Flat Tax?

[dolphinsleb]

The IRS is talking again about simplifying the tax code. I think a flat tax would be so much more beneficial to the country. It would make everyone pay, even the people making money "off the books", and those not claiming all the make ie. Servers, Pizza delivery, illegals.

What are your thoughts on this?

 

[Shmily1]

It would be way to simple and then they wouldn't need to write books about all the "multiply this number by 225 and divide by 278 plus......."

 

[kamik86]

I doubt the IRS will ever make a change to make something so simple that it would cut their department by 90% if not eliminate it all together.

 

[comicguy]

I would love a flat tax on all income with no exemptions, regardless of how much you money you earn.

The only problem that I have with it is Congress!!! They can not be trusted to not raise it on a whim to suit their fancy!!

 

[littleteapot]

I voted yes, but I think I like the "fair" tax better. Almost anything would be better than what we have now!

 

[wtccheermom]

Yes

 

[ilovemk76]

The IRS is talking again about simplifying the tax code. I think a flat tax would be so much more beneficial to the country. It would make everyone pay, even the people making money "off the books", and those not claiming all the make ie. Servers, Pizza delivery, illegals.

What are your thoughts on this?

No it wouldn't. The only way to get them to pay is to use a VAT and/or a national sales tax.


Simplifying the tax code is not a flat rate tax. A flat rate tax could be just as complicated as what we have now.

We need a tax code that has few, preferably no, deductions. No tax credits, etc. Everybody needs to pay something for living here.


I did not vote since I would want to vote "other".

 

[crashbb]

The IRS is talking again about simplifying the tax code. I think a flat tax would be so much more beneficial to the country. It would make everyone pay, even the people making money "off the books", and those not claiming all the make ie. Servers, Pizza delivery, illegals.

What are your thoughts on this?

How? Wouldn't it be a "flat rate" on what you declare? I people work "off the books" or don't claim all that they make, changing the tax rate wouldn't make any difference to how much they pay (or don't pay).

 

[Cheshire Figment]

IRS does not set the tax code. It is set by Congress. All IRS does i collect taxes and enforce the laws.

Many people I know at IRS (including the Washington Headquarters) would love to have the Code simplified.

And, as far as the concept of a Flat Tax, what would determine what is and is not taxed?

Mike (CPA Retired)

 

[crisi]

You are confusing two different things.

Tax code simplification would do away with many or all deductions and credits. While the tax code is complicated, a lot of the tax deductions and credits are in there to encourage behavior - i.e. deduction for charitable contributions, or mortgage interest deduction that encourages home ownership. Other deductions and credits are there to make the system more "fair" - i.e. there is a credit for adoption because adoption is expensive. Or a deduction for state income tax, because some people pay it and some people don't (and you don't want to be taxed twice.) (Me, I'd simplify it and get rid of credits for adoption and education, but keep deductions for state income tax).

A flat tax is taking all the marginal rates (from 10%-34% right now, IIRC) and collapsing them. You'd get rid of different rates for long term capital gains. So everyone would pay one rate (17% is often floated) on all their income - or a portion over something like $15k. People with large salaries would pay much less and the middle class, who usually don't end up paying 17%, would pay more.

Sometimes, both these ideas are mixed together so you get a tax form on a postcard.

Neither of these ideas gets the grey or black market taxed. There isn't any way to track cash other than to get rid of it and have the government be able to look at every transaction we made. A VAT gets closer - but services would still slip under the radar. We are getting closer to getting rid of cash - and I'm not sure I approve.

 

[Colleen27]

You seem to be confusing two concepts. "Making everyone pay" regarding black markets and off the books workers would require a shift from income tax to sales tax, and I don't support that because it is highly regressive - those who need to spend all or most of their money to get by pay the highest effective tax rates.

A flat income tax, on the other hand, if implemented correctly could be a great solution. I wouldn't support an every dollar tax because I see no benefit in adding an additional burden to those already in poverty. But a flat rate with a fixed per-person exemption indexed to the poverty level along with the end to all of the social engineering provisions of our tax code (mortgage deduction, special treatment for unearned income, child tax credits, energy efficiency credits, etc.) would be far better than the ridiculously complex and loophole-ridden system we have today.

 

[nunzia]

I doubt the IRS will ever make a change to make something so simple that it would cut their department by 90% if not eliminate it all together.

Ditto..I think the people are talking about this, not the Government...
Interesting tidbit is that 47% of American households pay NO income tax...guess who will vote to keep that going?
Also read the report that noted that many at low income have more disposable income than families making 60K...rental asistance, Medicaid, food stamps, utility assistance, day care assistance..etc.

 

[Marionnette]

With 47% of Americans paying absolutely ZERO federal income tax, there has to be something done to make things more fair. When people don't have "skin in the game" they have no incentive to reduce spending or to ensure that tax dollars are spent judiciously.

I'm all in favor of altering the tax code but I feel that a flat tax will have a greater impact on poor and lower middle income families. I would prefer to see something like the Fair Tax enacted.

 

[Colleen27]

Ditto..I think the people are talking about this, not the Government...
Interesting tidbit is that 47% of American households pay NO income tax...guess who will vote to keep that going?

That's a misleading statistic, though, because so much of the discussion about it assumes that 47% is a constant segment of the population that votes according to that specific issue.

In reality it is a shifting window; we paid quite a bit in income taxes as a dual income couple with no kids even though we were just starting out, pay almost none now as a single income family with 3 children, and will be paying more than ever in a few years when the kids start reaching adulthood. That is the pattern for most working and middle class families with children. Add to that figure the older generation living solely on social security and you get a pretty big number of people who aren't paying taxes at a given point in time, but most paid in the past or will in the future.

 

[Hoodie]

I voted yes, but I think I like the "fair" tax better. Almost anything would be better than what we have now!

Same here. I'd prefer the "fair tax" but anything would be better.

 

[tinker&belle]

I voted no...something needs to be done, but 17% (since that seems to be the number being thrown around) would be a big amount to poor and middle class families but a drop in the bucket to those who make millions/billions yearly.

 

[Marionnette]

I voted no...something needs to be done, but 17% (since that seems to be the number being thrown around) would be a big amount to poor and middle class families but a drop in the bucket to those who make millions/billions yearly.

The Fair Tax Act provides a "prebate" based on the size and composition of the household. The prebate uses the formulary for defining the poverty level and then gives a monthly prebate to all households based on that number. Everyone pays taxes based on consumption at the point of purchase but in theory the impact on the poor and lower middle class would be less because they would be getting a greater percentage of their income prebated.

 

[HHSTigerFan]

I voted no...something needs to be done, but 17% (since that seems to be the number being thrown around) would be a big amount to poor and middle class families but a drop in the bucket to those who make millions/billions yearly.

Yes, certainly would be unfair for a guy making $1M a year to pay $170K in taxes while the guy making $40K has to pay $6800..

 

[clutter]

I'm with Cheshire Figment. It will not solve the problems of being paid off the books. In fact, it would encourage it.

Example: a home day care provider. Parents using her services are encouraged to take a tax credit, meaning that the provider must report the income. She doesn't mind doing it so much because she files as a self-employed business, so she can deduct her expenses. So she reports her income, deducts the food she serves, diapers, toys purchased, and other expenses against it. Now, go to the flat tax system. The parents don't get a credit anymore, so they aren't reporting the day care providers income. Does she report it? Hmmm she went from taxable income of maybe $30/week/child to taxable income of maybe $150/week/child.

The problem with the flat tax is that you have to define income. It's easy for wage earners and for investment income. But what about someone starting a business? What about someone who is a consultant? They could be earning big bucks, but they pay huge expenses to travel to client sites. With a flat tax are they taxed on net or gross?

 

[kamik86]

A national sales tax is a system that I think would work great for most people. The only reason I see to be against it is that I could see many people getting that prebate, spending it all as free money and then not having enough money to live (because everything costs more with taxes) - I don't agree that this is a problem I should care about because if they are then idiots for doing this but some people have bigger hearts then me. Actually I see one other reason too. There will be a psychological sticker shock. Even if in my head I know that item is more because of taxes, and that a lot of it was pre-bated anyway there will a time period where everything just seems so expensive now, even if it all works out in the end. I can see alot of people getting upset about that, I know I would have to keep reminding myself why my spending is so much higher week to week and that it is ok that there is more in my check (since less is taken as income taxes).