7 thoughts on “Hey Congress, Why Don’t You…? Flat Tax.”
Without a lot of “un-flattening” bells and whistles, a flat tax is hopelessly regressive. Sales taxes and social security taxes already stiff it to poor and middle income working people — it’s unconscionable to make them pay rich peoples’ taxes too.
If you have a flat tax rate of, as suggested, 17-18%, then high-income taxpayers will pay less taxes. Can you guess who’s going to end up making up the shortfall? Of course, flat tax proponents argue that all the tax dodges and breaks that benefit wealthy taxpayers will be eliminated, so the flat tax would fall “equally”. Yes, and pigs will be flying and various celebrities’ butts will be emitting monkeys, too. Who is so naive to believe that Congress won’t bend to special interests and, as in 1986, replace a 1200-page tax code with a “simpler” 1600-page version?
As long as we’re dreaming of the impossible, why not let’s have cars that get 100 mpg on floor sweepings, everyone has a nice unmortgaged home and there’s a chicken in every pot?
I know that some states have a flat tax (like my home state of PA). It would be an interesting study to see if it works on that scale at least. (I’m not saying it’s a good idea or it isn’t, I’m only saying that it’s not some pie in the sky idea that no one has tried) I know TaxGirl is from PA as well…
Hey TaxGirl, do you think the Flat Tax works in PA??
A national sales tax would be preferred since all purchases, barring food and clothing, are basically left to choice and a system in which taxes are paid by our choices would be far better than a system in which we are forced into servitude by our government through income confiscation.
About half of Americans believe that “need” should be the final arbiter of who pays how much tax. Like the previous comment, people feel that need is the ultimate measure of your tax burden and the poor are seen to have the most need and thus pay the least tax by both percentage and dollar amount. For these people, the “needs” of the poor have outweighed the fundemental unfairness of charging one American a higher percentage of tax than another, even though the higher income earners will pay far more than the poor given the same taxation percentage. They are discriminated against based on their lack of “need”. When need is used as a measure, people find ways to “need” more. If one lacks character (which many Americans do) , he would find ways to increase his need by reducing his production. He could stop working and have five children, then he would “need” a lot. He could go from a productive citizen to a poor wretch in no time and then his “need” would have to be satisfied by those that are still productive. Since “need” is the final arbiter of taxation. As we have seen in this country, “need” has steadily increased over the years because “need” gets you things and also relieves your responsibility to society. If you have great “needs” you won’t be asked to pay your fair share of tax. If you have “need” you will be given what others earn but didn’t “need”. If you have “need” others will have to pay for your health insurance. If you have “need”, others will have to buy your food. If you have “need” others will have to pay your utilities, rent, and so on. After all, you are poor and in “need”. In a society where “need” is the basis of our morality, people will suddenly and miraculously find more and more “needs” to keep the cash cow going. In todays America, “needy” people get a free roof over their heads w/ air conditioning powered by electricity paid for by others, a car in the driveway, a TV with cable, and a fat butt and belly. Their “need” is subjective.
“Need” should never be used to determine the taxes we pay. Need is subjective and varies from person to person. Using “need” as the standard only creates more “need” in order to avoid taxation and responsibility. I say if you have unfulfilled “needs” then you ought to go out and earn the money to satify the “need” or find a charity to obtain it. At least the charity has the choice and is willingly offering to help your “need”. The rest of us are forced to support these so called “needs” which keep growing and growing.
A national sales tax (also called value-added-tax or VAT by those counbtries that impose nit — probably because “sales tax” sounds so obvious) would be even worse than a flat tax — sales taxes are probably the most regressive taxes of all. And I don’t like regressive taxes. And the argument that a sales tax allows you to “choose” whether to pay is is all wrong. A sales tax taxes everything you buy. So, if you don’t want to pay the sales tax, you can’t spend your money. So if I refuse to pay sales tax on eggplant (so I don’t buy any eggplant) what am I supposed to do with the money I didn’t spend on eggplant? If I buy peanut butter with it, I still end having X% of my money taken in taxes. The tax collector doesn’t care whether your sales tax payment was due to buying peanut butter, eggplant or porn or anything else.
Of course, we might exempt some things from the sales tax. Many states don’t apply their sales taxes to some “necessities”, particularly food. But, so far as I know, in VAT countries EVERYTHING is subject to the VAT.
Brian –
The short answer is no and here’s why: most states that rely on a “flat tax” system base their income or deduction scheme on some level on the national system. So in that regard, it’s not a proper flat tax.
Putting other issues like the regressive nature of a flat tax aside, I think that the major stumbling block to a flat tax is the false notion of simplicity. It won’t be more simple – end of story. We didn’t end up with our current Tax Code because Congress made the proactive decision to make it more complicated. It became more complicated. Every year, another layer of deductions, exemptions, adjustments, etc.
The notion of a flat tax is often appealing but the majority of Americans would squawk at the notion of giving up their deductions and exemptions (eliminate the mortgage interest deduction? capital losses? charitable deductions?). And what about seniors, the blind and the disabled, who receive extra exemptions? Should we ditch those?
Just switching the current system to a flat tax rate is not the same as a flat tax. And eliminating tax favored provisions would be political suicide. Congress is well aware of this. And that’s the major reason we’ll never have a flat tax IMHO.
Without a lot of “un-flattening” bells and whistles, a flat tax is hopelessly regressive. Sales taxes and social security taxes already stiff it to poor and middle income working people — it’s unconscionable to make them pay rich peoples’ taxes too.
If you have a flat tax rate of, as suggested, 17-18%, then high-income taxpayers will pay less taxes. Can you guess who’s going to end up making up the shortfall? Of course, flat tax proponents argue that all the tax dodges and breaks that benefit wealthy taxpayers will be eliminated, so the flat tax would fall “equally”. Yes, and pigs will be flying and various celebrities’ butts will be emitting monkeys, too. Who is so naive to believe that Congress won’t bend to special interests and, as in 1986, replace a 1200-page tax code with a “simpler” 1600-page version?
As long as we’re dreaming of the impossible, why not let’s have cars that get 100 mpg on floor sweepings, everyone has a nice unmortgaged home and there’s a chicken in every pot?
I know that some states have a flat tax (like my home state of PA). It would be an interesting study to see if it works on that scale at least. (I’m not saying it’s a good idea or it isn’t, I’m only saying that it’s not some pie in the sky idea that no one has tried) I know TaxGirl is from PA as well…
Hey TaxGirl, do you think the Flat Tax works in PA??
Hear, hear!! @ JBruce
A national sales tax would be preferred since all purchases, barring food and clothing, are basically left to choice and a system in which taxes are paid by our choices would be far better than a system in which we are forced into servitude by our government through income confiscation.
About half of Americans believe that “need” should be the final arbiter of who pays how much tax. Like the previous comment, people feel that need is the ultimate measure of your tax burden and the poor are seen to have the most need and thus pay the least tax by both percentage and dollar amount. For these people, the “needs” of the poor have outweighed the fundemental unfairness of charging one American a higher percentage of tax than another, even though the higher income earners will pay far more than the poor given the same taxation percentage. They are discriminated against based on their lack of “need”. When need is used as a measure, people find ways to “need” more. If one lacks character (which many Americans do) , he would find ways to increase his need by reducing his production. He could stop working and have five children, then he would “need” a lot. He could go from a productive citizen to a poor wretch in no time and then his “need” would have to be satisfied by those that are still productive. Since “need” is the final arbiter of taxation. As we have seen in this country, “need” has steadily increased over the years because “need” gets you things and also relieves your responsibility to society. If you have great “needs” you won’t be asked to pay your fair share of tax. If you have “need” you will be given what others earn but didn’t “need”. If you have “need” others will have to pay for your health insurance. If you have “need”, others will have to buy your food. If you have “need” others will have to pay your utilities, rent, and so on. After all, you are poor and in “need”. In a society where “need” is the basis of our morality, people will suddenly and miraculously find more and more “needs” to keep the cash cow going. In todays America, “needy” people get a free roof over their heads w/ air conditioning powered by electricity paid for by others, a car in the driveway, a TV with cable, and a fat butt and belly. Their “need” is subjective.
“Need” should never be used to determine the taxes we pay. Need is subjective and varies from person to person. Using “need” as the standard only creates more “need” in order to avoid taxation and responsibility. I say if you have unfulfilled “needs” then you ought to go out and earn the money to satify the “need” or find a charity to obtain it. At least the charity has the choice and is willingly offering to help your “need”. The rest of us are forced to support these so called “needs” which keep growing and growing.
Bwah ha ha! Not in our lifetime. Too much power attached to the ability to shape social policy through the tax code.
Seriously, I almost peed my pants. Flat tax – too funny!
A national sales tax (also called value-added-tax or VAT by those counbtries that impose nit — probably because “sales tax” sounds so obvious) would be even worse than a flat tax — sales taxes are probably the most regressive taxes of all. And I don’t like regressive taxes. And the argument that a sales tax allows you to “choose” whether to pay is is all wrong. A sales tax taxes everything you buy. So, if you don’t want to pay the sales tax, you can’t spend your money. So if I refuse to pay sales tax on eggplant (so I don’t buy any eggplant) what am I supposed to do with the money I didn’t spend on eggplant? If I buy peanut butter with it, I still end having X% of my money taken in taxes. The tax collector doesn’t care whether your sales tax payment was due to buying peanut butter, eggplant or porn or anything else.
Of course, we might exempt some things from the sales tax. Many states don’t apply their sales taxes to some “necessities”, particularly food. But, so far as I know, in VAT countries EVERYTHING is subject to the VAT.
Brian –
The short answer is no and here’s why: most states that rely on a “flat tax” system base their income or deduction scheme on some level on the national system. So in that regard, it’s not a proper flat tax.
Putting other issues like the regressive nature of a flat tax aside, I think that the major stumbling block to a flat tax is the false notion of simplicity. It won’t be more simple – end of story. We didn’t end up with our current Tax Code because Congress made the proactive decision to make it more complicated. It became more complicated. Every year, another layer of deductions, exemptions, adjustments, etc.
The notion of a flat tax is often appealing but the majority of Americans would squawk at the notion of giving up their deductions and exemptions (eliminate the mortgage interest deduction? capital losses? charitable deductions?). And what about seniors, the blind and the disabled, who receive extra exemptions? Should we ditch those?
Just switching the current system to a flat tax rate is not the same as a flat tax. And eliminating tax favored provisions would be political suicide. Congress is well aware of this. And that’s the major reason we’ll never have a flat tax IMHO.