Flat tax vs. progressive tax question

From a conservative perspective, why is the flat tax fairer than a progressive tax? Why should the rich have to pay more period? Why doesn't everyone just pay $20,000/year, and those who can't, well too bad, they go to jail or accumlate massive debt? Seems to me that "flat tax" is simply jargon that's being exploited by the right wing to reduce taxes. It seems to me that "flat tax," from their perspective, is as unfair as progressive tax.

And so much so, it is mired in misunderstanding. When I heard of the flat tax deal, I was thinking in terms of everyone paying a flat "percentage" of their earnings in taxes, which, on the surface seems very fair. The higher the income, the higher the dollar amount paid in taxes. This would only be feasible if all tax deductions were eliminated, because the wealthy would still have an edge otherwise; charitable donations, higher mortgage interest, etc.

Just thinking out loud.

it's just a flat percentage.

And then you have to think about what is going to be considered "taxable income". Earnings from a job only? Or would it include investment income too? See where I'm going with this?

People with low incomes need every cent just to get by. Any tax taken from them has a real impact on their health and well being. For higher income people, a tax is a nuisance more than a threat to a decent standard of living.

Even attempts to exclude the poor from a flat tax still suffer from this problem at the margins.

The flat tax, like ALL Repug ideas, is an attempt to reduce the taxes on the well to do. They can try to spin it however they want and sell it to the sheeple, but that core fact remains.

The tell-tale sign will be if the effective flat tax rate (adjusted for any allowable deductions) is lower than the current effective rate paid by the highest wage earners. If so, it's another Repug con to shift the burden to the middle class.

Smoke and mirrors! The basic idea is perfect and very fair and equitable to all concerned. It is the poison pill the Repugs insert up the fecal elimination orifice of this idea that ruins the whole deal.

My idea of a flat tax is this... taking into consideration this is very basic and there are a lot of other provisos undoubtedly needed:

Flat percentage of income tax for all people with a personal or family income of greater than $20k per person. (Number pulled out of my hat, ok? I realize more analysis would be needed to come up with a fair number. Let's just start here.)

Let's just say 10% for now so we can all see the flow easily. A person making $30,000 a year (Per person, remember) pays $3,000; a person making $60,000 a year pays $6,000; a person making $200,000 a year pays $20,000, a person making six million a year would pay $600,000. You have to keep in mind that under five percent of the people hold over 80% of the money. So, the more money "earned" the more paid in taxes. This way, the top five percent of the people pay 80% of the taxes. No loopholes. That's the rub. The repugs want to put too many loopholes/deductions for the rich in here.

Taxable income includes: Salary Earnings; Investment Earnings (actual gains). Does NOT include earnings (gains) from retirement investments where after-tax dollars were used.

of income disparity. If everyone pays x% of their income as taxes then it doesn't matter that some full-time workers have income that is 500 times greater than other full time workers at the same company. Paying X dollars per year makes the sum earned by individuals relevant.

This issue should not be framed in terms of fairness. It should be framed in terms of the common good. A flat tax ultimately appears to be fairer to many people because they fail to realize that it results in significantly greater sacrifices in discretionary spending by lower income workers. It also avoids the issue of tax loopholes and tax planning strategies.

Those who earn more (not have more*) should be required to contribute more to society. Their unwillingness to do so can then be defined and characterized as either greed or fear - the two motivations that underlie most financial decsions.

Edit: *I exclude "have more" because there is a reasonable argument that earnings and investments ought to be treated differently in order to stimulate savings.

Your first question makes sense. As for the rest...are you playing rethug, I hope? :shrug:

From a conservative perspective, the "flat tax" means that everyone pays the same percentage of their income to the government. The reason an honest conservative might consider it fairer (as I understand) are:

1) they assume that all "income" can be counted and treated equally (or they are just being dishonest, in which case there's no point in discussing this at all).
2) they assume that the relationship between income and how much a person benefits from the protections and privileges of a civilized society, vary directly one to one. I forget the exact mathematical term. Anyway, they deny that wealthier people benefit disproportionately more than poor people.
3) Speaking of wealth, they do not account at all for the wealth a person is born with or comes by through no hard work of their own. It seems to me that most people yelping for a flat tax, also want to do away with the "death tax." Many of these people also tout the values of "hard work" (sound familiar?) and "personal responsibility."

The reason the flat tax is not more fair is mostly because #1 is completely wrong. Again, these same people will come up with arguments why the capital gains tax should be done away with, or various other ways of hiding or deferring income for purposes of tax avoidance are okay. It is a heckuva lot harder to play tax avoidance tricks if you are a shelf-stocker working for Wal-mart than if you own a business and can play all sorts of creative accounting games.

#2 is controversial but I believe that most people realize that richer people get more relative value out of cops, libraries, and so forth than poorer people. The question is how the rate of increase in value received varies with income.

#3 adds another twist. I'm rethinking the ideas of my younger days aginst wealth taxes (aka property taxes and inheritance taxes) because I think wealth is more relevant to what someone takes from society than is income. It may also be easier to measure. Anyway, people who start out wealthier tend to have higher incomes, so a progressive income tax gets at that sort of indirectly.

Hope that is coherent enough to help. There is much more to say on this topic!

That's a good answer. It certainly appears from a right-wing perspective there is no more logic to a flat tax than a progressive tax. To your comment that, "they deny that wealthier people benefit disproportionately more than poor people," then shouldn't they really believe that everyone should pay the same dollars in federal tax, not the same percent? I think the notion of a flat tax as a fair tax is illogical. It's no more fair that a progressive (or regressive tax), using their logic. It's nonsense.

A flat tax is a flat percentage. Usually it's not even a flat percentage - it's a percentage of an amount over a certain fixed exemption - which makes it progressive. I don't think many DU'ers would object to a 'flat' tax of 40% on income over $150,000, though this is not the type of tax flat-tax advocates support.

Regardless, taxes on wages are regressive - even if the rate is progressive. Taxes on wages do two things: #1 they coopt a person's self-ownership #2 they raise the price of employment, causing unemployment and low wages.

As long as we keep fighting the battle between more progressive and less progressive income taxes, the vast majority of wage earners lose.

There's a movement to tax unearned income, and I support it. However, I distrust those who count investment income necessarily as unearned. Some of it is earned through risk. Some of it is unearned through privilege. When you tax something that is unearned, you never tread on people's willingness to be productive.

Unearned income:
#1 Land & real estate appreciation
#2 appreciation to gov't issued licenses: taxi medallions, liquor licenses, utility licenses, broadcast licenses, timber permits, mining permits, fishing permits, drilling permits, water permits, pollution permits, etc.
#3 Income from government protected patents

Taxing the crap out of things wouldn't have deleterious economic effects, as long as the rates were less than or equal to the market value of these privileges - a total value of which exceeds $4.5 T in the US.

Funding government from these sources would allow us to end wage taxes, income taxes on earned income, taxes on built property, and sales taxes.

Fewer taxes on wages = more wages, and more jobs
Fewer taxes on earned incomes = more earned incomes, more jobs, more investment
Fewer taxes on built property = more buildings, more machines, more workers constructing buildings and assembling machines, more places to work, more places to live
Fewer taxes on sales = more sales, more salesworkers, more production workers, wages go further

tax free while wages for work are taxed. It is fucking amazing that we don't hang that right around their necks. We SHOULD use that as a WEDGE issue.

I agree we should use it as a wedge issue.

There are a couple of Democrats who, I'm sure, would if they could (Kucinich and Edwards come to mind).

By how do they get anybody to listen? They could put it in every speech, publish in every issue of The Nation, Harper's, and such, and nobody but the people in the choir would ever hear them. I can't imagine the corporate media even covering what they say, much less giving it a fair airing.

think public works and government is funded but they don't want to pay any taxes at all.

Confronting the wealth gap is more important than being fair when people lack food, shelter, and health care.