Why we need a flat tax.

[HappySqurriel]

ManusJustus said:

HappySqurriel said:

The majority of the "Rich" are self employed or small business owners and they're entirely in control of how many employees they have, how much they are paid, what they charge for goods and services, how many goods or services they buy from other companies, and so on. When the government taxes them they are very likely to lay people off, reduce the salary and benefits of their employees, increase the price of their goods and services, and/or cut back on buying goods and services from other companies.

When "Rich" individuals end up recovering the additional money they need to pay the increase in their tax while maintaining there standard of living by decreasing the income of those who work for them or sell them goods and services, or by increasing the cost of anyone who buys goods and services from them, they have effectively passed on the tax to other people.

The people who have the lowest control over the ammount they earn, and the most limited ability to control their costs, are the poor and the middle class because they're (disproportionately) employees who spend the majority of their earnings on necessary expenses. When these poor and middle class people see lower income and higher costs because of higher taxes they have (effectively) paid the tax that was targeting the wealthy.

Again, you are arguing that when rich people are taxed less they are essentially going to write people who work for them a check saying, "Here's some money from you, I dont need it because I only want to make seven million dollars this year and after I got a huge tax break I figured I would give all of the extra money away."

Thats not how the world works.  In the real world, the market decides what income employees should make.  If the free market decides that a software engineer should make $60,000, thats how much his boss is going to pay him.  The boss isnt going to throw extra money at him if he doesnt have to.  Same goes for goods, businesses aren't going to take a cut in profit because they dont want any more money.

The free market will protect people with valued skills that are in demand, but these tend to be people who are not being "protected" by a progressive tax system anyways. While not all engineers and software developers are high earners for their field, they tend to be in the top 25% of income earners and (generally speaking) pay a proportionate percentage of tax gathered.

Its the bottom 50% that suffer because their skillset is not rare or valued, and when enough people are laid off because of companies cutting costs to recover money to pay increased taxes, the company they work for has a lot of power to adjust their income as they see fit.

Now, when taxes are low enough that companies thrive and unemployment is low the low wage earners have far more power to demand more equatible incomes because the companies cannot operate without their work. The reason a flat tax helps with this is that when 100% of people become aware that they have a stake in the total tax rate there is an increased focus on controlling unnecessary spending.