I think the only fair tax is a flat tax for all. A percentage being a percentage what could be more fair? Eliminate all loopholes deductions and write offs. Simple and to the point you make 100 dollars you pay 10 dollars you make 100,000 dollars you pay 10,000 dollars and so on. That would solve a lot more problems than it would create. Phoney Business expenses, political Graph, bogus businesses run at a loss,luxury yachts, corp jets,etc buy what you want make what you want and the tax percentage remains the same for poor as well as rich and would be fair.

A good book on this subject is The Fair Tax by Neil Boortz& Rep. John Linder.

Phil

The below is From the FairTax website: http://www.fairtax.org/site/PageServer

A Brief Summary Of The FairTax Plan

The FairTax proposal is a comprehensive plan to replace federal income and payroll taxes, including personal, gift, estate, capital gains, alternative minimum, Social Security/Medicare, self-employment, and corporate taxes. The FairTax proposal integrates such features as a progressive national retail sales tax, dollar-for-dollar revenue replacement, and a rebate to ensure that no American pays such federal taxes up to the poverty level. Included in the FairTax plan is the repeal of the 16th Amendment to the Constitution. The FairTax allows Americans to keep 100 percent of their paychecks (minus any state income taxes), ends corporate taxes and compliance costs hidden in the retail cost of goods and services, and fully funds the federal government while fulfilling the promise of Social Security and Medicare.

The FairTax Act (HR 25, S 1025)
Is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

Will the FairTax Act happen in my life time, I can only hope it does?

I totally support H.R. 25, and will not vote for anyone else that doesn’t.

RGD

If the United States had an adequate manufacturing base for exports to other nations and forgot all about "free trade" then tariffs would eliminate the need for any sort of personal income tax.

fairtax is not flat tax..I never hear anything else about flat tax..just fairtax..mostly on the rush radio show at work.

a straight 10% or less would be not only fair but simple to keep track of..which is why we will never see it..i,ve noticed the goverment loves to complicate things so as to decieve everyone...plus you can hire more people even open a another dept..to hide revenue..i just love big brother.

sc

I remember when Forbes Jr. ran for president on his own dime. Nice guy and all, but he proposed a "flat tax" on wages only. Yeah right, Joe sixpack gets to pay for government?

Years ago it used to be said the tax code was written for the Rockefellers. Certainly big business has better breaks than small business. My wife kept the books for a small company. Hands down, the biggest nightmare was managing employee wages and taxes.

I also feel used each year when the tax codes are so complicated I end up having to use tax software to keep out of trouble (capital gains, farm income).

Two three things that prevent tax code reforms:

1) Special interests/social engineering via taxes

2) The April 15th industry; H&R Block, Turbotax, etc.

3) Al Capone

How about no individual taxes?

--M

It doesn't matter what you do, someone will find a way to not pay their fair share or anything at all.

How about taxing only the poor people, giving them an incentive to become something.

...gjd

You're absolutely wrong about it being simple and fair. And the problem is exactly as you listed.

There is a baseline amount of money that people need to survive. And then that changes based on being married, having kids, etc.

At the heart of it lies the Law of Diminshing Returns to Scale. Using your example, of 10%, just think about it - you're a factory worker, unskilled labor, making minimum wage and unable to get your full 40 hours of work per week. At the end of the year, your total earning were $18,000. Less the 10% tax, you now have to pay $1,800 to the government, leaving you with just $16,200. A person making that little money doesn't have that kind of disposable income to be able to pay that tax bill. Whether it is paid as part of weekly earnings garnishment (as the current system) or just a final bill at the end of the year, it's a huge chunk of money that you could never afford.

But the CEO on the other side of town is making $850,000 a year. He pays the same tax, 10%. So he just writes a check for $85,000 and still has $765,000.

For one guy, the lost 10% amounts to $85,000, but the impact on his life and quality of living is minimal. So what, he spends 8 days in Cancun this year instead of 10. But to the other guy, the same tax rate of 10%, he now can't afford health insurance. Or maybe he can't pay to fix his car, and it breaks, and he loses his job.

A flat tax is NEVER a fair tax. It makes for great political yelling and screaming, but there isn't a serious, well-trained economist who will ever advocate one. You need to have a 0% tax bracket so people can survive. You need to have a graduated taxation system to ensure that people DO pay their fair share.

I agree that the existance of tax loopholes and incentives and the like needs to be fixed. But the basic premise of the US tax code is one that still makes the most economic sense, and is actually a very "fair" system.

BM2 (BS Economics, University of Colorado; prior Research Economist RBNZ) sends...

I agree. I have to pay taxes on my CG income AND my social Security. Here in San Pedro builders are forced to make 10% for low income citizens Low income is 2,000 a month! Noone I know makes that much money.

How about no individual taxes?


If your talking about tax as you spend, well that would be way to hard and far to visable for gov agencies to steal. Many small piles are less obvious and eiser to accept than one huge pile.

It doesn't matter what you do, someone will find a way to not pay their fair share or anything at all.


A flat tax prevents that in most cases you earn it your taxed and theres no way of getting it back using loop holes and deduction scams. A percentage is a percentage.

A flat tax is NEVER a fair tax. It makes for great political yelling and screaming, but there isn't a serious, well-trained economist who will ever advocate one. You need to have a 0% tax bracket so people can survive. You need to have a graduated taxation system to ensure that people DO pay their fair share.



The problem with the graduated rate is most wealthy dont pay thier fair share many pay little to nothing legally. People have to live within thier means. If you make 18,000 a year you live 18,000 a year lifestyle even if that means living in a cardboard box and you still pay your fair share percentage wise.

If a person is smart enough to have made millions and drive a Rolls that dont mean he should be expected to subsidize my 18,000 dollar lifestyle or pay for my children that I cant afford and continue to have. If everyone wants equal rights in this exclusive club called America they are expected to pay their fair share. Maybe then the percentage wouldnt have to be so high which would benefit the lower wage owners.

$85K or $8.50 is directly proportional what a person makes or has should have no bearing on the percentage he pays. people are spending money they dont have buying things they cant afford and living in a dream world expecting society to subsidize thier fantasy. The way it stands now just aint working. The rich pay little or nothing, the poor pay little or nothing, leaving the burden on the nearly extinct middle class. A disaster beginning to become more and more obvious.

Maybe the economists need to re-evaluate thier thinking. Reminds me of the story where the truck was wedged under an overpass and all the genuises converged and began planning to alter the overpass, Cut the top of the truck etc.. then a small kid on a bike said why dont you just let the air out of the tires??? And saved the day. Experts some times get so taken in by their self importance they miss the obvious. Its called Peters principal.

quote:

You need to have a 0% tax bracket so people can survive.

I believe they have one in haiti.

quote:

Originally posted by geejaydee:
How about taxing only the poor people, giving them an incentive to become something.

...gjd

or ship them to port a prince were they can can continue to bad mouth america only i won't hear it.

quote:

Originally posted by john2x: The rich pay little or nothing, the poor pay little or nothing, leaving the burden on the nearly extinct middle class.

You could not be more wrong. A non-partisan report from the Congressional Budget Office gives all the details. (Granted, this was reported in April 2000, but the US tax code has NOT undergone any SIGNIFICANT changes since then. I'm looking for more recent numbers, if I find them, I'll share.)

Link is here: http://www.allegromedia.com/sugi/taxes/

Summary:

• The Top 1% of taxpayers pay 29% of all taxes.
  
• The Top 5% of taxpayers pay 50% of all taxes.
  
• The Top 1% of income earners (comprising about 1 million families) earn about 15% of the total income earned by all wage earners in the United States, yet they pay almost 30% of all individual income taxes.
  
• The bottom 40% (by wage, not population) pay a NEGATIVE tax rate. That is, from subsidies and credits (the EITC being the most common), these people receive more money from the Federal Government than they pay in.

quote:

You need to have a graduated taxation system to ensure that people DO pay their fair share.

In a country where everyone is suppose to be equal ... what is everyone's fair share?

When you tax consumption [sales tax] the government's funding is tied to purchases. Remember in the 90s when we had a luxuary tax? Remember what it did to the boat building industry in New England? Remember Rep Patrick Kennedy (D-RI) offering a bill to exempt million dollar yachts from the luxuary tax. The luxuary tax on automobiles costing more than 35,000 was the last to be repealed in 2000 or so.

Flat rate sales tax would remind people with every purchase the cost of government. That could be a good thing.

Flat income tax rate is a fair tax, where everyone pays their fair share. The state of Michigan is increasing both it's income tax rate and it's sale tax on services. We shall see what the sales tax on services does to the economy.

Why is a progressive tax rate fair? I don't see why discriminating against people is "fair". Even if the Government states the first $50,000 of income is exempt from the tax, people will be complaining.

quote:

Originally posted by JoeJester:
In a country where everyone is suppose to be equal ... what is everyone's fair share?

When you tax consumption [sales tax] the government's funding is tied to purchases. Remember in the 90s when we had a luxuary tax? Remember what it did to the boat building industry in New England? Remember Rep Patrick Kennedy (D-RI) offering a bill to exempt million dollar yachts from the luxuary tax. The luxuary tax on automobiles costing more than 35,000 was the last to be repealed in 2000 or so.

Flat rate sales tax would remind people with every purchase the cost of government. That could be a good thing.

Flat income tax rate is a fair tax, where everyone pays their fair share. The state of Michigan is increasing both it's income tax rate and it's sale tax on services. We shall see what the sales tax on services does to the economy.

Why is a progressive tax rate fair? I don't see why discriminating against people is "fair". Even if the Government states the first $50,000 of income is exempt from the tax, people will be complaining.

In point of fact, no matter WHAT you do with the taxes, people will ALWAYS be complaining. That's just human nature and nothing can be done about it.

I can't figure out from your post if you're trying to be for or against a flat rate sales tax. Are you advocating FOR a luxury (fixed that spelling for ya) tax? Isn't that discriminating, which you said isn't fair? Or are you against it, becuase you note what it did to the boat industry of New England?

But back to a flat rate INCOME tax (the original discussion). A graduated taxation system IS fair because it has been economically PROVEN that the more wealthy you are, the more benefit you get from the government. So, the more you make, the higher tax brackets you get into, but that's okay, becuase you are getting a greater economic benefit from the government anyway.

People forget, or just don't realize, just STAGGERINGLY how much the government provides. But then, who uses it? The factory working making $18,000 a year probably never steps on an airplane. Maybe once every other year, if he's lucky. So why should he pay to fund ATC and the FAA? The CEO with his private jet files flight plans every other week. So it IS fair for him to pay more to the government because he gets more out of it.

And before you start decrying social spending, welfare, food stamps, government-subsidized after school programs - these are to the economic benefit of the rich man as well. Again, there are many papers, theses, and studies that have statistically proven what I'm saying. The EITC exists for a reason. So do the other social programs I mentioned. Because, they are, in the long run better for US ALL.

Economics is the study of choices, of trade-offs. Econ is NOT, NO, NEGATIVE, NOT RELATED TO the study of money. Because money is the most common, most obvious, easy to quantify choice or trade that people are willing to make, it is a large part OF economics. But economics is not the study of money.

Many schools, The University of Colorado at Boulder being one, do NOT include economics in the business school. The Leeds School of Business has studies for finance, accounting, management, advertising, etc. But economics is in the College of Arts and Sciences, because it is just that - a social science. It is a study of people, not business.

The point of that goes back to what I was saying previously. Everyone yells about welfare and how much it "costs" the American taxpayer. But what about the "cost" of not having it. Without welfare, there is an increase in crime, which has its own economic costs. Then you need to hire more cops, more cost. The end game is that, as has been statistically proven, the savings garnered from eliminating these social programs is FAR less than the new increased economic costs. The final result is that the guy making $1.5 million a year would RATHER pay a higher tax rate, have it spent on social programs, and ultimately save money by having lower insurance premiums and lower local taxes from decreased crime.

And that is JUST ONE EXAMPLE. Many others exist across a whole host of areas. It's not just poor people and crime. It's not just the FAA. Rich people pay more for the government because they get more benefit. Isn't that fair?

I was a proponent of the flat tax until I realized something very significant. If we ever went to a flat tax system, every person in America would lose their most valuable tax deduction: their own homes.

The deduction that people take for their homes is extremely significant; if that deduction were to be discontinued, it would create an incredible disincentive for people to own their own homes. Think about it-- there's no tax advantage to owning your home; you pay a certain percentage of your gross income out in taxes. If you own property and that property increases in value every year (as we hope our property does), then so does your taxes. Thus there's no reason for owning the property, as you'll continually pay more and more taxes as the years go on.

I believe now that the current system (as convoluted as it is) represents a more fair system.