Britman is correct in his description of how the tax system worksLink

and for those who don't like links, this is the relevant paragraph

Here's an example of how income is taxed: Say you are single and report $80,000 in taxable income in 2004. In accordance with the income ranges defining federal tax brackets for single filers in 2004, the first $7,150 of your income is taxed at 10 percent; dollars $7,151 through $29,050 are taxed at 15 percent; dollars $29,051 through $70,350 are taxed at 25 percent; and dollars $70,351 through $80,000 are taxed at 28 percent.

Your tax bracket is determined by the last dollar earned, but the amount you pay on each dollar on the way up, depends on how much of the tax ladder you've climbed. When it is withheld from a paycheck, however, an estimation is made of what your tax liability will be for the year, based on your rate of earning. Therefore, you don't see a tax amount withheld that is constantly rising throughout the year.

"Britman is correct"

It's always right on this side of the pond.

"You obviously know nothing of the American tax code,"

Ha ha ha, it seems I know a lot more than you and I don't even earn in America!

trollhole

Hahahaa...that's great. I can't wait for the chance to tell my hubby to shut his trollhole.

Now, I meant that statement as narrowly defined to the statement on tax code. I disagree with some of your prior stances, but can see that neither of us will get anything out of debating it, so I'll just saunter back into the shadows...ksh-sh-sh-sh, haw-aw-aw-aw

" You would have to show HOW or WHEN that happened." There you go again, trying to start a debate between a priori and a posteriori knowledge. For goodness sake just stick to the topic.

So I have to take your opinions as fact because asking you to back them up with facts is a change of subject? How odd.

So in other words you won't tell me which state that currently uses a flat tax has suffered recession because of it?

You just believe they these states would, but you do not, actually, know, because, as you say, checking that would be off-topic?

Some JoeUsers say a 15% falt tax would not cut the taxes for the wealthy. WRONG Bush paid 26.4% in 2004 and Cheney paid 21.3%.. That is a lot more then 15%. If people at that income pays less, guess who will pay more? 15% would not come close to balancing the budget!

The only wealthy folks paying the "real" tax rates under the current progressive system are 1) politicians afraid the media will make them out to be tax cheats if they take legitimate advantage of the tax code, 2) those with incompetent accountants & tax attorneys and 3) the occasional solid citizen who feels a social obligation to disproportionate taxation (Draginol being an example).

This means almost none of the truly wealthy (however you want to define them) pay the nominal rates in our allegedly progressive system, which is in fact a charade. Almost all of the lower & middle class pay at or near the nominal rates, depending on home ownership. Almost everyone pays an effective rate that is lower than the nominal rate, with the difference varying all over the map depending on life choices made.

For the above reasons, I favor a flat tax without deductions. I also know it will never happen, as there is too large a consituency dependent for a living on the convolutions of the tax code (accounting & legal types, mostly, but also the wealthy themselves) with too much clout & influence. They have a strongly vested interest in maintaining the illusion of a progressive tax system - a flat tax would either force them to find another career in the one case, or to pay more actual taxes in the other. And for the truly wealthy who feed on the tax code for a living, it would be a double whammy. Think of what would happen to Intuit, as just one example, if noone needed Quicken to keep track of deductible expenses & TurboTax to figure up the damn annual anal extraction anymore?

So, this is an interesting academic debate which will never see a practical test, much as I'd like that not to be the case.

Cheers,
Daiwa

Another strawman: the lowest income brackets are the recipients of taxes, in the form of social program and even cash handouts. Neither a sensible flat tax nor a sensible progressive tax would touch these people, for whom we are actually collecting the taxes.

I don't think anybody on either side of this debate seriously thinks that taxing the very poor makes any moral or economic sense.

Try not to get sidetracked from debating the merits of flat vs. progressive taxation, into a debate about where, exactly, to draw the line between "recipient" and "sponsor".

I think we can all agree that the line will have to be drawn somewhere. Where we draw the line doesn't really have anything to do with the tax system we choose.

"So once again your arguement carries no weight." There are other forms of taxation, other than income tax. The only reason Gordon Brown can promise Britain he will not raise taxes is because he has found over 90 other ways of taxing us. If there is a deficit, governments will fill it. Better it is through the income tax system where politicians can be held accountable. This was the problem with the poll tax here during the Thatcherite government. An invented charge to plug black holes. It created riots. I certainly don't want public disorder on that scale again. "And this piece of tripe is a VERY specious arguement." How? Flat taxers are arguing against situation specific income tax i.e. all alowances are lost. "Why would that be bad for society?"

We are NOT talking about Britian. We ARE talking about America. What works for your country does not mean it'll work here.

You would have to show HOW or WHEN that happened." There you go again, trying to start a debate between a priori and a posteriori knowledge. For goodness sake just stick to the topic.

They ARE sticking to topic! YOUR not! You made a statement.

Any gain the wealthy would make would be cancelled out by a flagging economy. How many more reasons do you need? Not only is it morally unsustainable, it is fiscal insanity and no government in a mature economy would bring it in because it would completely destroy any spending plans.

And it was replied to asking for proof which you have not yet supplied. Either do so or be branded as someonr that talks without knowing.

Some JoeUsers say a 15% falt tax would not cut the taxes for the wealthy. WRONG Bush paid 26.4% in 2004 and Cheney paid 21.3%.. That is a lot more then 15%. If people at that income pays less, guess who will pay more? 15% would not come close to balancing the budget!

What crap!!! You jump up and down on what Bush and Cheney gave in taxes. GET REAL! Just how much of that do you think the IRS got to keep after their accountants were done? With a flat tax there would be NO loopholes, NO getting out of paying! You pay your 15%, period! NO exceptions.

We make exceptions for charitable donations, for what I think are obvious reasons.

Would you really promote a system that encouraged people to give more money to the government, and less to private charities?

Has there ever been anything government has done, that's made you believe that you can trust them with more of your money?

So the married couple on average earnings should pay the same rate as a millionaire bachelor?

Yep, and why not? Because of some idea that society is now so badly off that we need to have incentives for people to get married?? Why do we need to "pay" people to get married? Why do we need to "pay" them to have kids? Heck, under the current tax law, we "pay" people to give to charity, "pay" their mortgage interest, "pay more" to be poor (EIC also applies to single or married persons with no children making less than 11,490 ($12,490 if married filing jointly))

A flat tax doesn't punish anyone. It just don't reward anyone either.

(I didn't realize the EIC max was $4,300, I hadn't seen where you posted that before, I'm sorry)

Here is a proposed Tax that a close friend of mine came up with (who has to remain unnamed since he is a politician).

"My tax: Less than $50k per person: no tax. 50% on the amount over $50k. So if you make $100,000 pay $25,000 gross $75,000 which is less than what people pay now. Now the rate goes up to 39%, 36% depending on how you count it.
50% on over $50k per family member is a great deal -- if you have a family of four, you pay no taxes until you hit $200k, with no EIC."

I would have to take argument with that also since there would be no incentive to make more than $49,999 a year per member of your household, and a definite incentive to have/adopt more children. Like in a family of 8 you could make up to $400,000 a year and have no tax obligations. It would be a major bonus to the lower income earners and a huge punishment to upper income earners. I can see the overall benefits, and the possible abuses in that system.

I'm having a hard time seeing the abuses of a flat tax system though. I'm sure there may be some...And I found it. LinkNow I must go and regroup my thoughts.

There are two very different issues. One is the amount of Federal tax revenue needed to balance the budget. The second is Who pays What. We must start with what we agree we will spend and then design a tax system that collects that amount of revenue.

We must start with what we agree we will spend and then design a tax system that collects that amount of revenue.

That's the easy part (determining budget and the designing the tax system).

The difficult part? Getting every single politician to keep their grubby fingers out of the cookie jar.

The difficult part? Getting every single politician to keep their grubby fingers out of the cookie jar.

BINGO!!! Give that man a ceegar!

Two solutions for the pro-progressive taxers:

Plan #1: Determine the total income in the US. Divide that by the # of people who are of wage earning age. Have everyone's pay sent to the government. The government keeps what it determines it needs and metes out the rest equally to the citizens.

Plan #2: Determine a wage allowance per person ... say $40,000 per person, plus $20,000 per child; limit 2 (that seems like a living wage, doesn't it?). Anyone making over their limit stops getting a paycheck and the rest is sent to the goverment. People making less than their allowance get the difference in a weekly check from the goverment. The government keeps the rest to spend as it wishes.

Bottom line: It's not your money. It belongs to the government. That is the cost for you living here.

"At least everyone would be paying their equal share in taxes as a percentage of their income. I find this more fair than the bracketed system. At least I'll know that the guy making $1m will be contributing his $150,000 and the guy making $15k will be ponying up his $1500. I make $40k/yr. and a flat tax sounds just grand to me. Why should the rich have to pay more of a percentage of their income just because they're rich? Because they can afford it? Please. "

In my opinion, rich people should pay higher taxes than poor people, since why should people who are born with better cognitive capabilities and richer parents e.g. live a better life than poor people that were not so fortunate. After all a big part of your income depends on your brains and herritage. Not all of course. Tinbergen, a noble prize winner in economics from the Netherlands, thought of a tax which depends on your income earning abilities, of course this is theoretical since it is impossible to measure exactly everyone's capabilities, but in this way everyone earns the same income. Isn't that fair?

Some JoeUsers say a 15% falt tax would not cut the taxes for the wealthy.

Who said that?

Here is a proposed Tax that a close friend of mine came up with (who has to remain unnamed since he is a politician).

Who has to remain unnamed since he is a politician?

"My tax: Less than $50k per person: no tax. 50% on the amount over $50k. So if you make $100,000 pay $25,000 gross $75,000 which is less than what people pay now. Now the rate goes up to 39%, 36% depending on how you count it. 50% on over $50k per family member is a great deal -- if you have a family of four, you pay no taxes until you hit $200k, with no EIC."

I don't think I much like the idea of somebody making 200,000 quids paying nothing at all.

A priest and a rabbi walk into a bar. There they meet an advocate of a progressive tax system who explains to them why a flat tax would cause a recesssion.

Who has to remain unnamed since he is a politician?

Sorry, I should say former politician since he left politics a few years ago, and unless he says otherwise I have to leave him nameless. I didn't think much of that idea at all either, it was just a different idea I thought that could be brought to the table.

A flat tax still doesn't do anything for all the ceo's earning $1.00 a year. The loopholes are the problem. As long as there are loopholes, the poor will kick and scream about the wealthy. As the matter of fact, you could raise taxes to 50% on the wealthy and the poor will still cry foul simply because they are envious of the wealthy.

A flat tax still doesn't do anything for all the ceo's earning $1.00 a year. The loopholes are the problem. As long as there are loopholes, the poor will kick and scream about the wealthy. As the matter of fact, you could raise taxes to 50% on the wealthy and the poor will still cry foul simply because they are envious of the wealthy.

Then don't tax income at all.



But wouldn't these CEOs have to pay taxes for their income from shares?