Robert Reich: "The Flat Tax Is A Fraud"

[hazlnut]

Brilliant rebuttal. "He's stupid and a commie. Oh, and a Bill Clinton joke (yawn)."

It's TD, what do you expect?

He spends most of his posting time in the basement.

 

[RadicalModerate]

yep, especially those who have an emotional based dislike of anyone or anything that is doing better than they are

If your statement is correct, that means you, personally Turtle, make $800,000+ a year. Good for you.

Turtle, I absolutely meant what I said.

You really have nothing to say besides telling others what they are really thinking/meaning/feeling.

I count several instances in this thread where you've translated other peoples words for them. You count that as a debate?

 

[hazlnut]

I count several instances in this thread where you've translated other peoples words for them. You count that as a debate?

Well, in fairness to TD, in the Basement, that is debate.


Only, we're not in the basement...

 

[Mach]

There is absolutely NOTHING in my post which says I believe the rich were GIVEN wealth by the government. Not only is that a perverted distortion of what I actually said - it is totally and completely without foundation.

I agree. You didn't appear to imply that in your post. You did however communicate these two messages:

Of course, what we actually see is that wealth seems to be like a drug where the more one uses it, the more one needs it to gain even less satisfaction from it.

So, the wealthy are drug addicts because money is a drug? Aside from more demonizing class warfare, how ironic that the end result is you want more of that "Drug" to go to the lower income classes. Wait, if it's a bad drug, why would you want that? I can't ever find a reasoned argument in your posts. I'll keep looking though, I have faith you can do it.

Those who profess to be atop the economic pyramid are blessed and lucky and should give thanks on their knees everyday before God that they are so blessed.

Wow, so people who earn a lot should worship a god? That's just weird.

 

[Mach]

If we were concerned with everyone paying their fair share, we could take total revenue desired and divide that by the number of citizens. This quotient would represent each citizen's share of the costs of the federal government. Splitting the burden equally is the only way to be fair.

That's an equal share. Whether or not equal is fair, is what's being debated. Although I know of no one of note, proposing an equal share, only a tax that is far less complicated with no loopholes, no ability for government to hand out special tax privelages to big corporations, etc. Every serious flat tax proposal I've seen has exceptions for the actually poor.

Austerity is coming, we lived beyond our national revenue for too long. Expecting all but the poorest to have to pony up a little more might be the easiest way to distribute that austerity fairly.

 

[Centinel]

That's an equal share. Whether or not equal is fair, is what's being debated. Although I know of no one of note, proposing an equal share, only a tax that is far less complicated with no loopholes, no ability for government to hand out special tax privelages to big corporations, etc. Every serious flat tax proposal I've seen has exceptions for the actually poor.

I think that I might prefer the elimination of income taxes altogether in favor of a fairly low percentage federal excise tax. Maybe 2 or 3 percent. This obviously wouldn't be enough to fund the current federal government though. So for raising the necessary amount until we can get the federal government back under control, I would then like to see a requisition made on the states, apportioned by population.

This would be simple (it would take 1 accountant to dived the money needed each state's population), and there would be no loopholes. Just split the federal bill among the states by population. Done.

Austerity is coming, we lived beyond our national revenue for too long. Expecting all but the poorest to have to pony up a little more might be the easiest way to distribute that austerity fairly.

Yes, we lived beyond our means. The federal government spend much more than it took in. Now it is going to have to spend much less than it takes in.

 

[radcen]

There are times that I read about a (sometimes seemingly unrelated) issue and think, "A flat tax would eliminate that.", or "A flat tax would lessen that.". Many of these are things that are almost never brought up when a flat tax is discussed specifically, but there could be a domino-effect. And pretty much the only reason I see against a flat tax is that it hurts the poor. I'm think that, concerns for the poor aside, a flat tax would be a great leveling tool and could end up benefiting society in an overall sense.

Someday I think I'm going to have to start keeping track of these impressions and thoughts as I see them and put together a pro-and-con list and see if my suspicions have any validity.

 

[TurtleDude]

It's TD, what do you expect?

He spends most of his posting time in the basement.

Its pavlovian

 

[TurtleDude]

Turtle, I absolutely meant what I said.

You really have nothing to say besides telling others what they are really thinking/meaning/feeling.

I count several instances in this thread where you've translated other peoples words for them. You count that as a debate?

by their works we shall know them and their subterraneous schemes and thoughts

 

[obvious Child]

Well, I agree that the flat tax is a fraud for a key reason:

A flat tax does absolutely nothing to simplify what is income and when it is income.

But considering that maybe 10 people here understand that, I'm talking to the wrong audience.

 

[Ockham]

Well, I agree that the flat tax is a fraud for a key reason:

A flat tax does absolutely nothing to simplify what is income and when it is income.

But considering that maybe 10 people here understand that, I'm talking to the wrong audience.

Does the current tax system simplify what is income and when it is income?

 

[obvious Child]

Does the current tax system simplify what is income and when it is income?

In regards to conversion from GAAP, yes. You go to a flat tax and many of the tax evading schemes of recognizing income come out.

A sizable portion of the complexity regarding tax has little to do with special deductions, credits and rates. It has everything to do with what is income and when it is recognized.

A flat tax does nothing to stop fraudulent creation of basis which can then be used to classify income as return of capital which should never be taxed. Much of the code exists to stop tax schemes to evade taxes. You get rid of that with a flat tax and you're going to see all of these schemes come right back.

A fair portion of the code is complex because it has to be. The notion that we can get down to a postcard is lunacy unless we want massive tax evasion.

 

[Ockham]

In regards to conversion from GAAP, yes. You go to a flat tax and many of the tax evading schemes of recognizing income come out.

The only difference between the current system and a (still fictional) flat tax concept is that the evading schemes today are built in and ratified. And they tend to change all the time. People still evade taxes today with the progressive tax system, so if you're saying that people wills still try to evade taxes whether it's a progressive tax or a flat tax - I would agree... there will always be those who attempt to evade taxes.

A sizable portion of the complexity regarding tax has little to do with special deductions, credits and rates. It has everything to do with what is income and when it is recognized.

Can you provide some examples of what you're talking about?

A flat tax does nothing to stop fraudulent creation of basis which can then be used to classify income as return of capital which should never be taxed. Much of the code exists to stop tax schemes to evade taxes. You get rid of that with a flat tax and you're going to see all of these schemes come right back.

To be fair, we don't know what a flat tax would look like in an actual implementation. You're making assumptions on what a flat tax would be based on what is reported in the media, what people write about, etc... we've actually never seen an actual blueprint of a flat tax so it may or may not address when and what is income.

A fair portion of the code is complex because it has to be. The notion that we can get down to a postcard is lunacy unless we want massive tax evasion.

IMO the tax code does not have to be complex but it is to support the loopholes and deductions which politicians put in - and they put those things in there for selfish reasons, such as re-election, election / campaign support, etc. The tax code and the revenue it brings in is Congress's play thing. The more control that can be exerted over it, the more control over the money - and the more control over the money the more power, regardless of political affiliation.

 

[obvious Child]

The only difference between the current system and a (still fictional) flat tax concept is that the evading schemes today are built in and ratified.

No. A flat tax revels in its simplicity. That basically eliminates most of the tax code and replaces it with a very simple single rate applied to all income. A flat tax is never described as maintaining all of the complexity regarding what is income and when it is income of existing systems.

And they tend to change all the time. People still evade taxes today with the progressive tax system, so if you're saying that people wills still try to evade taxes whether it's a progressive tax or a flat tax - I would agree... there will always be those who attempt to evade taxes.

Depends what you mean by change. Yes changes happen here and there regarding items and brackets, but it the underlying treatment of what is income and when it's declared don't People will try to evade taxes under any system, but you take away bright line rules and it gets a heck of a lot easier to cheat. Furthermore, it actually becomes legal to cheat because there would be no complex laws preventing tax schemes.

Can you provide some examples of what you're talking about?

Let's start with the basics. Do you understand the concept of deferred revenue? How about reserve accounts? Tax law differs quite a bit from GAAP/IFRS.

To be fair, we don't know what a flat tax would look like in an actual implementation. You're making assumptions on what a flat tax would be based on what is reported in the media, what people write about, etc... we've actually never seen an actual blueprint of a flat tax so it may or may not address when and what is income.

Well, we've never really seen a true flat tax either. Eastern European is still somewhat progressive even as it's declared to be flat. Furthermore, I'm basing my argument off of the simplicity arguments regarding why a flat tax is better. I've never seen any politician argue for a flat tax that keeps much of the complexity regarding what and when. Perry's arguing right now for a tax system so simple it will fit on a single piece of paper. That is guaranteed to remove the laws prohibiting illegal shelters.

IMO the tax code does not have to be complex

Want to explain how we get around what is income and when with a simple code?

First, no one should be taxed on the return of capital. But there are ways currently that are prohibited that prevent the creation of fraudulent basis. Some of these rulings, procedures and regs are dozens of pages long. Most of them came about because someone gamed the system. If we go to a simple "Everything" is income, that renders a real risk of taxing things that aren't income, such as return of capital to taxation. Furthermore, it forces people to pay taxes on legitimately deferred income. It's pretty absurd to tax people on income they won't constructively receive for years.

A little example, if we remove the regulations regarding revocable trusts which are somewhat lengthy, people could donate money into trusts they can change and not pay taxes on it on their rates because it's no longer technically under them. The laws regarding revocable prevent this right now as a way of stopping people from hiding income. People use to put large amounts of assets that would generate income in the future into such trusts and then not pay at their rates but under trusts rates effectively avoid large amounts of tax.

There are plenty of these kinds of historical examples that make up huge portions of the 3 trillion word tax code. You get rid of transfer pricing regulations and Exxon goes back to selling crude to its Cayman subsidiary for close to the price it sells to refineries in the US and results in exceptionally low corporate taxes. The tax code is complex partially because it HAS to be complex.

but it is to support the loopholes and deductions which politicians put in - and they put those things in there for selfish reasons, such as re-election, election / campaign support, etc.

To a certain degree yes, but to a certain degree no.

The tax code and the revenue it brings in is Congress's play thing. The more control that can be exerted over it, the more control over the money - and the more control over the money the more power, regardless of political affiliation.

I don't think you quite get the notion of the concept of what is income and when it is income. Like most people you seem fixated on the deductions/credit portions. Which really isn't that big of a concern.

 

[TurtleDude]

Well, I agree that the flat tax is a fraud for a key reason:

A flat tax does absolutely nothing to simplify what is income and when it is income.

But considering that maybe 10 people here understand that, I'm talking to the wrong audience.

that is true, the main argument (which I fully support) for the flat tax is that it serves as a deterrent on the main way many politicians buy votes

they promise a majority of voters in the relevant political subdivision that electing them will lead to more spending and if more revenue is needed, it will come from raising the top bracket rates.

a flat tax would prevent that pandering

If the masses want me to pay 40% and they have to Pay 40% to do that I suspect the chances of that happening are far far smaller

 

[obvious Child]

that is true, the main argument (which I fully support) for the flat tax is that it serves as a deterrent on the main way many politicians buy votes.

Maybe in the 50s. The past two decades have been more and more reliant upon deficit spending. No one is being taxed more (at the time) to pay for such goodies.

they promise a majority of voters in the relevant political subdivision that electing them will lead to more spending and if more revenue is needed, it will come from raising the top bracket rates.

Again, more in the 50s. Since Reagan (with the gap of Clinton), deficit spending has been on the massive rise. Hell Bush's Medicare D was entirely unfunded but served as a AARP vote grab. So taxes aren't the only way to do this and in recent years aren't the way it's been done. Effective tax has been going down and down and down while spending has been going up and up and up. If anything we need to restrict Congress from deficit spending beyond a percent percentage point.

a flat tax would prevent that pandering

Well, depends how the flat tax is structured. You could see a flat tax like the Eastern Europeans that only starts at a certain level exempting large numbers of voting poor. Perry's essentially does this right now with his super big standard deduction. The truly poor won't pay but will get services.

If the masses want me to pay 40% and they have to Pay 40% to do that I suspect the chances of that happening are far far smaller

So you propose a flat tax starting from $0?

 

[TurtleDude]

Maybe in the 50s. The past two decades have been more and more reliant upon deficit spending. No one is being taxed more (at the time) to pay for such goodies.



Again, more in the 50s. Since Reagan (with the gap of Clinton), deficit spending has been on the massive rise. Hell Bush's Medicare D was entirely unfunded but served as a AARP vote grab. So taxes aren't the only way to do this and in recent years aren't the way it's been done. Effective tax has been going down and down and down while spending has been going up and up and up. If anything we need to restrict Congress from deficit spending beyond a percent percentage point.



Well, depends how the flat tax is structured. You could see a flat tax like the Eastern Europeans that only starts at a certain level exempting large numbers of voting poor. Perry's essentially does this right now with his super big standard deduction. The truly poor won't pay but will get services.



So you propose a flat tax starting from $0?

philosophically yes,

in practical terms no

 

[Misterveritis]

Robert Reich has forgotten more things about economics that any ten persons here.

The point is that he has forgotten.

 

[Misterveritis]

It's simply inconceivable to me that Repubs voted down a .5% tax hike on a handful of millionaires to help pay to keep thousands of state employees from adding to the already high unemployment rate.

Isn't that the point of the Marxist agenda? Defund your enemies through progressive tax schemes. Wreck the foundation of capitalism, the ability to accumulate capital. Then use the money seized from your enemies to fund your friends, the labor unions, state unions...and add in just a bit of class envy. It is a perfect recipe and there might be enough people out there who buy it.

This can have a happy ending if we succeed in voting socialists, Marxists, democrats and liberal, in general, out of positions of power and replace them with Conservatives.

 

[TurtleDude]

Isn't that the point of the Marxist agenda? Defund your enemies through progressive tax schemes. Wreck the foundation of capitalism, the ability to accumulate capital. Then use the money seized from your enemies to fund your friends, the labor unions, state unions...and add in just a bit of class envy. It is a perfect recipe and there might be enough people out there who buy it.

This can have a happy ending if we succeed in voting socialists, Marxists, democrats and liberal, in general, out of positions of power and replace them with Conservatives.

the socialist left always claim "others" can afford tax hikes. its a never ending growing malignancy

 

[RadicalModerate]

Isn't that the point of the Marxist agenda? Defund your enemies through progressive tax schemes. Wreck the foundation of capitalism, the ability to accumulate capital. Then use the money seized from your enemies to fund your friends, the labor unions, state unions...and add in just a bit of class envy. It is a perfect recipe and there might be enough people out there who buy it.

This can have a happy ending if we succeed in voting socialists, Marxists, democrats and liberal, in general, out of positions of power and replace them with Conservatives.

Yup, Marxist plots to bring down capitalism...perfectly reasonable analysis of the situation.

 

[haymarket]

Yup, Marxist plots to bring down capitalism...perfectly reasonable analysis of the situation.

We discussed this just last midnight at the local cell meeting of the Leon Trotsky Mad Bombers Pledged to Destroy American Capitalism, Corporatism and Ball Room Dancing Social Club and Drinking Society.

 

[ksu_aviator]

I agree with Mr. Reich, a progressive tax is the fairest because complications in our society and capital gains should be taxed at the same rate as labor.

Robert Reich: "The Flat Tax Is A Fraud" | RealClearPolitics

LOL...it is a transfer of wealth to the top? Is that what he said? I didn't realize treating everyone equally really meant treating some people better than others. I guess it comes back to how you look at government. Should it guarantee opportunity or outcome. This guy clearly wants outcome.

 

[jambalaya]

I don't agree with him for the same reason he doesn't agree with the flat tax. His explanation is not that simple. We have to examine how the tax would affect compensation for labor in the lower tax brackets. Wages would necessarily increase for those in the lower tax brackets to make up the difference in what they would have to pay to the government. It would not have the same effect on the rich because they can already afford the tax. What somebody like Reich is afraid of is having all people with a stake in how the government does business with their money. Because if that happened it would create too many Republicans. They must promote a system that keeps the most people down and dependent.

 

[zgoldsmith23]

Isn't that the point of the Marxist agenda? Defund your enemies through progressive tax schemes. Wreck the foundation of capitalism, the ability to accumulate capital. Then use the money seized from your enemies to fund your friends, the labor unions, state unions...and add in just a bit of class envy. It is a perfect recipe and there might be enough people out there who buy it.

This can have a happy ending if we succeed in voting socialists, Marxists, democrats and liberal, in general, out of positions of power and replace them with Conservatives.

Just to double check, you do realize 'Marxist' has an actual meaning, not just something you don't approve of, right?