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Tuesday, April 14. 2015
I have a better idea. Shut it down and generate taxes via another method.
I think there are some easier ways to take money by taxing financial transactions, given the size of those markets.
But even if that isn't going to work, and income taxes remain the main method of tax taking, then funding the IRS is a terrible idea. The best way to raise revenue isn't to force people to adhere to a difficult and unworkable code that is punitive. It's to simplify that code and reduce the work. The idea of increasing enforcement is a 'jobs creation' idea that produces nothing. Let jobs be created where they add, rather than take, value - in the open market.
To do this, make the income tax low and flat. You earned $10,000? Fill out the form on the back of a postcard. Maybe you have deductions for family members living at home, but beyond that, you pay 10%. So $10,000, deduct yourself and pay $900. $250,000, deduct the wife and 3 kids and pay $24,600. Easy to file, easy to audit, easy to enforce, hard to avoid...lower staff, lower costs, higher collection rates.
It really is that easy. But again, it's just another good idea that won't pass because people are too caught up in how things have been rather than considering how they can be.
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I got a democrat friend of mine to agree that the tax code needs to be completely scrapped. I even got him to agree that a flat tax would be wonderful (he owns a business and hates the taxes he pays). We also both decided that even if that flat tax would only be temporary...because we all know that Congress would start messing with it after a while...that it would be okay, because right now the tax code is too complex.
Better to have a period of simplicity and take another 100 years to muck it up again...rather than just continue on the same course.
Would be just fine with a 10% tax after a deduction for each person in the family + maybe an equal housing/food deduction that we ALL get (renters and homeowners alike).
I used to think a flat tax was a good idea. But since I've retired, I don't think so -- at least for me anyway.
My income for 2014 was around 32k. My SS was not taxable but my pension and part time job income was. My adjusted gross income was around 16k. I paid the feds around $350 and California $7. So the percentage of tax on 32k was around 1%. The percentage of tax on 16k was around 2%. Can't beat that.
No matter how the tax laws are changed, there will be winners and losers. The question, however, isn't who wins or loses (except for those people, then it's a big question) but whether it makes logical and rational sense for several reasons:
1. Is it fair? A flat tax is fair - everyone pays the same rate, and if you make more, you pay more.
2. Is it easy to implement? Um, well, judge for yourself versus the existing code.
3. Is it cost effective? there is no more cost effective way to file than a postcard, which is what I used when Pennsylvania had a flat tax.
4. Is it easy to enforce? Yes.
5. Is it expensive to implement or enforce? No
Ultimately, yes - you might lose, as might some other fixed income folk. But in the grander scheme of things, there is no better way to implement the tax other than just getting rid of it altogether (which I'm all for).
Bulldog: Maybe you have deductions for family members living at home, but beyond that, you pay 10%.
U.S., with zero fiscal deficit:
Personal incomes, $13 trillion
Federal budget, $4 trillion
True flat tax, 30%
Total GDP, $17 trillion
Federal budget, $4 trillion
True flat tax, 24%
Flat tax with a deduction for minimum income would result in a somewhat higher rate. Assuming 3% deficits would mean a somewhat lower flat tax. Generally, a flat tax will mean lower tax rates for high income earners. Currently, most people pay some federal taxes, such as the payroll tax.
I'm supposed to care that you want to keep spending my money? It's implied, though to you nothing is ever obvious, that government must shrink. Your numbers serve no purpose. I never said I was out to balance the budget with a flat tax. Please show me where I wrote this?
Bulldog: I never said I was out to balance the budget with a flat tax.
Didn't say you were, but if you were to implement a flat tax, all else equal, it would require taxes considerably above 10%, depending on the standard deduction (which actually makes it a two-tier tax system).
"I never said I was out to balance the budget with a flat tax."
One doesn't normally propose a tax plan that leave a giant revenue shortfall unless it isn't a "plan," but is instead a "gesture."
If then we want to make a gesture, why not revert to the income tax in its original form before the government decided to use war as an excuse to ever widen its grasp.
A tax on a small percentage of the income of a small percentage of the top wage earners in the country.
But of course all the Flat Tax talk ignores the fact that someone with a small to medium income suffers more serious ramifications from having 10% of their income hijacked by the government than someone making, say, $2 million per annum.
And since the government is the one inflicting the income loss it would do well to consider this when designing revenue schemes.
In response to both your posts:
1. IF you read what I wrote, you'd see I oppose income taxes altogether.
2. IF you're going to have an income tax, a flat one is best, it is fairest, and it is easiest and most efficient.
3. IF you're going to have an income tax, it should not be punitive.
No, I didn't say I was out to balance the budget. Mainly because the budget is too large and needs to be cut drastically, punitively and aggressively.
Zach's commentary is off point. He's still learning to read, so we make accommodations for him. If you'd read it - I wasn't saying we need to tax at X%. I was saying that Oliver's idea that additional money for the IRS is a misplaced idea without much value. Giving them more money to enforce an absurd law/tax may generate increased legalized theft of income, but there are less expensive and better ways to generate taking of cash from Americans.
So no, I'm not being defensive. My response to Zach was based on the fact his commentary is misplaced. He assumes you have to raise as much cash as the government is currently spending.
I don't make that assumption. My belief is the government spends too much already. So set the tax at 10%, 15%, 5% - wherever you want. I used 10% as an means to show why a flat tax is more effective, not to say 10% is THE NUMBER.
Typical of most Progressives, and typical of his standard methodology - Zach focuses on something OTHER than the main point, creates a straw man, and then sits in his hut in the mountains somewhere smirking, thinking he's intelligent.
But he's not. He's just that guy we all know - Dick, from the internet.
Bulldog: No, I didn't say I was out to balance the budget.
No. What you did was provide a much lower tax rate than necessary making your proposal seem more reasonable. Substitute 30% for 10% in your original post for comparison.
Bulldog: I wasn't saying we need to tax at X%.
You said, "Maybe you have deductions for family members living at home, but beyond that, you pay 10%."
Bulldog: I used 10% as an means to show why a flat tax is more effective, not to say 10% is THE NUMBER.
It gives a false impression of the rate required.
You clearly have an odd sense of language.
First of all, reasonable is subjective. So, reasonable to YOU is not reasonable to many others, least of all me. Your discussion point here is not a point at all, just you engaging in the usual misdirection you employ.
Second, my saying "you pay 10%" was purely tossing a number out for purposes of illustration. Could I have been more clear? Perhaps, but not necessarily. 10% is actually fine by me. 5% and 0% are better. So again, you employ your own bias which isn't meaningful in the discussion.
Third, it doesn't give a false impression of anything. REQUIRED is a meaningful term if, indeed, something IS required. I'm not sure anything IS required. Do you? If you do, that's just you. There is no requirement to fund up to spending. In fact, the real requirement (were government run properly) is to spend down to funding. Which goes to show how out of touch with reality you truly are.
Finally, as I pointed out elsewhere, the article is less about how to raise money, but how to make the system simpler, more efficient, and raise more by doing less. Which means I was right - you still are failing English Comprehension.
Good luck with your absurdist bias, Dick.
Bulldog: Second, my saying "you pay 10%" was purely tossing a number out for purposes of illustration.
Notably, you didn't toss out 25% or 35%, but 10%. But we accept it was illustrative. We firmed up the number. If the U.S. moves to a flat tax, the rate will be closer to 25% to 35% depending on whether it includes corporations, and whether there is a personal exemption.
Bulldog: There is no requirement to fund up to spending. In fact, the real requirement (were government run properly) is to spend down to funding.
That's fine, but that would be a separate issue from the flat tax itself, which is what you introduced in your original post. To have a 10% flat tax, you would have to reduce the government by about two-thirds, which would mean ending Social Security and Medicare, among other programs. It would probably also entail drastic cuts in defence spending.
Bulldog: Finally, as I pointed out elsewhere, the article is less about how to raise money, but how to make the system simpler, more efficient, and raise more by doing less.
That's fine, but you might want to propose an appropriate rate next time so that people better understand what you're proposing.
Everything you just wrote - similar to everything that preceded it, is tangential and biased to your point of view.
You 'firmed up' nothing. You simply laid out for all to see that you happen to think theft of income is perfectly acceptable as long as it's for causes you deem worthy.
Most people don't share your view. I suppose, when you are approached on the street by a homeless person who steals your wallet, that you're fine with it because it's just another form of income redistribution? Or are you only OK with it when an elected official points a gun at you and says "If you don't do this, you go to jail and face fines and retribution"?
I don't have to follow your skewed rules of funding up to a number you deem worthwhile, and I don't have to follow descriptive laws of language which you have created out of the blue. Most people who have read my work know what I was doing, but you're a gadfly on the ass of society.
So long, Dick.
Bulldog: Everything you just wrote - similar to everything that preceded it, is tangential and biased to your point of view.
Actually, it's called arithmetic.
Actually, at this stage, as with all your other posts, it's called trolling.
Sorry K.S.; but whenever someone mentions how unfair a flat tax would be I have to roll my eyes.
"But of course all the Flat Tax talk ignores the fact that someone with a small to medium income suffers more serious ramifications from having 10% of their income hijacked by the government than someone making, say, $2 million per annum."
So what? Since when is taxation suppose to be fair? Why should those who make more money (and most likely use less government services) pay more? Just because they earn/have more they should pay more? That sounds like one of the seven deadly sins to me - envy! "He has a bigger house - tax him more! He has a bigger bank account - Tax him more! He makes more money than me - tax him more! he has more than me - give me some!"
Maybe, if those lower-income folks HAD to be "hurt" more by tax increases they would be less likely to vote for the politicians who tax us to death then act like they are doing use a big favor by giving us our money back in "free" stuff?
If EVERYONE(and not just the rich) saw their taxes rise every time they voted for the tax and spend crowd maybe they'd be less likely to vote for them?
"So what? Since when is taxation suppose to be fair?"
"Why should those who make more money (and most likely use less government services) pay more? Just because they earn/have more they should pay more?"
You're absolutely right, that doesn't sound . . . fair.
I would also note that the person who introduced the rather subjective term 'fair' into the conversation . . .is you.
I merely mentioned the fact that those planning grand schemes for the reform of the income tax consider the reality of a cost of living and how taxation affects it.
A flat tax would mean fewer opportunities for graft and corruption by the politicians and lobbyists.
I'm just not sure there is a valid reason to have deductions for family members. Why should two identical people making the identical income pay different amounts of tax where one gets a break because they are married and have children? Pay the tax then do what you want to with the money that is left after taxes.
The federal government is bloated. Perhaps three times as big as it should be. About 75% of the civilian jobs should be eliminated and about 2/3rds of non defense spendng eliminated. SS should stand alone and not be part of the general fund. After that the Federal government should have a budget under a trillion. We are not under taxed the government over spends.
Generally, I agree with you.
However, I feel if you're going to go with an income tax, you need to give a nod to the Progressives who feel a flat tax is "unfair" because the poor 'pay more' (a completely misguided notion) of the little cash they have.
As a result, deductions allow a somewhat progressive aspect to a flat tax, without being TOO problematic.
Tax on incomes is a BAD idea whether it's a progressive tax or a flat tax. If you want less of something, tax it.
The legacy of the income tax is that it has produced the type of government revenue - that is, money for politician's to waste - that has made a massive transfer of wealth from the productive to the unproductive possible. Washington's desire for more and more money stems not from its need for funds to accomplish its Constitutional obligations, but from its profligate spending on welfare programs, agricultural subsidies,and social insurance programs like Social Security or Medicare - items which are NOT federal responsibilities.
Politicians have used the income tax - or rather tax deductions and credits - to manipulate the American people into choices that they wouldn’t have otherwise made in a free market. These manipulations — whether in favor of “green energy” research, “cash for clunker” automobile purchases, or tobacco crop subsidies — have been chosen according to the prevailing virtue in Washington.
American history before Congress enacted the income tax in 1913 (first imposed the following year) demonstrates that the federal government was able to pay its bills, keep the nation largely out of debt, and respect the privacy of American citizens. Only the multiplication of unconstitutional federal offices, along with the demand by Congress to manipulate decisions of American consumers, has necessitated imposition of the income tax. Or, conversely, the imposition of the income tax made a massive increase of federal offices possible. Ironically, despite the imposition of the income tax, Congress has more often engaged in deficit spending and racked up a massive peacetime debt since enactment of the 16th Amendment.
The biggest problem with our tax system is that it revolves around the federal government rather than local governments. The further away the revenue collector/distributer is away from those it taxes and rewards, the greater is the corruption and inefficiency. The federal government should have minimal expenses and impose minimal taxes. In turn, it should keep its nose out of what is properly the business of state and local governments.
I would strongly favor a household tax - each family pays the same amount. This strongly encourages people to be productive. Once you've met the tax threshold, everything else is yours to keep. Of course, LOCALS will recognize people in their community - elderly, widows, orphans, cripples, etc. - who "need" a break. That's why taxing and rewarding authorities should be local rather than far off in DC. It's also why Adams felt that “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” The loony left will never understand that. Generosity is when you take YOUR own money and show mercy to someone less fortunate. When you take SOMEONE ELSE'S money and give it to a third party so that they will vote for YOU, that's theft.
I agree. But even with things like an income tax which are a bad idea, there are better ways of doing things.
This nation survived for over 130 years without an income tax, there is no reason to assume we can't go back to that time.
It would require massive cuts in spending, and an overhaul of the entire system, but we're an innovative people. I don't see how that's a roadblock.
The only roadblock is the individual unwillingness of politicians to recognize the value of doing this due to the personal gain they have baked into the current system.
Mike M: I would strongly favor a household tax - each family pays the same amount.
Households in U.S.
Average household tax burden
Cut the federal budget by half, and you still need to collect more than minimum wage from each household. Meanwhile, upper income families would pay a negligible share of their income.
Zach, once more missing the point and making another one which he feels is germaine to the discussion.
So what if upper income families pay a negligible share?
Tell me - are you a greedy person?
Bulldog: So what if upper income families pay a negligible share?
Just pointing out that a household living on minimum wage (perhaps a single mother with two children) would pay 225% of her income while a household making $500 thousand per year (perhaps a politician and spouse lawyer with one child in private school) would be paying 6% of their income. If you cut federal revenues by half, then the minimum wage household would still be paying more than 100% of her income.
Immaterial, except to you.
Most people are aware of this.
Playing Captain Obvious, if you have something meaningful to add, is a useful role. But in your current capacity, you're just playing the role of Dick from the internet.
Bulldog: Playing Captain Obvious, if you have something meaningful to add, is a useful role.
The household tax as proposed by Mike M entails taxing a single mother at over 100% of her income, so it is apparently not thought out very well. Again, it's arithmetic. If you exempt low income households, that means filing income statements, as well as an increased rate on the remaining households.
"Maybe, if those lower-income folks HAD to be "hurt" more by tax increases they would be less likely to vote for the politicians who tax us to death."
Ah yes, because there a dearth of high income types supporting the Democratic party.