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Flat tax rate + social programs = Fair taxes


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2011 Oct 28, 7:14am   2,722 views  6 comments

by Seattle Investor   ➕follow (0)   💰tip   ignore  

Taxes are a tough subject lately. Some thoughts on why a flat tax rate is fair:

1. Flat tax rate means that everyone pays proportionately the same % of their income. Whether we think that rate is too high or too low we are all in it together. Like a three-legged race, nobody is going to get ahead or behind.

2. "Pay their fair share" is an open-ended phrase that means something different to everyone and has no collective meaning. Don't believe me? Then answer these two questions:
1) What % is a fair share for someone making $1M a year?
2) Why that %? (Try responding to that and then asking a friend the same questions. Did u get the same answer? Hail No! That means it is subjective and not based in facts but based on your personal biases.)

3. There are TWO sides to taxes (!!! If you didn't gasp then read that again!) -
1) Government revenues (taxes)
2) Government spending (social programs)

Low income people are generally subsidized on both sides because they pay a smaller % to taxes and they take greater advantage of social programs in the form of public schools, free lunch programs, etc. We have to look at the big picture of how low income people are subsidized. Low income people should be subsidized on the social programs side but not on the taxes side. Reasons:

1. Ever worked on a team before and didn't contribute anything? If not, then imagine it. It is a terrible feeling. You are a leech. Not contributing to a group is the worst form of ostracism (ever heard of a time out)? If people are expected to be good citizens then they have to feel like a contributing part of the community. Not paying taxes preempts that.

2. All necessities required by low income people can be provided on the social programs side of the equation. If someone makes $10K/year and pays no taxes then they miss out on being a part of the community and they only save, say $1K in taxes!! They are being gypped like crazy! Instead of making them non-contributors, take the $1K in taxes and direct them to the social programs that exist to subsidize low income people. $1K will not make their life better, but being contributing citizens is a fundamental base upon which they can build a better life. Do I sound too naive? Have you ever been to help out at a soup kitchen? Do many of the people ever say thank you? Do they look cheerful? Hail no! They have been conditioned to believe that they are receiving handouts and that they have nothing to offer in return. Who would be happy at that prospect? Nobody. It is a demoralizing prospect.

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1   HousingWatcher   2011 Oct 28, 10:55am  

"because you can't tax income that will not be forthcoming -- which is exactly what happens when you tax rich people at high rates."

So when rates are high, people stop working? Really? So under that assumption, people must work harder in tax free Nevada than they do in high tax New York. But to assume that would be false.

2   tatupu70   2011 Oct 28, 11:43am  

If rich people stop working, that would be a good solution too. It would open up jobs and reduce the wealth disparity.

3   TPB   2011 Oct 28, 3:57pm  

Here we go with the Roads again. It's the United fucking States, you pay taxes and you drive on the road. Now sometimes you pay again to drive on roads you're taxes should have already covered. But that's not the point. The point is you pay you're fair share of taxes, and the government makes sure the roads used the most are paved the best, and they'll send a guy in a pick up truck, with a bucket of asphalt and propane torch to fix pot holes in the roads that are least important.

What's so hard to understand about that? It behooves all States, Counties and Cities to make sure the roads to and from their towns are suitable for transportation.

A flat tax would be a lot more fair than this.
I'm a contractor, and from time to time, I'll work on concurrent projects for different companies. Since I get paid from the same company, during those pay periods. I'm taxed as if my income was in 230K range. Those checks are double of working on one assignment, but I'm not taxed double. I end up paying $700 more in taxes, than if I were billing to separate companies.

4   nope   2011 Oct 28, 9:25pm  

Talking about "fairness" in taxes is an utter load of heaping bullshit.

Nothing -- nothing -- about anyone's financial position in this world is "fair".

It's not "fair" that one guy is born the son of a wealthy business man while another guy is born the son of a janitor.

It's not "fair" that some kids go to school in dangerous neighborhoods with overworked and under skilled teachers.

It's not "fair" that some people are in the right place at the right time when an opportunity comes along.

So to talk about "fairness" in the tax code is absurd.

Progressive taxation has a proven track record. Even when we had practically no taxes, they were progressive. Learn something...anything...about macro economics to find out why.

The truly absurd thing about this entire post is that you're just advocating for a different form of progressive taxation. Every dollar spent on social programs is another dollar that needs to be added in taxes. Since rich people won't get those benefits, their net contribution is greater than the poor people who do.

5   TPB   2011 Oct 29, 3:51am  

When we had no taxes, most land owners had hundred of acres, to which they would let squatters share crop and work the land.
We didn't have market forces we have now. This is not apples to apples comparison.

Our economic paradigm does not compare to anything that precedes it. I think more people have more access to the ABILITY to make money than ever before.

I think ultimately you get to hung up on the idiosyncrasies of the fundamental differences we derive the same conclusion.

Sure I think we need a fair tax system, and one that taxes rich and corporations more of their share. We differ as to why, and how we should use that money.

I think like the taxes, the services they pay for should also be a flat usage across the board. Meaning you use the roads or use the healthcare, your fair share was accounted for in your fair tax.

How ever, I'm not in the camp, of taxing people that make more a premium to pay for services that only poor can use. It's just to easy for one party(I wont mention any names) to manipulate that demographic to keep them in their current social status, dependent on the services they provide.

It does nothing to better our society but creates a culture of entitled bums, like we have now, in all socioeconomic layers.

Taxes should provide Infrastructure, Postal, Education, Health all in house, with nothing to game and rig. No chance of fraud because it's not outsourced or contracted to the highest bidder, or no bidder as it normally were.

We should not be writing any class checks other than Social Security for the seniors or those that honestly earned it.

If you are poor and can't afford food or shelter, then there should a work pool for companies that need cheap labor. This would end the need for illegal labor. There would be no such thing as a job nobody in America wants.

That was the poor can work and pay their fair share of taxes too. Of course this would ultimately create a nation of day laborers, and large corporations would still win, because they wouldn't be hiring high earning skilled people. But picking up day laborers from the Federal jobs pool.

But hey it would all be Fair and on the up and up.

See how this works. In order to fix one thing to make it Fair, you skew it somewhere else and make it unfair for someone else. That someone else is almost always the middle class. Even if you tax the rich more, they'll find away to either make the middle class pay for it, or cut them out all together.

Why can't we just go back to the model that worked?
Where we use the road map that worked and was laid out for us decades ago. But this time, not talk about "Accountability" but "Accounting" and we hold people liable for those breaches.

"Accountability" is just a word, politicians use to misplace, until they need a scapegoat, in which that person gets a golden parachute after an admonishment and a wink from either a Senate or Congress committee.

Like Congress investigating Soylendra now, I don't expect anything to come out of that, but the key principals coming out even better for the effort.

The DOJ and the AG should be investigating these matters.

Fix the breach of the tax payers trust, with our government to spend our money in our best interest.
Then it would be a hell of a lot easier to get everyone on board for a conversation about how much to tax who. The way most see it now, we'd rather nobody pays any taxes, that's just crazy talk. But you know, it's better to take your chances than to bust your ass, so Bank CEO's can get your tax dollars.

6   TPB   2011 Oct 29, 6:16am  

So you want to make it a thankless task for anyone to get a head.
That's not very appealing.
As for your chart, I told you what that represents, that represents the top 1% that is going to be where they are regardless what the over all economy does. Their number stay constant, the problem is the lower lower make less money. Your graph does dick all to explain how taxation was administered to correct those trends. Any suggestion would be pure speculation that coincided with underlying social ills being corrected. Like monopoly busting, and Anti trust laws, that corrected the problems in the 20's.

We're experiencing the same problems now because those laws were laxed and regulation is non existent. It has nothing to do with taxes.

Now I know why you love graphs so much. You can use them for your choosing to assert any claim you want. With data and facts missing, it's just a pretty picture you can use to illustrate your disconnected point.

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