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Forums - General - Why we need a flat tax.

mrstickball on 24 July 2009

Squilliam - None that I am aware of. Every country that has imposed flat tax has had a lot of prosperity since initiation and have very little reason to change back.



Back from the dead, I'm afraid.

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Squilliam on 24 July 2009

Could you name some good examples since you're familiar with the whole thing? I want to have a lookie.



Tease.

ManusJustus on 24 July 2009
Kasz216 said:
ManusJustus said:
TheRealMafoo said:

Well that's a socialist point of view: "The rich just shouldn't have all that money, so we are going to take it from them."

As opposed to "The poor shouldn't have all that money, so we are going to take it from them."

Economically speaking, flat taxes do not work.  It puts a larger tax load on lower income people who need that money to support themselves with housing, food, healthcare, and other basic essentials, as opposed to high income people who use that money for less necessary items.  People with lower income are working demanding jobs to support themselves and their families, the last thing we want to do is make it harder for them to provide for their families.

The end result of a flat tax is either people living in poverty with increased crime rates that hamper the economy, or people depending more on the government than themselves for lost income resulting in more government spending or increased minimum wage.

Or rather... "Everyone should pay their fair equal share."

Also... America already has one of the most progressive tax systems around.

We have more progressive tax brackets then England and Canada for instance.

Their fair share doesn't necessary mean 20% and 20%.  Taxing 20% on someone who makes $15,000 a year is more hurtful to that person than taxing 20% on someone who makes $150,000. 

America's tax system is full of loop holes that rich are able to take advantage off.  I personally know of many instances of people getting tax breaks to for frivolous items or business owners not reporting income.



ManusJustus on 24 July 2009
HappySqurriel said:
ManusJustus said:
TheRealMafoo said:

Well that's a socialist point of view: "The rich just shouldn't have all that money, so we are going to take it from them."

As opposed to "The poor shouldn't have all that money, so we are going to take it from them."

Economically speaking, flat taxes do not work.  It puts a larger tax load on lower income people who need that money to support themselves with housing, food, healthcare, and other basic essentials, as opposed to high income people who use that money for less necessary items.  People with lower income are working demanding jobs to support themselves and their families, the last thing we want to do is make it harder for them to provide for their families.

The end result of a flat tax is either people living in poverty with increased crime rates that hamper the economy, or people depending more on the government than themselves for lost income resulting in more government spending or increased minimum wage.

You're making the assumption that the cost of housing, food, healthcare and other basic essentials do not see increased prices, and the poor and middle class do not see lower wages, because the "Rich" wouldn't try to maintain their standard of living by using their influence to recover the increase in tax. Now, this assumption is false and if you could "redistribute wealth" through progressive taxation why does the United States (a country which already has one of the most "Progressive" tax systems in the world) have one of the least equal distributions of wealth?

Economically speaking, every time a country has moved to a flat tax system the tax revenues of the country has gone up and they have seen faster economic growth than similar countries; and the increased standard of living of everyone typically results in a more equitable distribution of income. Now, it is not clear how much of this can be attributed to the flat tax, how much can be attributed to other "Free Market" reforms that are (typically) resisted by socialists, and how much can be attributed to several other conditions that changed for these countries.

Now, if socialists were really interested in reducing the level of disparity of income and wealth inside of their country they would take a look at what makes other countries so equitable. What they would find is that the quality and consistency of an education system lead to far more equitable results. One of the biggest problems in the United States is that its education system is so inconsistently managed that some regions receive far worse results than others even though they spend far more money on their students.

You've made a lot of incorrect assumptions.

Countries with a flat tax are worse off and have less equal distribution of wealth.  Countries that have flat tax systems are mostly in Eastern Europe and the former Soviet Union, and the reason these countries have higher GDP per capita that the West is that they are poorer and economic growth works in the favor of lesser developed countries.  Your observation that adopting flat taxes improves economic growth is no better a statement than stating that we should be poor to improve our economic growth.

http://en.wikipedia.org/wiki/Flat_tax#Countries_that_have_flat_tax_systems

I do agree with you that the United States education system is horrible and that education is the best way to make society more equitable.



HappySqurriel on 24 July 2009
ManusJustus said:
HappySqurriel said:
ManusJustus said:
TheRealMafoo said:

Well that's a socialist point of view: "The rich just shouldn't have all that money, so we are going to take it from them."

As opposed to "The poor shouldn't have all that money, so we are going to take it from them."

Economically speaking, flat taxes do not work.  It puts a larger tax load on lower income people who need that money to support themselves with housing, food, healthcare, and other basic essentials, as opposed to high income people who use that money for less necessary items.  People with lower income are working demanding jobs to support themselves and their families, the last thing we want to do is make it harder for them to provide for their families.

The end result of a flat tax is either people living in poverty with increased crime rates that hamper the economy, or people depending more on the government than themselves for lost income resulting in more government spending or increased minimum wage.

You're making the assumption that the cost of housing, food, healthcare and other basic essentials do not see increased prices, and the poor and middle class do not see lower wages, because the "Rich" wouldn't try to maintain their standard of living by using their influence to recover the increase in tax. Now, this assumption is false and if you could "redistribute wealth" through progressive taxation why does the United States (a country which already has one of the most "Progressive" tax systems in the world) have one of the least equal distributions of wealth?

Economically speaking, every time a country has moved to a flat tax system the tax revenues of the country has gone up and they have seen faster economic growth than similar countries; and the increased standard of living of everyone typically results in a more equitable distribution of income. Now, it is not clear how much of this can be attributed to the flat tax, how much can be attributed to other "Free Market" reforms that are (typically) resisted by socialists, and how much can be attributed to several other conditions that changed for these countries.

Now, if socialists were really interested in reducing the level of disparity of income and wealth inside of their country they would take a look at what makes other countries so equitable. What they would find is that the quality and consistency of an education system lead to far more equitable results. One of the biggest problems in the United States is that its education system is so inconsistently managed that some regions receive far worse results than others even though they spend far more money on their students.

You've made a lot of incorrect assumptions.

Countries with a flat tax are worse off and have less equal distribution of wealth.  Countries that have flat tax systems are mostly in Eastern Europe and the former Soviet Union, and the reason these countries have higher GDP per capita that the West is that they are poorer and economic growth works in the favor of lesser developed countries.  Your observation that adopting flat taxes improves economic growth is no better a statement than stating that we should be poor to improve our economic growth.

http://en.wikipedia.org/wiki/Flat_tax#Countries_that_have_flat_tax_systems

I do agree with you that the United States education system is horrible and that education is the best way to make society more equitable.

I made no assumptions, I was quite clear in stating that there were other reforms and other factors which changed that had an influence in these fast growth rates and improvement in the equlity of the dristribution of income ...

At the same time I can demonstrate that the progressive tax systems don't work because The United States has one of the most progressive tax systems in the world and one of the least equal distributions of income and wealth in the developed world. As I have said many time, when you increase taxes people who can pass on the costs of the tax and in (eventually) gets paid by those who can not pass on increased costs; and since the "Rich" have a greater capacity to pass on costs than the "Poor" a progressive tax is no more "Progressive" than a "Regressive" tax, because the "Poor" and "Middle Class" pay the increased costs either way.

If you know that the same people will pay the bulk of the tax regardless on who you charge whatever rate to, why wouldn't you choose the simplest (most straightforward) tax system possible to reduce overhead?



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mrstickball on 24 July 2009

I don't know if we can correlate rampant growth in Eastern Europe, but we can say:

- Flat tax hasn't ruined their system
- Progressive taxes haven't helped us

Worst case scenario, FT wouldn't change what America is. Best case scenario it provides a much better system of tax collection.



Back from the dead, I'm afraid.

ManusJustus on 24 July 2009
HappySqurriel said:
ManusJustus said:
HappySqurriel said:
ManusJustus said:
TheRealMafoo said:

Well that's a socialist point of view: "The rich just shouldn't have all that money, so we are going to take it from them."

As opposed to "The poor shouldn't have all that money, so we are going to take it from them."

Economically speaking, flat taxes do not work.  It puts a larger tax load on lower income people who need that money to support themselves with housing, food, healthcare, and other basic essentials, as opposed to high income people who use that money for less necessary items.  People with lower income are working demanding jobs to support themselves and their families, the last thing we want to do is make it harder for them to provide for their families.

The end result of a flat tax is either people living in poverty with increased crime rates that hamper the economy, or people depending more on the government than themselves for lost income resulting in more government spending or increased minimum wage.

You're making the assumption that the cost of housing, food, healthcare and other basic essentials do not see increased prices, and the poor and middle class do not see lower wages, because the "Rich" wouldn't try to maintain their standard of living by using their influence to recover the increase in tax. Now, this assumption is false and if you could "redistribute wealth" through progressive taxation why does the United States (a country which already has one of the most "Progressive" tax systems in the world) have one of the least equal distributions of wealth?

Economically speaking, every time a country has moved to a flat tax system the tax revenues of the country has gone up and they have seen faster economic growth than similar countries; and the increased standard of living of everyone typically results in a more equitable distribution of income. Now, it is not clear how much of this can be attributed to the flat tax, how much can be attributed to other "Free Market" reforms that are (typically) resisted by socialists, and how much can be attributed to several other conditions that changed for these countries.

Now, if socialists were really interested in reducing the level of disparity of income and wealth inside of their country they would take a look at what makes other countries so equitable. What they would find is that the quality and consistency of an education system lead to far more equitable results. One of the biggest problems in the United States is that its education system is so inconsistently managed that some regions receive far worse results than others even though they spend far more money on their students.

You've made a lot of incorrect assumptions.

Countries with a flat tax are worse off and have less equal distribution of wealth.  Countries that have flat tax systems are mostly in Eastern Europe and the former Soviet Union, and the reason these countries have higher GDP per capita that the West is that they are poorer and economic growth works in the favor of lesser developed countries.  Your observation that adopting flat taxes improves economic growth is no better a statement than stating that we should be poor to improve our economic growth.

http://en.wikipedia.org/wiki/Flat_tax#Countries_that_have_flat_tax_systems

I do agree with you that the United States education system is horrible and that education is the best way to make society more equitable.

I made no assumptions, I was quite clear in stating that there were other reforms and other factors which changed that had an influence in these fast growth rates and improvement in the equlity of the dristribution of income ...

At the same time I can demonstrate that the progressive tax systems don't work because The United States has one of the most progressive tax systems in the world and one of the least equal distributions of income and wealth in the developed world. As I have said many time, when you increase taxes people who can pass on the costs of the tax and in (eventually) gets paid by those who can not pass on increased costs; and since the "Rich" have a greater capacity to pass on costs than the "Poor" a progressive tax is no more "Progressive" than a "Regressive" tax, because the "Poor" and "Middle Class" pay the increased costs either way.

If you know that the same people will pay the bulk of the tax regardless on who you charge whatever rate to, why wouldn't you choose the simplest (most straightforward) tax system possible to reduce overhead?

How then do the 'rich' pass off costs to the 'poor'?  And what will the rich do to when they no longer feel the need to pass costs off on the poor?  Essentially, your argument is that if we adopt a flat tax, wages will automatically increase and prices will go down because the rich will feel like they no longer need to gouge the poor for money.

That is much more idealistic than realistic. 

In reality, businesses (the rich) will try to be as profitable as possible regardless of the tax system.



Kasz216 on 24 July 2009
ManusJustus said:
Kasz216 said:
ManusJustus said:
TheRealMafoo said:

Well that's a socialist point of view: "The rich just shouldn't have all that money, so we are going to take it from them."

As opposed to "The poor shouldn't have all that money, so we are going to take it from them."

Economically speaking, flat taxes do not work.  It puts a larger tax load on lower income people who need that money to support themselves with housing, food, healthcare, and other basic essentials, as opposed to high income people who use that money for less necessary items.  People with lower income are working demanding jobs to support themselves and their families, the last thing we want to do is make it harder for them to provide for their families.

The end result of a flat tax is either people living in poverty with increased crime rates that hamper the economy, or people depending more on the government than themselves for lost income resulting in more government spending or increased minimum wage.

Or rather... "Everyone should pay their fair equal share."

Also... America already has one of the most progressive tax systems around.

We have more progressive tax brackets then England and Canada for instance.

Their fair share doesn't necessary mean 20% and 20%.  Taxing 20% on someone who makes $15,000 a year is more hurtful to that person than taxing 20% on someone who makes $150,000. 

America's tax system is full of loop holes that rich are able to take advantage off.  I personally know of many instances of people getting tax breaks to for frivolous items or business owners not reporting income.

Actually it does mean 20% of 20%.  20% is 20%... that is fair.

If your being taxed 20% of your income your beign taxed 20% of the time you've worked.

 

Otherwise your penalizing people because what they do is seen as more valuable.  That's really quite stupid.

The only reason flat taxes don't work is because governments are full of corruption who like to spend money on pet projects and waste it.

Ideally a flat tax should work.  Of course you need to get rid of all deductions and lower wasteful government spending.


Progressive taxation is inherently unfair and only done because people can't think of a better way to do it.

I mean how does "You do something more valuable therefore you owe more to the country" make sense?

 

Progressive taxation is done simply because the government wants to spend more then they can get from a flat tax and the rich are an easy target.



HappySqurriel on 24 July 2009
ManusJustus said:
HappySqurriel said:
ManusJustus said:
HappySqurriel said:
ManusJustus said:
TheRealMafoo said:

Well that's a socialist point of view: "The rich just shouldn't have all that money, so we are going to take it from them."

As opposed to "The poor shouldn't have all that money, so we are going to take it from them."

Economically speaking, flat taxes do not work.  It puts a larger tax load on lower income people who need that money to support themselves with housing, food, healthcare, and other basic essentials, as opposed to high income people who use that money for less necessary items.  People with lower income are working demanding jobs to support themselves and their families, the last thing we want to do is make it harder for them to provide for their families.

The end result of a flat tax is either people living in poverty with increased crime rates that hamper the economy, or people depending more on the government than themselves for lost income resulting in more government spending or increased minimum wage.

You're making the assumption that the cost of housing, food, healthcare and other basic essentials do not see increased prices, and the poor and middle class do not see lower wages, because the "Rich" wouldn't try to maintain their standard of living by using their influence to recover the increase in tax. Now, this assumption is false and if you could "redistribute wealth" through progressive taxation why does the United States (a country which already has one of the most "Progressive" tax systems in the world) have one of the least equal distributions of wealth?

Economically speaking, every time a country has moved to a flat tax system the tax revenues of the country has gone up and they have seen faster economic growth than similar countries; and the increased standard of living of everyone typically results in a more equitable distribution of income. Now, it is not clear how much of this can be attributed to the flat tax, how much can be attributed to other "Free Market" reforms that are (typically) resisted by socialists, and how much can be attributed to several other conditions that changed for these countries.

Now, if socialists were really interested in reducing the level of disparity of income and wealth inside of their country they would take a look at what makes other countries so equitable. What they would find is that the quality and consistency of an education system lead to far more equitable results. One of the biggest problems in the United States is that its education system is so inconsistently managed that some regions receive far worse results than others even though they spend far more money on their students.

You've made a lot of incorrect assumptions.

Countries with a flat tax are worse off and have less equal distribution of wealth.  Countries that have flat tax systems are mostly in Eastern Europe and the former Soviet Union, and the reason these countries have higher GDP per capita that the West is that they are poorer and economic growth works in the favor of lesser developed countries.  Your observation that adopting flat taxes improves economic growth is no better a statement than stating that we should be poor to improve our economic growth.

http://en.wikipedia.org/wiki/Flat_tax#Countries_that_have_flat_tax_systems

I do agree with you that the United States education system is horrible and that education is the best way to make society more equitable.

I made no assumptions, I was quite clear in stating that there were other reforms and other factors which changed that had an influence in these fast growth rates and improvement in the equlity of the dristribution of income ...

At the same time I can demonstrate that the progressive tax systems don't work because The United States has one of the most progressive tax systems in the world and one of the least equal distributions of income and wealth in the developed world. As I have said many time, when you increase taxes people who can pass on the costs of the tax and in (eventually) gets paid by those who can not pass on increased costs; and since the "Rich" have a greater capacity to pass on costs than the "Poor" a progressive tax is no more "Progressive" than a "Regressive" tax, because the "Poor" and "Middle Class" pay the increased costs either way.

If you know that the same people will pay the bulk of the tax regardless on who you charge whatever rate to, why wouldn't you choose the simplest (most straightforward) tax system possible to reduce overhead?

How then do the 'rich' pass off costs to the 'poor'?  And what will the rich do to when they no longer feel the need to pass costs off on the poor?  Essentially, your argument is that if we adopt a flat tax, wages will automatically increase and prices will go down because the rich will feel like they no longer need to gouge the poor for money.

That is much more idealistic than realistic. 

In reality, businesses (the rich) will try to be as profitable as possible regardless of the tax system.

Where did I say anything about "Automatically"?

Beyond that, 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.

 

 



ManusJustus on 24 July 2009
Kasz216 said:
ManusJustus said:

Their fair share doesn't necessary mean 20% and 20%.  Taxing 20% on someone who makes $15,000 a year is more hurtful to that person than taxing 20% on someone who makes $150,000. 

America's tax system is full of loop holes that rich are able to take advantage off.  I personally know of many instances of people getting tax breaks to for frivolous items or business owners not reporting income.

Actually it does mean 20% of 20%.  20% is 20%... that is fair.

If your being taxed 20% of your income your beign taxed 20% of the time you've worked.

 

Otherwise your penalizing people because what they do is seen as more valuable.  That's really quite stupid.

The only reason flat taxes don't work is because governments are full of corruption who like to spend money on pet projects and waste it.

Ideally a flat tax should work.  Of course you need to get rid of all deductions and lower wasteful government spending.


Progressive taxation is inherently unfair and only done because people can't think of a better way to do it.

I mean how does "You do something more valuable therefore you owe more to the country" make sense?

Obviously, you arent being taxed 20% of the time you've worked because people have differenty hourly wages.

No, 20% and 20% is not fair.  You've made up some idea of 'fair' that really doesnt exist.  You could argue fair would be taxing people the same amount (everyone pays a tax of $2,000), or you could sargue that fair is taxing people with respect to how much they can afford (poor pay less since they can afford less).  Those are two completely different ideas of 'what is fair' that are independent of each other, yet you are trying to put them together and calling them both unfair alone but somehow fair when combined.