Tea Parties

[m26]

The other option is a 12% flat income tax with no loopholes and 12% flat corporate tax, no loopholes.

12% seems low. Where'd you get that #? What is there some economic reasoning behind it?

If there are no loopholes won't you entrench double taxation? (Which I consider a bad thing, and suspect most fiscal conservatives would agree).

 

[eddie]

The other option is a 12% flat income tax with no loopholes and 12% flat corporate tax, no loopholes.

Certainly seems the simplest. Might there be funding issues with that?
Of course, getting rid of Social Security and Medicare could help that too...

If there are no loopholes won't you entrench double taxation? (Which I consider a bad thing, and suspect most fiscal conservatives would agree).

Wait, which double taxation specifically? / Maybe you'd be paying so much less to begin with it wouldn't be such an issue?

I mean, someone is always going to whine, but...

 

[Jynx]

Jynx, in most consumption based tax schemes I have seen, things for basic sustenance like food, clothing items under $50, and rent were not taxed. They can eat, clothe themselves and have a place to live.

Fair point. Objection withdrawn

 

[m26]

Wait, which double taxation specifically? / Maybe you'd be paying so much less to begin with it wouldn't be such an issue?

Corporate taxation:

Corporation makes $100 and pays their $12. Shareholders have a value of $88. But to actually have use of that money they must pay personal income tax, so they only get $78.

A situation results where shareholders are keeping 78% of their business/investment income, while employees and investors/owners in SP/GP/LLP/LLC situations are keeping 88% of their income.

 

[MPH]

Oh boy, the "Fair Tax" discussion again. I'll steer clear this round, thank you.

The other option is a 12% flat income tax with no loopholes and 12% flat corporate tax, no loopholes.

Question: What exactly constitutes a loophole?

If we're going to flat tax everything at 12%, does this apply just to ordinary income? What about capital gains, retirement funds, Social Security Income, etc.? We live in a complicated business environment with many varying generators of wealth.

The tax code is complicated for two reasons: Politics, and smart people. Politicians pass a tax law in order to get votes and smart person realizes he could benefit from tax law even if it is not designed for him. Politicians write law to "close the loophole" and the cycle continues. To simplify the code, politicians will have to cease subsidizing and taxing particular groups for political reasons.

I won't hold my breath.

 

[Cobra Commander]

My point in my above post is that I do see the fairness in some of our more productive citizens paying more for the upkeep up the system. They're benefiting most from it and it doesn't hurt their Q of L very much.

Is it an extreme example? Yes. However, there are individuals making money in that kind of ratio. Some CEOs make more than 300X of their worker's average wage. I do think it's fair that Warren Buffet pays more to uphold our society than I as a guy just trying to get on his feet can.

To illustrate my point, http://www.timesonline.co.uk/tol/money/tax/article1996735.ece

Warren Buffet pays less in taxes than his secretaries.

 

[m26]

Warren Buffet pays less in taxes than his secretaries.

Warren Buffet pays a lower percentage of his income in taxes than his secretaries.

He shelled out $8.2 million to the government. His secretary pitched in $18,000.

 

[eddie]

A situation results where shareholders are keeping 78% of their business/investment income, while employees and investors/owners in SP/GP/LLP/LLC situations are keeping 88% of their income.

Costs of doing business?

The more I see this discussion come around, the more I think that there "is no fair" in taxes.

 

[exhelodrvr]

Figure out some baseline income, don't tax that at all for anyone, and then have a flat tax for everything above that. The poor pay no tax, or virtually no tax; the rich pay a lot, but at a fair rate, and there is still incentive to increase your income, unless you want to stay at the poverty level. Simple, fair, effective, but would put too many lawyers out of work, so it'll never happen.

 

[MPH]

Figure out some baseline income, don't tax that at all for anyone, and then have a flat tax for everything above that. The poor pay no tax, or virtually no tax; the rich pay a lot, but at a fair rate, and there is still incentive to increase your income, unless you want to stay at the poverty level. Simple, fair, effective, but would put too many lawyers out of work, so it'll never happen.

The problem with any scaled tax is that there is a point on the margin you benefit from making less. Lets say "the line" is $20,000. Above that, you get a 15% tax rate.

What are you going to do when you realize you're going to breach the 20,000 line by a hundred bucks? Thats a $3,000 tax liability you didn't plan for that you're about to incur. Have fun paying that unexpected bill on a $20,001 yearly wage.

Additionally, removing the deduction system would absolutely obliterate charitable giving. There are a whole lot of rich people who put billions into the charity system every year because they don't want their hard earned dollar going to "the man".

Every time we get into this discussion someone asks "Could it be any worse than our current system?" I've determined I feel a bit like Churchill:

Our system is the worst taxation scheme except all the others that have been tried.

I certainly believe that we are taxed too much. I believe the government uses my/our money for mostly the wrong things. I also think the system in place although not perfect, is effective. If you want a lower tax rate, we should spend less as a government and extend the cut equally across the board. Lower tax rates will always encourage greater prosperity.

 

[MasterBates]

MPH, most taxes set up like that only tax the amount above the cutoff.

SO if you make $20,001, you pay 15c

 

[MPH]

MPH, most taxes set up like that only tax the amount above the cutoff.

SO if you make $20,001, you pay 15c

Roger, I misread what he proposed.

Thought he meant per my example.

Edit: Also, can you please explain your avatar. I'm eerily drawn to all of your posts since you changed it.

 

[scoolbubba]

This just in....http://news.bbc.co.uk/2/hi/uk_news/politics/8011321.stm

50% tax proposed on top earners in Britain to cover social programs and pensions...It wouldn't surprise me if it's a forecast for America in 5-10 years. Awesome.

 

[SkywardET]

Except many of them are chanting about taxation without representation, and their tea theme re-enforces that, which just makes them look idiotic. Last I checked, we still have those funny things called elections. These people have representation. They may not like their representatives, and they may not have gotten their preferred representative into office, but they are demonstrating total ignorance about what the phrase means, making it hard to take them seriously.

For the sake of a mildly witty (and provacative, whether intentionally or not) slogan, the sacrificed making sense. If what you mean is that you hate wated tax dollars and you disagree with how money is being spent, say that. Don't say that you object to not having represnetation, because possibly excepting DC residents, they very much do have representation. Did they forget about what happened last November?

Based on what I've seen, it seems that they merely took the actions of the twilight of the previous administration and coupled them with this current administration and likened them (generically) to "taxation without representation" because it essentially was. Almost none of the elected officials who voted for TARP listened to their constituents, who were between 60-90% opposed to it.

Now everyone is debating taxes as if there is something to worry about. Taxes will go up by a bit, but hyperinflation will cover the rest of the debt being run by the gubment.

50% tax proposed on top earners in Britain to cover social programs and pensions...It wouldn't surprise me if it's a forecast for America in 5-10 years. Awesome.

We're not in nearly as bad a shape as GB, schoolbubba. They couple potentially end up like Iceland (Google that shit, btw), end up in hospice care at the IMF, or whatever else, but we're in one of the best positions in the world during this scenario. Regardless of what China and Russia float, we still have the world's reserve currency and it will remain that way at least until hyperinflation goes into full effect and that's when all the economic corrections will play out. Just my opinion, of course.

 

[m26]

50% tax proposed on top earners in Britain to cover social programs and pensions...It wouldn't surprise me if it's a forecast for America in 5-10 years. Awesome.

George Harrison would have killed for 50%