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What are the arguments against a flat income tax?

radcen

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What are the arguments against a flat income tax?

A true flat income tax, where everyone is taxed a set percentage based on income, with absolutely zero deductions or credits or exemptions.

The most common argument I hear against it is that it disproportionately hurts the poor as they can least afford it. What else?
 

It also won't bring in enough tax revenues for a modern first-world government to operate.
 
Unfortunately the distribution of income would be detrimental to consumer activity in addition to the gross amount of revenue being substantially lower.
 
radcen said:
What are the arguments against a flat income tax?
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Whatever they are, they are invalid (because progressive taxation destroys equality). eace

Usually flat tax is bashed by people who want to put a "socialist" yoke over society.
 
OK, guys who suggested that a flat tax can't bring in enough income - that totally depends on how much the flat tax is. If you make it high enough, then most certainly it can bring in enough income. Like if we went to 20%, thats a higher rate that Warren Buffet would have to pay, thats a higher rate that I would have to pay, and thats a higher rate that the working poor would have to pay. If everyone paid more, then obviously it could generate more tax revenue.

The arguement that it can't bring in enough revenue is busted.

A big part of the reason that todays system doesn't bring in enough income is due to all of the exemptions and loopholes and the huge discount that the rich get for capital gains. But the OP suggested getting rid of exemptions and loopholes.

Personally I suspect that if we had a truely flat tax like the OP suggested, this flat tax may actually be more progressive than our current tax scheme. Lets say that we make it 20%, most uber wealthy people would actually pay MORE in taxes than they do today (as they only pay 15%). So for that reason, I would actually support the flat tax concept as a move in the right direction.

I also suspect that lower work incomes would tend to rise to accomidate the higher tax on the poor and middle class.

Now all that said, I do believe that income tax should be progressive. Progressive taxes are mechanisms which tend to slowly and gradually redistribute wealth so that we don't end up with a small percent of our population owning everything. Redistribution of this type is neccesary for our economy and is neccessary for a middle class to exist. thats why we have had it for the last 99 years.
 
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samsmart said:
It also won't bring in enough tax revenues for a modern first-world government to operate.
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Which is funny considering that right now many people don't pay any - and the wealthy pay more than their 'fair share'

I think it's humorous to suggest that distributing the amount more evenly would bring in far less.

We stayed asleep in this country far too damn long - and now tha twe're waking up and realizing the unfairness of our many systems we can't do anything ot change it because once the government becomes reliant on something the more incapable they are of figuring out how to do without it.
 


If the rate were set high enough for the government to operate at anything close to its current levels, the bottom third of income earners would be forced to revolt or lose everything.
 
Yes: problem being that the government has bloated itself - everyone's become reliant on that - and the former idea of living on a tighter budget is impossible, now - unless we're reduced by nationwide disaster and have to start from the groun up.
 
Having to severely reduce the size and scope (and thus operating budget) of government is not a defect of a flat tax, it's a feature.
 
JayDubya said:
Having to severely reduce the size and scope (and thus operating budget) of government is not a defect of a flat tax, it's a feature.
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I think some way of doing this other than forcing the working poor to rise in armed revolt or starve would be preferable.
 
Goshin said:
If the rate were set high enough for the government to operate at anything close to its current levels, the bottom third of income earners would be forced to revolt or lose everything.
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My contention exactly, the flat rate to sustain our current level of government would have to be in the teens most likely (purely speculation), and when you have as many people on government benefits or unemployed as we do currently, the rate would extremely detrimental to those in the lower and lowest income brackets, not to mention the subsequent dip in consumer activity from said brackets.
 
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It is truely crippling for the poor.

let's say you make $26,000 per year, not dirt poor, but not wealth by any stretch. That is $500 a week. 20% is $100 a week.
Take out rent at a conservative $400 a month, another $100 per week. Conservative grocery bill, $50 per week. Gas, another $50.

Right now we are at a whopping $200 a week and we have not started into day-care, clothing, car upkeep, etc.

The numbers do not add up to being "Fair" the more you move up the pay scale. The reason is that the incedentals do not increase proportionally. When you make $260,000 a year, your grocery and gas bill is not going to be 25% of your net weekly pay. Your mortgage may be that much, but that is your choice. Eating and getting to work is a necessity.
 


I would expect that lower income wages would tend to increase to match the tax increase. If I was that $25,000 a year person, I would go to my boss and ask for more. He may tell me to go screw myself, and then advertise for a replacement. People would interview, and would ask for more money because tax rates had gone up. Ultimately, the boss has to pay someone $32,000 to get a good quality employee. The employeer would deal with the additonal cost by either making less profit, or paying less business or personal taxes himself, or by increasing prices of his products.
 


Employers making less profit and/or charging more for goods and services.... how's THAT going to affect the economy??

Not too good, says I.... rising prices hits the working poor hardest too....
 
Goshin said:
Employers making less profit and/or charging more for goods and services.... how's THAT going to affect the economy??

Not too good, says I.... rising prices hits the working poor hardest too....
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I just figure that incomes of the poorest people would rise the fastest. We may never know because we may never try it.

I would assume that only employers that have very high profit margins due to low labor rates would tend to be able to eat the cost of higher wages.

Other companies would embed the higher cost of employment into the cost of the products, which would likely cause a one time inflationary effect of two or three percent - not exactly economy shattering.
 



Hm, I think it would be higher than that. A lot of small businesses have payroll as the single highest expense.
 
Canell said:
Whatever they are, they are invalid (because progressive taxation destroys equality). eace

Usually flat tax is bashed by people who want to put a "socialist" yoke over society.
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Actually, it's more like because it's a plainly bad idea.
 

You're forgetting a ton of things in your post.

The main thing you're forgetting is that a flat tax is a consumption tax. Which means that most revenue generated is based on consumption.

A wealthy person does not consume things as much as a poor person does. Which is why a flat tax won't bring in as much revenue.

Especially if you set the tax at 20%, which will be even more disadvantageous to the poor, not to mention to the business that produce consumer goods. Because most people won't buy things with taxes at that level.

Which will be incredibly detrimental to our consumer economy.
 

But what you're forgetting is that the reason why so many people don't pay federal income taxes is because they don't earn enough to warrant it - because businesses lobby for that. Because the more money people have in their own pockets the more they can spend on the goods and services those businesses provide. Which is good for our economy.

If you want to make a flat tax because it treats the wealthy unfairly, fine, go ahead. But the wealthy will be the first to be hit hard by it when fewer people are buying the goods and services from the corporations that the wealthy gain income on via capital gains as shareholders in those corporations.
 
Aunt Spiker said:
Yes: problem being that the government has bloated itself - everyone's become reliant on that - and the former idea of living on a tighter budget is impossible, now - unless we're reduced by nationwide disaster and have to start from the groun up.
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And having a military that represents 43% of total military expenditures on the planet is a major reason why.
 

Don't forget corporate welfare in the form of bailouts, no-bid contracts, and considerations to lobbyist groups.
 

No, incomes on the poor won't rise the fastest.

This is because labor is being phased out more and more. Poor laborers don't have the technical or academic skills to work better jobs. That's why they're doing low wage labor that cannot be automated.

Now, it's true that some laborers can move out of that profession. But that profession will always be there. And for a lot of those laborers they cannot transition to job skills that will allow them advancement in the way you're thinking of.

So no way - wages for laborers won't rise.
 
samsmart said:
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You can thinker with it for as long as you want but why?
Making things so complicated only benefits the power-hungry folks and their boondoggles. It doesn't contribute to just society.

Make everyone equal, get a flat tax - it's that simple.
No loopholes, no deductions, no back doors, no nothing - just a flat tax for everyone. eace
 
I completely agree that loopholes are unnecessary and should be eliminated promptly. But many feel that a flat tax would not necessarily benefit the rich, but negatively affect the poor in a
disproportionate manner.
 
Hare said:
I completely agree that loopholes are unnecessary and should be eliminated promptly. But many feel that a flat tax would not necessarily benefit the rich, but negatively affect the poor in a
disproportionate manner.
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What do you mean by "in a disproportionate manner"?
You earn a $1000, you pay $200 taxes (if we assume a rate of 20%). You earn $10 000, you pay $2 000. So, what's disproportionate about that?
 
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