The Negative Income / Perfectly Progressive Flat Tax

[cpwill]

A link to a spreadsheet showing how this would work would really be helpful IMO.

Post 98 and a bunch of bigger-picture stuff on the first and second pages.

 

[Individual]

Post 98 and a bunch of bigger-picture stuff on the first and second pages.

This thread is the kind of political discussion I had hoped to find in this Debate Forum. But no one seems to have much interest in things which need fixing in ways most fair and beneficial to all.

The political parties keep us arguing along party lines leaving us to deal with the consequences created by which ever one wins an election and creates or changes laws to grow or maintain their base.

If you're still interested in pursuing change to our tax system, perhaps starting a new thread would help? I'd really like to see our elected politicians begin representing ALL citizens once elected, rather than keep us divided against one another for their own benefit.

 

[danielpalos]

Raise the minimum wage until the Poor pay their fair capital share of taxes.

 

[Peter]

Raise the minimum wage until the Poor pay their fair capital share of taxes.

What do you consider fair?
The problem is the rich have way more ways to avoid taxes than the poor and many times end up paying much less tax.
This is especially obvious with large companies. Amazon and Apple end up paying almost no tax because of loopholes that small and medium companies just don't have access to.

It's why the EU and UK is about to put a new tax on digital sales to try and redress that imbalance.

 

[cpwill]

What do you consider fair?

He wants the government to pay him to stay at home and do nothing for the rest of his life. He turns every conversation in that direction if he can. fair warning.

 

[bomberfox]

1. This isn't a flat tax - it's a perfectly progressive tax because every additional dollar someone makes above 200% of the Federal Poverty line slightly increases their real tax rate. It benefits from the simplicity, predictability, and growth potential associated with the structures of flat taxes, without being flat itself.

2. I think that was the FairTax debate Wow, blast from the past

I wish this was the debate again

 

[cpwill]

I wish this was the debate again

I sometimes fantasize about how, on Earth One, we are currently all arguing about school uniforms, or flag-burning, or something similarly inconsequential.

 

[danielpalos]

What do you consider fair?
The problem is the rich have way more ways to avoid taxes than the poor and many times end up paying much less tax.
This is especially obvious with large companies. Amazon and Apple end up paying almost no tax because of loopholes that small and medium companies just don't have access to.

It's why the EU and UK is about to put a new tax on digital sales to try and redress that imbalance.

How much revenue do we need to raise? Besides, higher paid labor pays more in taxes and creates more in demand.

 

[danielpalos]

He wants the government to pay him to stay at home and do nothing for the rest of his life. He turns every conversation in that direction if he can. fair warning.

Only illegals don't care about the law.

 

[Individual]

No one seems interested in having a civil discussion on making changes to our tax system.

 

[danielpalos]

What do you consider fair?
The problem is the rich have way more ways to avoid taxes than the poor and many times end up paying much less tax.
This is especially obvious with large companies. Amazon and Apple end up paying almost no tax because of loopholes that small and medium companies just don't have access to.

It's why the EU and UK is about to put a new tax on digital sales to try and redress that imbalance.

Until the right wing stops complaining about the Poor not paying enough in taxes. Raise the minimum wage until the Poor, pay their share of taxes!

 

[The Mark]

Alright, I gave up on trying to recreate family structure inside of the income statistics, and finally just went ahead and assigned the standard sized family equally to all income strata. That's the biggest methodology criticism I have off the top of my own head for this work. but here it is.



Currently, the tax and welfare structure of this nation are costly and self-destructive. They represent needless harm that we as a people inflict upon ourselves, and worst, they disproportionately harm those in our society who are most vulnerable. In order to achieve the goal of a tax/welfare reform effort that accomplishes the three goals laid out:

1. It should not place undue burden on the poor or provide them with incentives to engage in self-destructive behavior. ​

2. It should retain a progressive approach while eliminating the ability of politicians to take advantage of it to set bloc against bloc in a cynical search for power, and ​

3. It should encourage growth that raises all boats and provides opportunities especially to the poor to escape their station.)​

I propose the following: TANF, SNAP, and the EITC will be replaced with a negative income tax of 50% on all income not earned below 200% of the poverty line, with a simple poverty line of $5K per adult and $2500 per child being assigned. If you earn precisely zero dollars, then you are raised precisely to the poverty line - in this manner we can ensure that not a single man, woman, or child in the United States lives in poverty. In addition, a 25% flat tax should be applied to all income earned over 200% of the poverty line. This will make the actual effective tax rate perfectly progressive. Instead of our current system, in which the marginal tax rate on each dollar earned between $218,000 and $388,000 is flat, with the perfectly progressive flat tax, the effective rate increases for each dollar earned, as that is a dollar further away from the 200% of the poverty line. I have run the figures and created the presentation below on the effects, comparing a perfectly progressive flat tax of 20% to a perfectly progressive flat tax of 25%, to the current system.





SOURCES:
TANF Calculator: TANF Calculator
EITC Calculator: Earned Income Tax Credit Calculator
SNAP Calculator: https://dss.sc.gov/content/customers/food/foodstamp/foodstampcalc.aspx
Effective Tax Rates: Warren Buffett’s Tax Story Is Bogus | Cato @ Liberty
Negative Effective Tax Rates: Free 2011 Tax Estimator & Tax Return Calculator - H&R Block®
Current Poverty Line: http://coverageforall.org/pdf/FHCE_FedPovertyLevel.pdf
Population and Income Data derived from the US Census
Program Cost derived from 2012 Budget Proposal

But COL isn't the same in all areas, would not some form of poverty line tied to COL be better?

Edit: Just realized that post is from 12 years ago, so my question might have been addressed in this thread already.

 

[bomberfox]

Alright, I gave up on trying to recreate family structure inside of the income statistics, and finally just went ahead and assigned the standard sized family equally to all income strata. That's the biggest methodology criticism I have off the top of my own head for this work. but here it is.



Currently, the tax and welfare structure of this nation are costly and self-destructive. They represent needless harm that we as a people inflict upon ourselves, and worst, they disproportionately harm those in our society who are most vulnerable. In order to achieve the goal of a tax/welfare reform effort that accomplishes the three goals laid out:

1. It should not place undue burden on the poor or provide them with incentives to engage in self-destructive behavior.
2. It should retain a progressive approach while eliminating the ability of politicians to take advantage of it to set bloc against bloc in a cynical search for power, and
3. It should encourage growth that raises all boats and provides opportunities especially to the poor to escape their station.)​

I propose the following: TANF, SNAP, and the EITC will be replaced with a negative income tax of 50% on all income not earned below 200% of the poverty line, with a simple poverty line of $5K per adult and $2500 per child being assigned. If you earn precisely zero dollars, then you are raised precisely to the poverty line - in this manner we can ensure that not a single man, woman, or child in the United States lives in poverty. In addition, a 25% flat tax should be applied to all income earned over 200% of the poverty line. This will make the actual effective tax rate perfectly progressive. Instead of our current system, in which the marginal tax rate on each dollar earned between $218,000 and $388,000 is flat, with the perfectly progressive flat tax, the effective rate increases for each dollar earned, as that is a dollar further away from the 200% of the poverty line. I have run the figures and created the presentation below on the effects, comparing a perfectly progressive flat tax of 20% to a perfectly progressive flat tax of 25%, to the current system.





SOURCES:
TANF Calculator: TANF Calculator
EITC Calculator: Earned Income Tax Credit Calculator
SNAP Calculator: https://dss.sc.gov/content/customers/food/foodstamp/foodstampcalc.aspx
Effective Tax Rates: Warren Buffett’s Tax Story Is Bogus | Cato @ Liberty
Negative Effective Tax Rates: Free 2011 Tax Estimator & Tax Return Calculator - H&R Block®
Current Poverty Line: http://coverageforall.org/pdf/FHCE_FedPovertyLevel.pdf
Population and Income Data derived from the US Census
Program Cost derived from 2012 Budget Proposal

Im curious why did you give up on trying to recreate the family structure based on income? I believe i addressed the tax question before in another thread but did not hear back from you (not complaining just informing). The thing i agree with left criticisms of the negative income tax is while it can achieve the desired floor that safety nets are designed to achieve, they will likely have to be raised a good bit due to rising expenses in housing and healthcare thus putting us in more debt. (Considering in NY real estate moguls charge you a hell of a lot more for barely any space at all than i’ve ever had to pay for plenty of space for a couple). If we replace welfare with this we would have to adjust this one lump sum to cope with rising costs.

Im not knowledgeable enough on this part to say there is anything wrong with it and certainly appreciate the effort.

 

[bomberfox]

negative income tax would be the largest entitlement program there is.
I think it would surpass most of the current ones by a fair margin.

who wants to work when I can collect 20-30 grand by not doing anything.
the government picking winners and losers is bad enough this makes it worse.

The whole purpose is to provide a floor for people so that nobody has to face death and starvation when negotiating for wages. If the threat of starvation and death is off the table people can more effectively bargain for higher wages. That benefits us all. If you wanna see countries where people have the threat of starvation on the line look at anywhere foxcon operates where people are barely able to afford what they produce much less any reasonable living space.

 

[cpwill]

But COL isn't the same in all areas, would not some form of poverty line tied to COL be better?

Edit: Just realized that post is from 12 years ago, so my question might have been addressed in this thread already.

No worries - I can't recall that coming up.

COL is generally determined locally, whereas this would be federal policy I think it has to be FPL, v COL.

 

[cpwill]

Im curious why did you give up on trying to recreate the family structure based on income?

I couldn't find good data in a usable format.

I believe i addressed the tax question before in another thread but did not hear back from you (not complaining just informing)

I straight up missed it - i think you were right in the data, but, I think, off on your characterization. Thank you for calling my attention to it, that's a straight mea culpa

. The thing i agree with left criticisms of the negative income tax is while it can achieve the desired floor that safety nets are designed to achieve, they will likely have to be raised a good bit due to rising expenses in housing and healthcare thus putting us in more debt. (Considering in NY real estate moguls charge you a hell of a lot more for barely any space at all than i’ve ever had to pay for plenty of space for a couple). If we replace welfare with this we would have to adjust this one lump sum to cope with rising costs.

Locality costs are driven by, well, locality. The federal government needs a federal standard.

As a side note, if Democrat-run cities are too expensive to live in... you don't have to. If Steve is willing to spend 50%+ of his take-home income on rent to say he lives in New York, well, okay, but, I'm not sure I see a good reason why we should make Jerome, who lives in a cheaper area, subsidize that decision.

Im not knowledgeable enough on this part to say there is anything wrong with it and certainly appreciate the effort.

As you said : this debate is so much better than what politics has descended into