2 votes

Question about Flat Tax

I've seen a number of times in the past where people post that they are in favor of a flat tax (ideally set at 0%). But what is a flat tax? Is it a flat rate based on your income? If so, how is income determined? Are there still deductions?



Trending on the Web

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

That's all a sideshow.

In the MAIN RING, the issue is that the income tax is unconstitutional and is currently being enforced via emergency powers.

The "flat taxers" really want a constitutional amendment, which would put the issue of a federal taxation of individuals to bed forever with no chance of resurrecting the issue for discussion.

NO CONSTITUTIONALIZATION OF FEDERAL TAXES... period!

If they are going to do it, it needs to be as hard as possible for them to do so.

The moniker "flat tax" is just to distract from the real objective they are trying to accomplish.

fireant's picture

If that's the case, they should be up front and help educate

the public on how the 16th and 17th eviscerated our Republic, and join the fight to repeal both. Trying to do an end run or work with deception is a sure way to not garner public support.

Undo what Wilson did

They are liars.

Suprised? People in politics lie? :P

tasmlab's picture

I think 'prefer' would be more accurate

I would think many here would prefer a flat tax over a progressive income tax, esp a sales tax in replacement. But only as picking one over the other i.e., the lesser of two evils.

A flat sales tax, for example, would abolish most of the IRS, not require us to submit long documentation every year about our finances and would likely end the accounting and much of the lawyer industry as we know it.

It would do nothing, though, to curb the government's power nor would it likely make our taxes any less. The ideal would be simply no taxation, IMO.

Currently consuming: Gatto: "Underground history of education..", FDR; Wii U; NEP Football

fireant's picture

Regardless, don't be fooled.

A flat tax is still repugnant to Constitutional precepts, and does nothing to get the federal monkey off our backs and out of our pockets. The ONLY direct tax authorized by the Constitution is apportionment among the States; NO direct taxes upon the People. In fact, reading the Constitution as a whole, it can be said the Federal government is to have zero direct interface directly with the People, other than through the States. A flat tax will maintain our unconstitutional status as a Nation State, rather than a Nation of States. Repeal of the 16th and 17th Amendments is the only real solution.

Undo what Wilson did

But what you forget

is the founding fathers put in place the ability to add amendments. So currently an income tax IS constitutional as long as those amendments stand. They are every bit as valid as the original constitution.

fireant's picture

Arguably,

the 16th did not alter Article I Sections 2 and 9, so it left the Constitution at odds with itself.
Arguably, the 16th and 17th were never ratified by 3/4 of the States.
Additionally, the 16th and 17th eviscerated a Constitutional Republic, creating a Nation State, rather than a Nation of States. I doubt those who voted for them understood how radical the alterations would be.
Regardless, the two have to be repealed (or found fraudulent) if we are ever to have a chance at freedom from tyranny under a Constitutional Republic.

Undo what Wilson did

Move, 'under a Constitutional Republic'

to the beginning of that sentence, and I agree 100%.

Perfect

response.

Kudos!

"What if the American people learn the truth" - Ron Paul

fireant's picture

Thanks for the kudos!

I just wish more liberty lovers, and "conservatives" for that matter, understood.

Undo what Wilson did

A flat tax

is essentially a level tax on goods, services, and income. Everyone, regardless of how much or how little they make, would be taxed the same.

Let's use the famous 9-9-9 Pizza deal by herman cain.

All sales tax would be 9%.
All income tax would be 9%
All inheritence tax would be 9%.

vs the current structure, which taxes the rich at a higher rate on additional income, and does not tax, but supports the poor by giving them tax promotions (i.e. corporate welfare).

Currently, wages are set low, corporations pay high taxes, and in turn the government uses those taxes to support the poor collectively.

Under a flat tax, the poor and rich would all pay the same taxes based off of percentage, but unfortunately in order for this to be feasible, minimum wage would need to rise drastically. (but it would eliminate welfare, etc).

This is very different from a consumption tax, which basically eliminates all income tax, but taxes everything you buy (let's use 9% as an example).

Whether you are rich or poor, you would pay the same percentage on anything. Many say this unfairly treats the poor, as they will be paying a larger portion of their income to taxes, as they spend nearly 100% of their income, vs the rich who spend a small portion of their income. There is validity to this to some degree, because if both a rich and poor person ONLY buy necessities such as food, then both will be paying the same amount, literally, if they buy the same food, but it would impact the poor person more. The positives to this are that the amount of taxes you pay are fully within 100% control of what you choose to buy. Unfortunately because of this, studies have shown that, while it does increase personal wealth, it also has the potential to destroy an economy as people would be encouraged to spend less.

Under a flat tax, the poor

Under a flat tax, the poor and rich would all pay the same taxes based off of percentage

However, one would still need to figure out all their deductions. So, there would still be a culture of lobbying congress for various deductions as well as having to file a return disclosing all your relevant financial activities. Am I correct on this? If so, it seems like a magician's trick where they having you looking at the rate that is being applied while they could just monkey around with the income via various deductions.

Ideally

under a flat tax, there would be zero deductions. In practice though, i'm sure the rich would continue to benefit

Spending less = Saving

How does this destroy an economy?

Capitalism

is based on the premise that if goods are produced, they will be bought, which will increase demand, furthering the cycle.

If money is saved rather than spent, then goods are not purchased, and businesses are harmed.

While it is the goal of an individual to raise their wealth, it is the goal of capitalism to have the wealth change hands more.

This is why, in many ways, a graduated or "socialistic" taxation program like we currently have is actually better for capitalism, because it takes more money from the rich (who would more likely save it) and gives it to the poor, who will more likely spend it. Not saying that's "right", but it is a basic function of capitalism. You need a flow of capital from the top to the bottom to keep the system going. Otherwise all wealth is concentrated to the top, the bottom have none, and it all comes griding to a halt.

The downside is if the staggard taxation of socialism is too high, that the rich end up taking their ball and going home (cashing out, closing factories). Then the system also comes to a grinding halt.

That's false.

A saved dollar increase FUTURE consumption twice:
1) the dollar will be spent later anyway
2) the invested dollar increases the trajectory of the productivity increase curve represented as return on investment, which is later also spent (or reinvested).

The assertion that "capitalism is based on consumption" is a pure-Keynsian/Marxist assertion.

Hazlitt's Lesson

When money is saved and then invested it is used to buy or build capital goods.
Any of these projects puts as much money into circulation and gives as much employment as the same amount of money spent directly on consumption.
Saving in short in the modern world, is only another form of spending.

Nor

am i talking about people taking their money and buying stocks and investing.

I'm talking about people either on small scale throwing their money into CD's, or on large scale, offshore foreign banks.

sure

IF and when it is spent. But if it is never spent, it cuases harm to capitalism.

I'm not talking about people saving for short term and reinvesting. I'm talking about people saving, passing on to children, and creating dynasties. That money harms the economy to sit in a bank earning even more money which remains out of the economy.

i knew you had no idea what austrian economics was from your

Right left wing mindset. Read the following: Tom Woods, Murray Rothbard, F. a. Hayek, And anyone else who would explain how the rich use protectionism, barriers to entry, minimum wage laws, occupation licensing, inflation and taxation to eliminate competition and keep the poor from climbing the ladder, so as not to lose market share.

All socialism harms the poor and benefits the rich, while minimizing productivity for everybody.

we have had all this planned economy for how long, and wealth disparity has only become greater??? Hello!!!

You need to learn about the petrodollar.

Séamusín

Capitalism is an economic system

characterized by private or corporate ownership of capital assets and goods, and the creation of goods and services for profit.

Capital: Financial assets or the financial value of assets, such as cash.

How is capital acquired without saving?

Dont waste your time.

He is stuck in the mainstream. No applications for a spot at mises u from this guy.

Séamusín

yepper

and they continue to eat the seed corn