Let’s all move to France! 35 hours a week, pensions, the good life.
Can someone please give us a rational argument why implementing a Flat Tax system in America is not fair? We don’t know if we can continue posting without thoroughly understanding this issue first. From a percentage basis, each person pays an equal amount of their income towards taxes, and from an absolute basis, richer people pay more!
Why don’t we just start taxing people according to height? The shorter you are, the more you have to pay! Brilliant idea, thanks. Here’s a commentary from a site that really got me thinking about the word “comrade” and the phrase “melt your pots for bullets.”
Those of you rich folks in the top 39.6% tax bracket (~$400,000 and higher) need to stop whining. You don’t get to whine. I hope this administration taxes the beejesus out of you all…it’s time you paid your fair share and get with the program. It’s only fair the wealthy pay more out of their millions and billions of dollars to subsidize the rest of us who need it the most. We are struggling in this recession and it’s time to fix the problem – by taxing the rich!
Gee whiz, last I checked, we live in America not North Korea. Why people believe it’s fair to tax one class of citizen a higher percentage than another confuses us. Is this not a pure form of discrimination? Fine, let’s agree that anybody below the poverty line of $25,000 for a family of four ($10,000 for a single person) are exempt from all income taxation.
Here’s a reasonable 15% Flat Tax Example:
“Poor” Man Income: $50,000 / year.
“Rich” Man Income: $1,000,000 / year.
How much does the poor and rich man pay as a percentage of their income? 15% each = equality!
How much tax does the poor man pay in absolute dollars? $7,500.
How much tax does the rich man pay in absolute dollars? $ 150,000
———-> The rich man earns 20X more than the poor man, but also pays 20X more than poor man in taxes! Equality!
Let’s put a twist to this example. Let’s say the rich man is a 50 year old ER doctor who saves lives every single day. He spent 15 years after high school studying, and $300,000 in tuition to become a doctor. Is it right to reward this doctor who studied harder than most of the population with a higher tax rate just because he makes $1 million a year?
One could argue this doctor deserves a tax holiday, or should spend regressively less on his taxes. But then, the honorable $50,000/yr school teacher says she’s helping people too, and should pay less taxes as well. It gets complicated, but not with a flat tax!
LET’S STOP DISCRIMINATING AGAINST PEOPLE
Should we tax everybody who makes more than us an even greater amount than we are taxed to help subsidize our own living? Should I buy the domain name: “Financial Socialist Samurai of America?” We are craving for rational reasons from the personal finance community as to why the flat tax is not fair. Everybody understands racism and bigotry is bad. Why then do we accept discriminating against income levels?
Mathematically, the flat tax makes perfect sense and expunges words such as “should, fair, subsidize” from the tax argument. What the government has is a serious spending problem. The first thing we’ll tell the president is the mother of all personal finance advice: spend less than you earn!
We have a monster budget deficit due to reckless spending and this must stop. The second thing we’ll tell the government is: discrimination is illegal. Damn, maybe we shouldn’t have revealed the secrets, for now it’ll be hard to make millions from the government.
Tax Progress For 2019
2019 Federal Income Tax Rates
I’m glad that that tax reform in 2018 and beyond has stopped severely penalizing couples who want to get married. In the past, it was 1 + 1 = 1.2. Finally, it’s 1 + 1 = 2 up to each partner making $300,000 a year if you check out the latest tax bracket above.
Despite the standard deduction going up to $12,000 for singles and $24,000 for married couples, the State And Local Tax (SALT) deduction cap of only $10,000 hurts individuals and couples who live in high cost of living areas around the country.
For example, the median home price in San Francisco is $1.5 million, resulting in a $18,000 a year property tax bill. This couple might also pay $30,000 in state income tax for a total of $48,000 a year. $38,000 of their $48,000 in taxes can no longer be deductible. Meaning they lose out on thousands of dollars in tax refund.
This penalty against coastal cities and other high cost of living areas is why everybody should consider investing in the heartland of America. Due to technology, the trend is away from HCOL areas. The best way I’ve found to invest in lower cost areas of the country with lower property valuations and higher net rental yields is through real estate crowdfunding.
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Update for 2019: After leaving Corporate America and making little money in 2012 and 2013 from a lot of money a decade before, and now back to making a decent chunk of change with my online media business and various consulting gigs, I’ve got to say that my feelings about a flat tax have not changed. A flat tax above a certain poverty level by individual and family count is absolutely the fair and simplest way to go to not only collect more tax revenue, but to also simplify the tax filing process.
The burden of a flat tax rate would fall disproportionately on lower income families because of the current costs of living within the U.S. 10% of a $60,000 income would hurt that family a lot more in our current high-inflation economy than 10% of $2,000,000. That’s why a flat tax rate isn’t fair. And a flat tax rate still doesn’t resolve the glaring issue of the wealthiest 10% hiding 70% of their assets in real estate, offshore accounts, bank accounts and other assets. Or the fact that they pay themselves $1 salaries to avoid the standard income rate (doesn’t matter if it’s a flat rate or not). Currently, they pay a discounted wealth tax on assets. Capital gains is not taxed the same as working income, you see. So either way, with our current economy’s ballooning inflation and with the myriad of loopholes used by the ultra-rich to evade taxes, a flat tax rate wouldn’t be fair.
Well if you want to go this route. Then lets be completly fair. Tax social security all the way to the top dont stop at some arbertrairly bullshit number like the first 137,000 dollars. Also stop this bullshit of making dividends lower they get taxed too. Plus fuck this bullshit of not taxing the firts 11 million of an estate start from the begining. The federal govt taxes about 25% a year in toltal gdp. so make it 25% across the board. Then allow states to take their share see if the rich wont perfer the progressive system. See if the bottom 50% dont rise up and literally eat the rich. Essentially why is a progressive system fair. Well because the rich tend to take more of the pie, so you must pay more than the rest. Plus its disingenous to post things like this considering a billionaire came out with only paying 750 dollars. The tax code is unfair not because its progressive but because the rich can take so many deductions.
I think most people would be OK with paying the Social Security tax on $400,000 of income if the Social Security benefits had no cap.
Let’s see if Donald Trump really did only pay $750 in taxes or not when his taxes are released and done with an audit. At least we know he paid tens of millions of dollars in payroll taxes.
Trump could release his taxes any time. There is no problem with releasing your returns when you are under audit, another red herring. Taking credit for payroll tax is that the new thing now why not take credit for all taxes employees pay? That Hero of the tax cut crowd, Reagan created the income tax on social security while cutting corporate rates. How is it that a family pays sales tax on their kid’s shoes while someone buying stock in the shoe company pays no sales tax. Banks borrow money from the feds at less than 1% and turn around and loan that out to the public at 6- 19%. Why is that? Why not start with all the unfairness the rich and corporations have and then we can a flat tax system later?
A flat tax is certainly simple but not fair. A childless couple with $500,000 annual income paying a 15% flat tax would barely notice the loss. A single mother of three with $30,000 income and 15% tax would wonder if all the electric bill will get paid this month or can she get her car fixed. This woman needs to be able to have some huge deductions before deciding the tax, if any, she owes.
So, your definition of “fair” is that everyone have enough money left over to get their car fixed and pay their electric bill, regardless of what past decisions they have made about
1. getting prepared for a high paying job
2. having a kid, and another, and another
3. not having a spouse
The judgmental assumptions about American families is just wild. Your implication is that this woman is 1: dumb or lazy, 2: has too many kids, and 3: Is a single parent by choice.
What if, instead, this woman:
1. Potentially being born into poverty. Potentially being born into a broken home.
2. Having children is perfectly normal. Baby Boomer families routinely had six children, even.
3. Maybe her spouse died? Maybe they were financially solvent until the breadwinner got sick, injured, or perished?
YES my definition of fair is families being able to survive on the income they have from working a fair day’s labor.
Poverty is not a choice. America does not provide equal opportunities to all of its citizens. Hard work does not always equate to success and riches. Statistics back this up.
24 countries and 8 US states have flat income tax.
Search “Flat_tax” at Wikipedia
I like knowing exactly what I contribute and what I retain.
Possible example
8% for Country
8% for State
8% for County
8% for Town/City
For those in unincorporated areas, the amount goes to the next level.
Don’t live in a town, that 8% goes to the County, which then receives 16%
No matter where one lives or what their income is, their total tax rate is 32%.
Zero write offs
Who cares if the doctor “deserves” better treatment because he had to study after high-school that shouldn’t factor into how much money you pay in income tax, that idea is ludicrous; I wake up at 4am everyday, can I have a tax break because of that? What about driving a red car? Can I pay less in taxes because of that? No? But why, I’m more likely to get pulled over so I assume more risk in getting to work. because none of that effects my ability to make more money. I don’t care what hardships you endure to get where you are today, you agreed to our tax system when you started working in the country, if you have a problem with an income tax that is proportional to income then you are an incredibly selfish person for thinking you shouldn’t be required to contribute your fair share like the rest of us and I question whether or not you really have a soul. People like that who are only interested in living off the rest of the countries taxes are the reason this country is, and will continue to fail in the future. Atleast until we become a part of China, but then we’ll probably find a way to drag China down too.
A flat tax can take two forms… a flat tax on consumption or a flat tax on income. If the flat tax is on consumption, it is regressive because poor people spend virtually their income on consumption, whereas wealthy people spend a substantial portion of their income on investments. So a consumption flat tax would result in the poor paying a higher tax then the rich.
A flat tax on income will almost always evolve into a regressive tax. The poor derive most of their income from wages. Wages are easy to see and easy to tax. The wealthy derive most of their income from non wages. These other income sources are difficult to identify and therefor tax. Simple example: the poor guy earns $15,000 a year… 10% flat tax = $1,500. The wealthy individual owns a stock portfolio of $50 million, real estate of $50 million and earns businesses which earn $5 million annually. He takes a salary of $1 million.
The portfolio appreciates $10 million (in the following year the market goes down $4 million). The real estate appreciates around 4 million a year, but like stocks the amount varies. The business has been re-investing its profits to grow and adds jobs along the way.
So how much is the income of this guy? Do we tax the appreciation? If not what if he never sells and simply borrows against those assets as they appreciate. Say he borrows $1 million a year against his real estate… but never sells it… Do we tax the borrowing as “income” or do we tax the appreciation? Or does he never pay tax even though he is enjoying the benefits of the appreciation through the loan.
I do support a national sales tax on consumption to replace payroll taxes, since I think it improves the competitiveness of our business by shifting some of the tax burden of entitlement programs on to goods manufactured overseas. The current payroll tax is already regressive… so replacing it with a “better” regressive tax makes sense.
But flat taxes sound good… but they do end up being regressive…