS from all of those PUBLIC services.

Honestly, I find your insistence that businesses don't benefit more from public infrastructure than do individuals to be ludicrous. I know that intelligent people can disagree, but this boggles my mind. They simply USE that infrastructure far more than any individual. If nothing else I find it hard to believe that ANY small business doesn't use FedEx or some similar shipping service far more than I do- which means roads, airports, air-traffic control, FAA oversight, highway patrol, the DMV, fuel from drilling on public land, employees who can READ the addresses, etc. And the only way that I use the port of Long Beach is when some BUSINESS ships something through there to SELL it to me and make a PROFIT.

Let me assure you, I have spent enough time in third-word s#!tholes to NOT take literacy for granted.

Yes, individuals use these government services to get around in their lives, but businesses use them to make tons of money. But what I'm saying is that a flat tax addresses this- 17% of a ton of money is indeed more than 17% of a manual laborer's income.

Certainly, yes, there are government programs that do not directly benefit businesses- I'm sure that you are thinking of welfare programs. But frankly, that's not what I'm talking about. It isn't "cherry picking." I'm compassionate enough to think that yes we do need social security and WIC and such programs, and that everyone should pay into that. That's off the table- it's just a loss that we as decent human beings have to accept. The thought of an illiterate American child with malnutrition is repugnant to me. Hell, the thought of any child being illiterate and unfed is repugnant to me, but I hope you know what I'm saying. And having them NOT die of starvation STILL helps business, because it leads to a larger workforce and thus cheaper labor.

EDIT-- Ninja'd!

@ Ben- you want to talk about coal? I'm originally from Pennsylvania. My paternal grandfather had black lung, and ultimately died sooner than he should have because of it.

Simple rules at least make everything transparent, and thus the righteous fury of the people can be properly focused. (DOWN WITH CITIZENS UNITED!)

I'm really not a hippie- I just worry a lot about sustainability, and get fatalist about it at times. We WILL run out of fossil fuels some day (unless we die of climate change first) and unless we have alternative energy sources ready when that happens the human race is screwed. Energy will NEVER be so cheap again. And I'm responsible enough to NOT be willing to just shove that problem off on my descendants, unlike those idiotic "drill, baby, drill" people. Or whoever pays for those "We need to develop ALL possible energy sources" commercials- which actually means "go ahead and try to develop green energy sources with the pittance we allow you, but we for damned sure want to keep our massive fossil fuel subsidies." What the HELL is "clean coal"?!? That's an oxymoron!

I love my daughter- I don't want her starving to death or dying of dysentery.

@ Brad- Getting health insurance through your employer is an odd legacy that we got stuck with. During the war when wages were frozen the only way that businesses could competitively attract workers was to offer other benefits, and health insurance became a popular one. I agree, it's an odd system.

But, hell yes, tax Twinkies. Well, certainly tax sugary soda- a "food" with absolutely zero nutritional value except for water and too many calories. It's not a "slippery slope." Governments have used taxes to try to promote good behavior since the dawn of time- I certainly support the extremely high taxes on tobacco, for example. And, as a matter of fact, yes, I should pay less for my health insurance than does an obese smoker. (Pre-existing conditions is a different issue.)

but as I said, it seems clear that we will one day have a public healthcare system of some kind, anyway.

Edited by acrosome on 11/08/2012 11:16:36 MST.

I'm with on coal and our energy. And sorry to hear about your grandfather. Our population continues to live with the results of coal mining.

Coal is so big its hard to suddenly replace, which is why we need to start now.

Couldn't agree with you more on Citizens United. This was a pure political decision made by 5 republican appointees. I ain't gonna sugar coat it.

My hippie reference was not a slight at all. I'm part hippie myself. People consider you to be a hippie if you want to be more responsible towards our resources, so I just embrace the term.

See, when we talk about taxes enough, we don't disagree too much. Its when you go slapping on terms that carry baggage that people get all crazy. To me, when I hear "flat tax", it means less taxes on the rich and more on the middle class. But if you manipulate the existing system so that that is not the effect, I'm ok with it. When most politicians talk about a flat tax, though, their plans do just that.

"once the road construction had been paid off the politicians simply couldn't bring themselves to end that revenue stream."

That is the problem. Every year we collect more and more taxes as a percentage and dollars.

A couple of weeks ago I flew to New York, rented a car and drove less than 300 miles in a rental. Here are the taxes and fees I paid...

Personal car: Round trip drive to LAX (fuel taxes at the pump) = $11.96
Economy Parking at LAX = $90.00
Rental Car Fuel Taxes at the pump(9.72 gallons) = $6.76
Tolls in New York = $18.82
Rental Car Fees/Taxes = $132.92 (26.89% of the rental car charge)
Airplane Ticket taxes and fees = $29.83
Hotel Taxes/Fees = $150 (15% of total)
Taxes on meals = $16.52

Total Taxes and fees paid = $456.84

I am not saying we should not pay taxes, but the government is so inefficient and they waste/misuse too large a percentage of what they collect.

Not to mention the income tax rate for me (State and Federal) is 38%. I travel a lot which generates my income. So I pay a lot of taxes to get to the point where I get the privilege to pay 38% of my income in income taxes.

P.S. The state and federal government make more money on a gallon of gas than the oil companies do.

This one is the worst!!

Edited: Note that the Concession Fee is taxed too!

Edited by ngatel on 11/08/2012 11:39:22 MST.

We all do.

Dean,

The government in and of itself doesn't generate any revenue. It's source of revenue are:
1. Corporate taxes
2. Individual taxes (on the wages individuals make by working for a company)
3. Payroll taxes (but technically those are trusted)
4. Taxes on income from investments
5. Debt

So the way I see it is that the government has no source of income to building infrastructures, etc without corporations. So just like you ask me how a business can operate without an infrastructure. I ask you how a government builds an infrastructure without corporations. In reality without corporations you have no revenue for any government spending.

So when the President says businesses couldn't do what they do without the government infrastructure. I say who do you think build that infrastructure? My business taxes and the taxes of the people I employee. I agree they are the vehicle for taking the tax dollars and utilizing them to build it, but its not like they paid for the development of the infrastructure and that businesses are exploiting them.

Its a great circle. Business can't exist without the civilization created by a system of government. Government needs the tax dollars to create the civilization. And its not just the roads and tangible things. Business benefits greatly from a court system that protects many interests,from police that keep order, from a military that protects us(and employs defense contractor business), and from teachers that provide an educated work force. The list can go on forever.

Ben,

You are right it is a great circle. It has greatly increased our quality of living since the end of WWII, but nothing guarantees that it will continue. I'm just amazed at how each party takes a portion of the circle and just trashes it like they don't depend it. Dems trashing corporations/1% and Reps not wanting to pay any taxes/social programs. Plenty of other examples....

See, we're all just one big happy circle ;) We just all want a place in the circle.

@ Brad-

I never said that government generates revenue- that's a straw man. Except in China, where the government owns most businesses...

So, would you take that deal? Zero taxes with all the limitations I gave? Is that what you're saying?

Well, wait, let me edit the hell out of this....

EDIT--

We're clearly arguing about two different things.... I'm just saying that corporations and the rich should pay some sort of tax on profits/gains, and that in fact since they benefit disporportionally it isn't unreasonable if a "flat tax" scheme doesn't end up being absolute (such as I described) such that the poor do get some relief.

But reading your last post... well, you're making my argument for me. So I think we're not arguing about the same things. It looks like you have no problems with a tax on business profits- you merely have some nitpicks about implementation. I mean- I agree that getting your healthcare insurance through your employer is bizzare, but it's the system we've inherited. If you don't like that I'm surprised that you oppose a public healthcare option, since such a service would eventually do away with employer-provided healthcare.

So... what are we arguing about? In what way do you disagree with me?

I mean, you say that businesses built and maintain all of this infrastructure. So... what now? Do we stop taxing businesses? Stop all these services and stop maintaining and improving the infrastructure?

Mind you, remember what I said- welfare programs are simply a loss for everyone. That's neutral. IMO we as compassionate human beings just have to accept SOME minimal welfare programs. And just to cover all bases, I get no angst about a public healthcare option. I'm not thrilled about the prospect, but I certainly get no angst, either. Here's why-

We already have publicly-funded healthcare in this country.

Whenever anyone shows up in an ER they cannot be turned away, they must be treated, even if they have no insurance and cannot pay for their treatment. COBRA says so. So who pays for their care? Answer- you and I, through higher medical billing and higher insurance premiums. Every serious analysis I've seen has shown that it would be CHEAPER to have a public healthcare option with preventative services and screening that would catch problems before they got bad enough to result in ER admissions for all of these uninsured folks.

Edited by acrosome on 11/08/2012 15:44:10 MST.

"I'm not sure how I feel about capital gains taxes- in theory I see no reason that such income should be taxed at a lower rate, but there is NO DOUBT that it drives investment and thus the economy, so it may be a necessary evil."

How about differentiating between capital gains on profits from investing in startups or small cap companies, as opposed to flipping stocks of well established companies after holding them for 366 days or more?

"It's a sad day when a desire for self-sufficiency and being fiscally conservative gets you labeled "extreme"."

If that is all the current crop of Republicans stood for, Romney probably would have won, what with the current economy, closet racism, and all the special interest money flowing into his campaign. But no, they wanted to get into people's personal lifestyle choices and deny women the right to make decisions concerning their own bodies, not to mention alienating Latinos and African Americans. If they don't change that particular set of positions, they will go from irrelevant to extinct in less than a generation, given the current rate of cultural and demographic change.

"I'm not sure how I feel about capital gains taxes- in theory I see no reason that such income should be taxed at a lower rate, but there is NO DOUBT that it drives investment and thus the economy, so it may be a necessary evil."

How about differentiating between capital gains on profits from investing in startups or small cap companies, as opposed to flipping stocks of well established companies after holding them for 366 days or more?

------

All the capital gains I have made were from money I already paid income tax on in the first place!

Also, if you lose money what happens? You can deduct the loss... unless it was part of a retirement plan. Of course in a retirement plan, like a 401K you pay taxes on the amount you withdraw each year. But then I am no tax expert... which irks me -- the tax laws are so complicated you have to hire someone to figure it out -- which makes a flat tax a good argument.

How about stock you own and there is a buy-out and the company is merged, no longer existing. Has happened to me. They buy the stock from you and you have to pay capital gains, and if it was unplanned it can have dire consequences on your overall tax situation if you have other income.

If that is all the current crop of Republicans stood for, Romney probably would have won, what with the current economy, closet racism, and all the special interest money flowing into his campaign. But no, they wanted to get into people's personal lifestyle choices and deny women the right to make decisions concerning their own bodies, not to mention alienating Latinos and African Americans. If they don't change that particular set of positions, they will go from irrelevant to extinct in less than a generation, given the current rate of cultural and demographic change.

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

Its both parties and even our country. You see, God is on our side.

God tells us to invade other countries, so it is okay. God is on our side.

God tells the Democrats we must be our brothers' keepers so we must re-distribute wealth. God is on their side.

God tells the Republicans what a woman can and cannot do with her body. So we must outlaw abortion. God is on their side.

God is not on the side of the Libertarians, since many are atheists. Many prefer anarchy because there is no God.

Bottom line is that the electorate needs to quit voting the party line, and make decisions based on what the candidate stands for -- only it ain't gonna happen.

This is funny

"All the capital gains I have made were from money I already paid income tax on in the first place!"

True enough, but the money you made in capital gains was new, untaxed money. Same goes for interest.

"But then I am no tax expert... which irks me -- the tax laws are so complicated you have to hire someone to figure it out -- which makes a flat tax a good argument."

+1 When an college educated person can't understand the tax code, something is seriously wrong. I could support a flat tax with either no, or minimal, deductions, as long as adjustments were made for those for whom it would truly be a burden. I think reasonable folks could reach a consensus on what circumstances constitute a burden.

"They buy the stock from you and you have to pay capital gains, and if it was unplanned it can have dire consequences on your overall tax situation if you have other income."

I think that is what is called risk. It comes in a lot of flavors, and this is one of them. Margin calls are another form of unplanned liquidation with potential adverse tax consequences, not to mention loss of capital consequences. Life in the market, like life in general, is not always fair. Unless you're one of the big fish who can afford a good accountant. ;)

Edited for grammar.

Edited by ouzel on 11/08/2012 18:51:18 MST.