The Flat Tax thread

[MarkGrace]

But if all other expenditures are included, then it shouldn't be regressive. If a flat tax rate applies to each expenditure, then rates should be the same for everybody so long as no expenditures are exempted and all money earned is eventually spent. Right?

I see what you mean. If you add this add this as a condition, sure, in theory you'd take out the regression. But for obvious reasons that would never happen -- you implement a flat tax, you'll get regression, because the higher incomes will still have ample opportunity to save where others won't and there's just no way to force every single person to spend every single penny they make. You can already see this at play in various states.

[LeedsCougar]

how many of you have lived with a VAT?

it's terribly regressive and harms the poor.

[MarkGrace]

how many of you have lived with a VAT?

it's terribly regressive and harms the poor.

Which is why, despite some potential benefits, I just don't think a flat tax of any kind (income, consumption, other) is ever going to fly in this country.

[All-American]

I see what you mean. If you add this add this as a condition, sure, in theory you'd take out the regression. But for obvious reasons that would never happen -- you implement a flat tax, you'll get regression, because the higher incomes will still have ample opportunity to save where others won't and there's just no way to force every single person to spend every single penny they make. You can already see this at play in various states.

I don't think you need to require it. People don't save money for the purpose of burning it or sticking it between cracks in their mattresses. They save it so they can spend it later. Saving money would only defer the time you would eventually end up paying the tax, unless you eventually dispose of your money in some way for which you don't need to pay the tax.

[Lost Student]

how many of you have lived with a VAT?

it's terribly regressive and harms the poor.

Isn't the only difference between VAT and a sales tax is the collection mechanism? (I.e., how the tax is apportioned and collected along the entire supply chain rather than just the end-user point of sale is the only difference, right?)

[old_gregg]

you're right that with an unlimited time horizon it's not technically regressive, unless those who are able to avoid the tax on consumption by saving are doing so in order to take advantage of lower rates in the future or other savings.

[MarkGrace]

I don't think you need to require it. People don't save money for the purpose of burning it or sticking it between cracks in their mattresses. They save it so they can spend it later. Saving money would only defer the time you would eventually end up paying the tax, unless you eventually dispose of your money in some way for which you don't need to pay the tax.

But then of course you get to the argument that an ability to defer still makes it regressive. You know, the old saying "a tax delayed is a tax not paid" and such. Being able to delay a tax is the second best scenario to outright not having to pay, and high income earners would still be a in a better position to do that. Ultimately, it's easy to view this scenario as still being a regressive burden.

[Bo Diddley]

So if a flat tax wont fly, let's at least streamline the tax code. You could adjust the tax brackets and take out all deductions and make it very simple.

[Flystripper]

Right now poor people at certain income levels pay zero income tax. At the levels of income where poor people are paying zero tax, they are often barely able to support themselves and their family's well being. You would suggest that these people now start paying taxes based on their consumption which will further impede their ability to care for their necessities.

This flat tax that the poorest of the poor will now be paying will significantly impact their ability to take care of their basic needs. (unless the tax rate is so small that it would not accomplish the objective for government revenues.) Isn't that basically the definition of regressive? So if you exclude certain items (which I don' think AA is advocating), which items get excluded and who gets to choose?

[Mormon Red Death]

Re: The Flat Tax thread

Right now poor people at certain income levels pay zero income tax. At the levels of income where poor people are paying zero tax, they are often barely able to support themselves and their family's well being. You would suggest that these people now start paying taxes based on their consumption which will further impede their ability to care for their necessities.

This flat tax that the poorest of the poor will now be paying will significantly impact their ability to take care of their basic needs. (unless the tax rate is so small that it would not accomplish the objective for government revenues.) Isn't that basically the definition of regressive? So if you exclude certain items (which I don' think AA is advocating), which items get excluded and who gets to choose?

The fair tax isn't regressive by providing the "prebate". I maintain if the fair tax were implemented this country would have the biggest boom it has ever seen.

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[Mormon Red Death]

Re: The Flat Tax thread

how many of you have lived with a VAT?

it's terribly regressive and harms the poor.

The Fair tax is not a vat tax.

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[MarkGrace]

MRD going off on a tangent. Or are you taking up the mantle for the Fair Tax in lieu of Uncle Ted? yOhio wants someone to do it.

[Joe Public]

Right now poor people at certain income levels pay zero income tax. At the levels of income where poor people are paying zero tax, they are often barely able to support themselves and their family's well being. You would suggest that these people now start paying taxes based on their consumption which will further impede their ability to care for their necessities.

This flat tax that the poorest of the poor will now be paying will significantly impact their ability to take care of their basic needs. (unless the tax rate is so small that it would not accomplish the objective for government revenues.) Isn't that basically the definition of regressive? So if you exclude certain items (which I don' think AA is advocating), which items get excluded and who gets to choose?

My initial reaction to this line of thinking:

I like the idea of everyone having skin in the game. If everyone gets to use the bridge, it's better that everyone help to pay for the bridge and, presumably, care more about cost, maintenance, etc. of the bridge.

If the nation wants to assist low-income persons, then just pull it out of Title 26. We already do that with food stamps, etc. Just create another welfare category that mails checks to people every month. That idea has some drawbacks, too, but it separates the two issues and allows everyone to have a sense of buy-in regarding government spending. I think that matters.

[LeedsCougar]

The Fair tax is not a vat tax.

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This thread has not specifically focused on the "fair" tax. There has been discussion of a nationalised sales tax, which would likely be similar to the sort of vat we see in Europe. It's a bloody disaster and you yanks have little idea of the devil you've chosen to take to the dance.

[MarkGrace]

This thread has not specifically focused on the "fair" tax. There has been discussion of a nationalised sales tax, which would likely be similar to the sort of vat we see in Europe. It's a bloody disaster and you yanks have little idea of the devil you've chosen to take to the dance.

The VAT is a consumption tax, and this thread is about a flat tax on consumption. I understood what you were going for.