[spacefreak]

Steve Forbes just released a new book on the flat tax, and it looks like he's going to continue to push for his idea. I've always liked the idea.

http://www.chooseflattax.com is the promo site for Forbe's flat tax idea, and this little site has a flat tax calculator that I was playing around with.

[turtle777]

Yep, as far as I know, Croatia is using a similar model, very successfully.

-t

[spacefreak]

Dammit... I thought I posted this in the Policital lounge.

Anyway, if I wasn't interested in the flat tax idea, I'd have thought that website was a "get rich quick" scheme.

[Paco500]

Jerry Brown was flat tax when flat tax wasn't cool.

http://www.collegian.psu.edu/archive...92dnews-07.asp

Damn I wish he'd won. Governor Moonbeam in the White House. The 90's would have so totally rocked.

[Doofy]

Currently used in Russia, Poland, Slovakia, Latvia, Lithuania and Estonia.

Greece next to get with it.

[rozwado1]

This will put all tax accountants out of business.

[nonhuman]

Originally Posted by rozwado1

This will put all tax accountants out of business.

No it won't there will will still be plenty of demand for people who know all the loopholes in the tax code. The percentage of you income that you pay may be set in stone, but how much of your income is counted towards that percentage likely won't be.

[SVass]

Originally Posted by nonhuman

No it won't there will will still be plenty of demand for people who know all the loopholes in the tax code. The percentage of you income that you pay may be set in stone, but how much of your income is counted towards that percentage likely won't be.

Currently essentially, only half of "capital gains" and "dividend" are taxed as regular income. Therefore, some ordinary income is converted to these categories. No income in IRAs is taxed until withdrawn and the latest Senate proposal will eliminate the "death" tax on IRA money when passed through inheritance.

Forbes proposal would require taxing those categories thus INCREASING the actual tax burden on the wealthy. sam

[budster101]

I'm all for the Flat tax!

[spacefreak]

Originally Posted by rozwado1

This will put all tax accountants out of business.

That should not be the main argument against the flat tax. That's like saying that food should not be sold in grocery stores for fear of putting restaurants out of business.

[chris v]

Meh. Taxes are for the little people. User Fees are the new flat tax.

[suvsr4terrorists]

What about that thread that said our earnings aren't income if they're produced ourselves? Shouldn't we technically pay no taxes except sales tax and stuff?

[budster101]

Close the IRS. They sucketh.

[nonhuman]

Originally Posted by SVass

Currently essentially, only half of "capital gains" and "dividend" are taxed as regular income. Therefore, some ordinary income is converted to these categories. No income in IRAs is taxed until withdrawn and the latest Senate proposal will eliminate the "death" tax on IRA money when passed through inheritance.

Forbes proposal would require taxing those categories thus INCREASING the actual tax burden on the wealthy. sam

Right, so there'll be an ever greater demand for tax accountants as no one is going to be happy about suddenly having to pay more taxes and so will want someone to help them keep their payments to the absolute bare minimum using every possible loophole and trick in the book.

[BRussell]

Originally Posted by nonhuman

No it won't there will will still be plenty of demand for people who know all the loopholes in the tax code. The percentage of you income that you pay may be set in stone, but how much of your income is counted towards that percentage likely won't be.

Not that I really believe it's going to happen, but theoretically, Forbes' plan would get rid of virtually all of those loopholes we currently use to determine taxable income.

[von Wrangell]

OK, I don't fully get this flat tax system.

Here on Iceland everyone pays around 37%. There are a few exceptions (if you go over a certain income a couple of percent are added but that will be removed in the next few years) but that's basically it for private citizens. Oh, on top of that a certain amount per year isn't taxed (equal amount for all). Would this classify as flat tax?

[BRussell]

Originally Posted by von Wrangell

OK, I don't fully get this flat tax system.

Here on Iceland everyone pays around 37%. There are a few exceptions (if you go over a certain income a couple of percent are added but that will be removed in the next few years) but that's basically it for private citizens. Oh, on top of that a certain amount per year isn't taxed (equal amount for all). Would this classify as flat tax?

Sounds like it. Right now the US has I think 5 rates depending on your income - starting at 10% if you make less than around $10,000, up to 35% if you make a couple hundred thousand. And there are lots of other taxes too.

[von Wrangell]

Originally Posted by BRussell

Sounds like it. Right now the US has I think 5 rates depending on your income - starting at 10% if you make less than around $10,000, up to 35% if you make a couple hundred thousand. And there are lots of other taxes too.

Are we talking about in a month or year? Those numbers confused me, but please don't say per year. I can't believe you would tax someone with that low income

[BRussell]

Originally Posted by von Wrangell

Are we talking about in a month or year? Those numbers confused me, but please don't say per year. I can't believe you would tax someone with that low income

That's per year, but I don't think most people making that amount end up actually paying any federal income taxes. There is a standard deduction of $5-10 thousand, depending on the size of your family and that sort of thing. Now that you mention it, it doesn't really make any sense to have the 10% rate because no one probably is going to pay it. Maybe someone else knows what's going on.

[von Wrangell]

Originally Posted by BRussell

That's per year, but I don't think most people making that amount end up actually paying any federal income taxes. There is a standard deduction of $5-10 thousand, depending on the size of your family and that sort of thing. Now that you mention it, it doesn't really make any sense to have the 10% rate because no one probably is going to pay it. Maybe someone else knows what's going on.

.

[SVass]

The US has an initial deduction and then percentages on the amounts above that. 10% on the first 14,000 then 15% on the next ...etc (and a flat 7.5% additional tax on regular income to fund social security and medicare). However, some income only counts as half. (Rich people and corporate officer's income doesn't count because it falls into a "special category" and doesn't even have to pay social security tax.) sam

[nonhuman]

Originally Posted by BRussell

Not that I really believe it's going to happen, but theoretically, Forbes' plan would get rid of virtually all of those loopholes we currently use to determine taxable income.

Except that the people who would be responsible for implementing this plan are some of the same people that would most want to use loopholes and tricks to reduce their tax burden.

[suvsr4terrorists]

I read somewhere that businesses used to pay the majority of taxes in America, and now citizens pay the majority.

[CharlesS]

Originally Posted by BRussell

That's per year, but I don't think most people making that amount end up actually paying any federal income taxes.

Wrong. There have been years where I made not much more than that, and I still had to pay taxes...

[Doofy]

Originally Posted by von Wrangell

OK, I don't fully get this flat tax system.

Here on Iceland everyone pays around 37%. There are a few exceptions (if you go over a certain income a couple of percent are added but that will be removed in the next few years) but that's basically it for private citizens. Oh, on top of that a certain amount per year isn't taxed (equal amount for all). Would this classify as flat tax?

Yep, remove the bold bit and it's flat tax.

[von Wrangell]

Originally Posted by Doofy

Yep, remove the bold bit and it's flat tax.

We are trying but the left wing here on Iceland is doing it's best to prevent that.

They even want to change to the system were you pay a higher percentage the more you earn. Something I hope will never become a reality here.

[Doofy]

Originally Posted by von Wrangell

We are trying but the left wing here on Iceland is doing it's best to prevent that.

They even want to change to the system were you pay a higher percentage the more you earn. Something I hope will never become a reality here.

Yep, it seems like it's the left trying to prevent it happening here too. The amount of times I've had the following argument is unreal:

Leftie: "But the rich should pay more tax".
Me: "They would pay more tax - 30% of £100,000 is more than 30% of £25,000".

Problem with the left is they're into wealth distribution (due to jealousy, as far as I can tell) and can't see the problems that it will cause (i.e. it's generally the higher earning folks who provide them with jobs). It's a case of them wanting to bring everyone down to a level, whereas the right want to bring everyone up to a level.

[Millennium]

Originally Posted by von Wrangell

OK, I don't fully get this flat tax system.

Here on Iceland everyone pays around 37%. There are a few exceptions (if you go over a certain income a couple of percent are added but that will be removed in the next few years) but that's basically it for private citizens. Oh, on top of that a certain amount per year isn't taxed (equal amount for all). Would this classify as flat tax?

Not yet, but it will then the extra percentage you mention gets removed.

I think that the concept of a flat-tax system is a good one, but I'm skeptical of Forbes. I don't see how his proposed tax rate is going to sustain revenue at its current levels, and I suspect that this is his real purpose: shrink government revenue to the point where the government itself must shrink. I'm not entirely sure this is a Bad Thing, but the fact that he seems to be covering this detail up doesn't sit well with me. Either he hasn't thought about this consequence or he's hiding it, and I don't know which would be worse.

[Doofy]

Here's an article about flat tax from the failed Veritas Party (ran in the last general election in the UK)...

http://www.veritasparty.com/html/tax_brief.html

[von Wrangell]

Originally Posted by Doofy

Yep, it seems like it's the left trying to prevent it happening here too. The amount of times I've had the following argument is unreal:

Leftie: "But the rich should pay more tax".
Me: "They would pay more tax - 30% of £100,000 is more than 30% of £25,000".

Problem with the left is they're into wealth distribution (due to jealousy, as far as I can tell) and can't see the problems that it will cause (i.e. it's generally the higher earning folks who provide them with jobs). It's a case of them wanting to bring everyone down to a level, whereas the right want to bring everyone up to a level.

Amazing. I almost completely agree with you

The best example of it that I know is my fiancee. She leaned towards the left when it came to tax issues. Then she got a job which paid very well and she saw that she was paying for almost three unemployed. It wasn't until then she realised how much worse the system the left wants is

But I wouldn't say the left wants to bring people down a level. I'd say they want to keep everyone on the same level. That's probably the only thing I disagree with in your post. Amazing isn't it?

[Doofy]

Originally Posted by von Wrangell

Amazing. I almost completely agree with you

Originally Posted by von Wrangell

But I wouldn't say the left wants to bring people down a level. I'd say they want to keep everyone on the same level. That's probably the only thing I disagree with in your post. Amazing isn't it?

Arh. I think you misinterpreted a little (not that hard with my crappy explanations!). I believe the left wants everyone to be equal through bringing the rich folks down to the same level as everyone else - i.e. wants everyone to be equally poor. Whereas the right, IMHO, wants everyone to be equal through bringing the poor folks up to the same level as the rich - i.e. wants everyone to be equally well-off.

So, if I'm reading you right, we probably agree on that too!

[von Wrangell]

Originally Posted by Doofy

Arh. I think you misinterpreted a little (not that hard with my crappy explanations!). I believe the left wants everyone to be equal through bringing the rich folks down to the same level as everyone else - i.e. wants everyone to be equally poor. Whereas the right, IMHO, wants everyone to be equal through bringing the poor folks up to the same level as the rich - i.e. wants everyone to be equally well-off.

So, if I'm reading you right, we probably agree on that too!

I think it's time for a break, because yeah, we agree!

[Gee4orce]

I'm all for a flat tax rate (here in the UK). After all, where's the incentive to work harder when the more you earn the disproportionately more you loose to tax ?

[olePigeon]

Rich people love the idea, poor people hate it.

[budster101]

Why? A flat tax would remove loopholes in the tax code. People will actually have to PAY TAXES.... just like the poor people.

[von Wrangell]

Originally Posted by olePigeon

Rich people love the idea, poor people hate it.

Why do they hate it?

[Doofy]

Originally Posted by von Wrangell

Why do they hate it?

They're jealous of the rich, plain and simple.

[suvsr4terrorists]

Originally Posted by Gee4orce

I'm all for a flat tax rate (here in the UK). After all, where's the incentive to work harder when the more you earn the disproportionately more you loose to tax ?

I agree. I hate making X amount when I work 40 hours at a job that pays $10 an hour, and only making like 30 more per week when I'm working at a job that pays 12-14 or something. It's freakin lame. It's like. GEEE, you sure make it easy to get ahead here don't you?! The more I make, the more of it you take!

Personally, I think a flat tax would help, as it would get rid of the millions of pages of loopholes and complicated **** no sane person could ever hope to understand. Thus, the nation as a whole would save a ton of money per year in time and money spent trying to figure out all that crap.

[suvsr4terrorists]

Originally Posted by budster101

Why? A flat tax would remove loopholes in the tax code. People will actually have to PAY TAXES.... just like the poor people.

Agreed.

[budster101]

Wait....... this can't be good.

[wdlove]

We need fundamental tax reform. My hope is that something will evolve from the current Tax Reform Commission.

[ReggieX]

Like a lot of things, the "Flat Tax" is an over simplisitic answer to a complicated question, and appeals greatly to the simple-minded.

Originally Posted by suvsr4terrorists

I agree. I hate making X amount when I work 40 hours at a job that pays $10 an hour, and only making like 30 more per week when I'm working at a job that pays 12-14 or something. It's freakin lame. It's like. GEEE, you sure make it easy to get ahead here don't you?! The more I make, the more of it you take!

You'll see a difference when you get your tax return.

[Doofy]

Originally Posted by ReggieX

Like a lot of things, the "Flat Tax" is an over simplisitic answer to a complicated question, and appeals greatly to the simple-minded.

You mean like these guys, who tout flat tax as the best possible solution?

[BRussell]

I think it's important to throw in that the flatness of a tax doesn't necessarily relate to its simplicity. We could have a tax that was loaded with deductions and loopholes, but had only one tax rate. And the hard part of taxes is not the rate anyway, which you simply look up in a table, the hard part is all the deductions and loopholes that you need to use to figure your taxable income.

I support simplification, and I think getting rid of loopholes would make the wealthy and politically well-connected pay more of their fair share. But I'm not sure about flatness. My guess is that just having one rate would shift the tax burden more onto the middle class and away from the wealthy.

Why people want to do this I really don't understand. The wealth of the wealthy has absolutely skyrocketed over the past 20 years - they simply don't need our help or tax cuts. The lower-to middle-classes have remained relatively stagnant. The concentration of wealth has just been the nature of our economy in the last 20 years. We don't need to manipulate our tax system to go further in the same direction.

And most of the plans are a joke anyway. Forbes says that everyone will pay less under his system. Everyone. Well isn't that special. We're not taking in enough revenue to pay for what we spend right now. How about he just say everyone gets a free iBook every time they pay taxes under his plan.

[suvsr4terrorists]

Originally Posted by ReggieX

Like a lot of things, the "Flat Tax" is an over simplisitic answer to a complicated question, and appeals greatly to the simple-minded.

Nice comparison. I see it as a clean slate. It's so incredibly screwed up right now, I think it'd be a good idea to start fresh, and make small subtle changes later on, rather than trying to untangle something so tangled it's freaking hopeless.

[Doofy]

Originally Posted by BRussell

Why people want to do this I really don't understand.

It's to do with growth. I know of a lot of people in small business who've had the option of expanding (and thus providing more jobs) yet haven't because the expansion would take them into the next tax bracket - meaning the law of diminishing returns kicks in for their efforts.

Flat tax removes this artificial ceiling which is preventing growth.

[TETENAL]

Originally Posted by von Wrangell

Why do they hate it?

If you have a flat tax at the lower rate of the leveled tax system (like proposed) then people with low income don't have to pay more taxes and people of higher incomes will pay lower taxes. Sounds good for everybody, but this means that overall the state collects less taxes. And when the state collects less taxes it can't provide as much services as it does now. So the citizens have to pay for more these services like health care, education, infrastructure etc. for themselves. And these services – when privately provided – do not come at a "flat rate". They cost a fixed amount of money. When everybody pays x for health-care and x for school and x for the mile on the high-way, then the people with lower income pay a higher percentage of their income than people with higher income. What this means is that a flat tax is regressiv. The more you earn the less you pay.

I'm not surprised a multi-millionaire advocates this tax system.

[SVass]

Originally Posted by Doofy

It's to do with growth. I know of a lot of people in small business who've had the option of expanding (and thus providing more jobs) yet haven't because the expansion would take them into the next tax bracket - meaning the law of diminishing returns kicks in for their efforts.

Flat tax removes this artificial ceiling which is preventing growth.

That argument is ****. Tax rates on the last dollar are always less than 100%. Flat taxes will never be legislated because it takes away a reason to bribe your legislator. Tax rate on stock option "capital gain" by CEO is currently 15%. Tax rate on last dollar from employee earning $60,000 is 25% + 7.5% (social security) which totals 32.5% (and this ignores the extra 7.5% paid by his company). Tax rate on last dollar of small businessman earning $60,000 is 25% + 12% (self employment tax). Tax rate on last dollar of small businessman earning 1,000,000 is 25%. sam

[budster101]

Sam as usual your convoluded thinking clouds everything.

[Hugi]

Originally Posted by von Wrangell

We are trying but the left wing here on Iceland is doing it's best to prevent that.

They even want to change to the system were you pay a higher percentage the more you earn. Something I hope will never become a reality here.

I agree, the Icelandic system is quite OK. I consider myself leaning to the left, but I still can't for the life of me justify a progressive tax system, ie. where you pay a higher tax rate the more you earn, and I'm extremely glad that the last remains of that system, the 2% (4% for last year) "high income tax" on annual earnings over $65,000, is being abolished.

But I think that the difference in taxation on regular income and income from business transactions (stock earnings/interest from savings etc.) is a problem. In an ideal world, companies and people would pay the same tax rate - under that system, it would be much, much more difficult to cheat.

Keeping the tax system as simple as possible is good for everyone. The people saying that "only simple people want a simple tax system" probably have no idea what they're talking about.