US Flat Tax Rate

[JerryL]

The Cato Institute once proposed something similar at 17% as I recall.
But the amount isn't really the issue, is it?
That would be in the "to be determined" category.
Whatever the result, it would beat the roughly 50% marginal rate I pay for Schedule C income.
(Fed income tax + Fed self employment tax + state tax)

$X is taken from a population of Y people.

There's nothing at all you can do in terms of tax code to change $X. The overall burden is not at all effected by tax code.

You *can* distribute the burden among Y people in different manners.

As someone in the upper-half of incomes: you advocate this tax plan because it lowers your personal tax burden.

Since this is done without changing the average/sum, this must be done at the expense of raising someone else's taxes.

Since you believe the rich will pay less: who will pay more?

 

[Revoltingest]

OK. That's your assertion.
Now: Show your proof please.

Proof:....
Would anyone knowingly invest money in a stock which will never yield dividends?
No....such people do not exist.
(This ignores rare exceptions such as stock certificate collectors.)
They know that a stock which would never gives a return on investment would be worthless.
But we know that investors do buy stock.
Investors have one or both of the 2 following expectations.....
1) They'll receive dividends.
2) The expectation of future dividends will increase the stock's value upon sale.
Both of the above depend upon getting dividends.

 

[Revoltingest]

$X is taken from a population of Y people.
There's nothing at all you can do in terms of tax code to change $X. The overall burden is not at all effected by tax code.

This is a false premise.
(Btw, you mean "affected", not "effected".)
The tax code is an important consideration in investment decisions.
A code which discourages investment & productivity will see a lower value of X than one which encourages them.

 

[JerryL]

This is a false premise.
(Btw, you mean "affected", not "effected".)
The tax code is an important consideration in investment decisions.
A code which discourages investment & productivity will see a lower value of X than one which encourages them.

X is the budget of the government.

Please give an example of a tax code that changes the budget of the government.

 

[Revoltingest]

X is the budget of the government.

OK....that's different from what I inferred & what you said.
This is past being tiring.
I need a hiatus.

 

[JerryL]

Proof:....
Would anyone knowingly invest money in a stock which will never yield dividends?

You seem to have confused "proof" and "conjecture".

Do you have any proof?

BTW: Here's some people advocating and discussing those who buy stocks with no plans to ever offer dividends.
What is the incentive to buy a stock without dividends?

 

[JerryL]

OK....that's different from what I inferred & what you said.
This is past being tiring.
I need a hiatus.

Get some sleep. I doubt the forum is going anywhere.

 

[Acim]

Because taking out of one persons food budget and the other person's art-collecting budget is inherently harder on the former than the latter. You are hurting the poor in a way and to a degree you are not hurting on the rich.

This ignores the $0 being paid by the poor. And the same type of rhetoric could be said about anything the poor would buy other than food (and rent/housing payment). So, if poor person wants to go watch a movie in a theater, it is inherently disproportionate for society to charge poor people for that because you are taking out of their food budget, whereas with non-poor people you are not. Or so the spin suggests.

The claim is ignorant and not supported by fact.

If they can't lease, then they can't purchase. Interesting that you think a purchase is possible, but leasing not.

Leases last 2-4

On cars that are likely under warranty.

You just really have no comprehension of how the finance industry treats the poor.

You clearly have no reasonable rebuttal and instead have to make it about me to have any leg to stand on.

Hey let's ignore the $0 paid by the poor and yet base our whole point on that, implied you, early on.

Subsidized insurance is a great thing. It's hardly the only issue.

In today's world, healthcare would be in top 3 expenses for most people. Housing number 1 I would think and healthcare number 2. If I'm telling you I've had insurance with $0 in premiums, and $0 in co-pays, and you're telling me I have privilege and no comprehension of how the poor are treated, then I'm pretty sure you're missing a number of things in the discussion. The $0 being paid in income tax by the poor being the most pertinent.

I recall decades ago traveling to West Africa (before I was 18). Poor there, vs. poor here is apples and oranges and recall thinking that often upon return. Poor there would not be remotely considering what type of car might I be able to finance in order to get to work that day. Poor here would be considering which Air Jordans might I get this year, because obviously you need the latest and greatest tennis shoe. I mean, we are talking about clothing your foot, so obviously that's crucial. Poor here, in this thread, is earning anything under $25,000. By that standard, I've been poor more in my life than the next step up, and yet, have memory of being moderately wealthy often, which I attribute to the trip to Africa where I observed actual poor, not the American version.

And you'd be surprised how expensive even a negotiated bone-marrow-transplant or NICU-stay is.

I highly doubt I would be surprised. I'd think it vastly over-inflated in cost, and would be surprised if either was had for $10,000 or less. We can have the debate on healthcare costs (preferably in another thread) if you think I'm ig'nant on the topic. I don't think I am.

Or food. Or clothing. Or school supplies for your children.

All of which $0 for the poor in income taxes would help.

OK. Well. That put a bunch of people out of work. So you can cut them from the tax rolls and start financing that free medical insurance for them you were mentioning you were fond of.

Then they will vote the people who did it out of office and no matter what your plan was, it's derailed.

Next?

There is no next. If poor people have to cut expenses on rising costs, then government has to learn to do the same. I would say this is glaringly obvious at this stage of American history. The trillion dollar debt being fairly key indicator. Thing with government is it all becomes justifiable and crucial once spent. Yet, when observed (by I think literally everyone) it is well known to have pork galore. So, to then say we can never ever touch the pork because someone will lose their job, is like a poor person being told they can't get the 55 inch screen TV, but they do anyway and now don't have money for food, clothing and school supplies for children and blaming those people who charge so much for 55 inch screen TV's, knowing that there are poor people that will want need them.

 

[JerryL]

This ignores the $0 being paid by the poor. And the same type of rhetoric could be said about anything the poor would buy other than food (and rent/housing payment). So, if poor person wants to go watch a movie in a theater, it is inherently disproportionate for society to charge poor people for that because you are taking out of their food budget, whereas with non-poor people you are not. Or so the spin suggests.

False equivalence fallacy.

If they can't lease, then they can't purchase. Interesting that you think a purchase is possible, but leasing not.

I know for a fact that the credit requirements are lower for a purchase than for a lease (though usually with money up-front). The underlying reason is mostly about risk for the lender. The leasing company takes on far more risk than the loan company for a purchase.

You clearly have no reasonable rebuttal and instead have to make it about me to have any leg to stand on.

Hey let's ignore the $0 paid by the poor and yet base our whole point on that, implied you, early on.

In today's world, healthcare would be in top 3 expenses for most people. Housing number 1 I would think and healthcare number 2. If I'm telling you I've had insurance with $0 in premiums, and $0 in co-pays, and you're telling me I have privilege and no comprehension of how the poor are treated, then I'm pretty sure you're missing a number of things in the discussion. The $0 being paid in income tax by the poor being the most pertinent.

I recall decades ago traveling to West Africa (before I was 18). Poor there, vs. poor here is apples and oranges and recall thinking that often upon return. Poor there would not be remotely considering what type of car might I be able to finance in order to get to work that day. Poor here would be considering which Air Jordans might I get this year, because obviously you need the latest and greatest tennis shoe. I mean, we are talking about clothing your foot, so obviously that's crucial. Poor here, in this thread, is earning anything under $25,000. By that standard, I've been poor more in my life than the next step up, and yet, have memory of being moderately wealthy often, which I attribute to the trip to Africa where I observed actual poor, not the American version.[/quote]
There isn't a single thing on-topic in there.

All of which $0 for the poor in income taxes would help.

Ok. Let's make taxes 0% for the bottom 95% of tax payers.

Oh? That's not something you support?

Then the problem you'll find is that the issue isn't binary... it's on a spectrum. The problem the extremely poor face relative to the rich is the same, but more exaggerated, than the middle-class face relative to the rich.

By saying $0 for the poor: you agree we need a progressive tax. Then you immediately abandon it at whatever your threshold cut-off is arguing that a progressive tax is bad. Your position is self-contrary.

There is no next. If poor people have to cut expenses on rising costs, then government has to learn to do the same. I would say this is glaringly obvious at this stage of American history. The trillion dollar debt being fairly key indicator.

That is an entirely different topic.

The question at hand isn't "how much tax do you collect?", the question is "how do you distribute that collection".

 

[Acim]

If I tax everyone the same amount (say $20,000)... that's "equal" right?
What if I tax everyone the same percentage (say 15%)? That's a different number. They can't both be "equal"?

A percentage would make it equal, a specific dollar amount would not. The impact will be different because taxation is inherently repressive. No typo this time. We are talking about a mandatory expense, one you say if you don't pay, you are likely to go to jail.

With all other expenses you bring up, that's not the case. So, if you don't pay food, clothing or medical expenses, you don't go (directly) to jail, but still there are consequences. With food, clothing and housing, I'd call those necessities. Healthcare (in an expensive market), I would not. Still if you need healthcare to save your life, then its necessity, but this is literally another debate because of what is justified as necessity. I'm sure anyone reading this can think of necessity items in healthcare, and then other items where it would be debatable. I would say the fact is, if you are truly poor and aren't facing actual medical emergency you learn to live without medical treatment. You learn to live without a bunch of things that rich people literally take for granted, and seemingly some of them get so bent out of shape if they can't have it just perfectly, they are almost in 'need' of psychiatric treatment. IMO, this type of discussion deserves more attention than simply sloughing it off to idea that poor people require medical attention like everyone else. The idea of what's truly required is the debate I'd want to have, instead of assuming one is ignorant if they don't agree on all such requirements. Personally, if getting into that in spiritual/philosophical way, I'd pity those who stand by idea of requirement and necessity. IOW, you'd lose the debate.

The reason that "flat" is "regressive" is, too, mired in the issue of what is and is not "equal".

I see this assertion as odd. I think equal can be had until deductions become part of the picture, which a poor person is not going to reasonably be involved in (much if at all), and thus are being used as political pawns on the regressive tangent. Methinks, if we went with 0 tax on people making under $150K, and flat tax thereafter, that a similar game would be played. That the rich (over $150K) aren't paying 'their fair share.' That we need to tax them even more, to cover all the crucial things government is involved in, otherwise people will become poor, out of work, destitute, in jail, etc.

So. If you made $50k; and that $50k was taken from your paycheck for medical bills. You got $0, and you owe the government $2,500 you don't have, and likely are about to go to jail.

Then you go to jail. $50K in medical bills is a lot. If absolutely necessary to save one's life, then hard to argue against, but under such a scenario, housing and food are going unpaid, so taxes become truly repressive, and unnecessary. Goal ought to be for that society to lower medical expenses. I'd start by getting rid of privately paid insurance in such a system. I'm not saying that will solve the problem, but have rationalized through the topic enough to realize such insurance is huge contributing factor to the problem, because everyone in that market treats insurance as - I paid nothing! So, why not then charge $80 per pill while in a hospital when same pill is $4 outside of hospital? Don't worry, your insurance will cover this pill. Oh, btw, this pill has side effects that will guarantee you need more of our services at some point. Yeah, we're good like that.

 

[Acim]

False equivalence fallacy.

Prove it.

I know for a fact that the credit requirements are lower for a purchase than for a lease (though usually with money up-front). The underlying reason is mostly about risk for the lender. The leasing company takes on far more risk than the loan company for a purchase.

And I know for a fact that a poor person can lease a vehicle. And interesting how you bypassed my point on American version of poor compared to other nations. The idea that a poor person would even consider purchasing a car (for $5000) makes me wonder if we are talking about actual poor people.

Ok. Let's make taxes 0% for the bottom 95% of tax payers.

Oh? That's not something you support?

No, I would support that. I'd go as high as 100%. I'm guessing you don't support that. So, trying to throw a scenario in my face, I hope you can take it, while dishing it out.

I'm guessing we'd disagree on the rate at which the taxpayers who are paying ought to pay from their income. Me seeing it as repressive, I'd be advocating for finding loopholes galore if going above say 20%.

Then the problem you'll find is that the issue isn't binary... it's on a spectrum. The problem the extremely poor face relative to the rich is the same, but more exaggerated, than the middle-class face relative to the rich.

And I would say the problem you are getting at isn't resolved through taxation, nor does it have much to do with it, if spectrum type rhetoric is being considered. Here in this thread, we are saying people at a certain income level pay $0 in income tax. That the poor is even coming up in this discussion strikes me as using them as a political pawn for other points being made, as if those are binary, and the poor represent the negative side of the binary position.

By saying $0 for the poor: you agree we need a progressive tax. Then you immediately abandon it at whatever your threshold cut-off is arguing that a progressive tax is bad. Your position is self-contrary.

I agree it self-contrary. I prefer 100% non mandatory taxation. Yet, I will hold discussions with people who don't have that ideal in mind, and have other ones, all of which seem to rest on taxation is a necessary requirement of society, and not paying it is worthy of punishment. I don't think we need taxation, nor do I think (progressive) tax is relatively bad. I think it is inherently bad, but I'm willing to adapt my position for sake of discussion.

The question at hand isn't "how much tax do you collect?", the question is "how do you distribute that collection".

Where in OP is this question mentioned? Or is this you invoking an entirely different topic than one OP brought up? Answering your question will obviously be based on a spectrum, which includes a whole lot of variation in items up for discussion, and all of that will introduce tangents that if we go on the ones you don't want to, then "that's an entirely different topic" and "moving the goalposts" gets to be part of your defense strategy for how this topic is to be properly discussed.

 

[JerryL]

Prove it.

Prove your original claim.

And I know for a fact that a poor person can lease a vehicle. And interesting how you bypassed my point on American version of poor compared to other nations. The idea that a poor person would even consider purchasing a car (for $5000) makes me wonder if we are talking about actual poor people.

You aren't just equivocating my claim, but also your own. Another fallacy.

No, I would support that. I'd go as high as 100%.

I agree then. 0% for the bottom 95% of taxpayers and 100% for the margin would not be regressive. I don't think it's *good*, but I certainly concede it's not regressive.

It's not the OP's suggestion; but I guess you and I are done given your example. Have a great day.

 

[Revoltingest]

I've posted this before, but I'll do so again because it illustrates the importance of incentives.....
Two gals I know were once single mothers with young kids.
Each had a good job, but still needed money. They applied
for government aid. The social worker advised each to quit
their jobs because they'd get greater total income if they
were unemployed.
The poor shouldn't see work as something which has a low
or negative marginal rate of return. This is something both
the ultra-progressive & libertarian within me can agree upon.

 

[columbus]

Poor there would not be remotely considering what type of car might I be able to finance in order to get to work that day. Poor here would be considering which Air Jordans might I get this year, because obviously you need the latest and greatest tennis shoe.

You go off on some tangents I find annoying. But this is so true.
Listening to people in the USA complaining about being poor because their car is old and their cable TV got shut off makes one ill if you regularly work on projects trying to get basic food or medicine to people who are too poor to even know anybody with a private car much less own one themselves.
Tom

 

[Acim]

Prove your original claim.

You'd like me to prove that something "could be said" about what I said it "could be said" about it? Is that the proof, by argument, that you'd like me to prove?

You aren't just equivocating my claim, but also your own. Another fallacy.

Unsubstantiated. You're ceasing to be cogent in the thread. Given how off topic from OP you are, it's quickly arriving at point where you can be safely ignore in the topic discussion of this thread.

It's not the OP's suggestion; but I guess you and I are done given your example. Have a great day.

I'm not done, but apparently you never got started on the actual topic.

 

[Revoltingest]

Some basics......

Marginal tax rate....
This is the tax rate at the "margin", ie, the tax rate for each additional dollar you earn.
The marginal rate drives investment go or no-go decisions.
Example:
For upcoming years, you have an expected taxable income (after personal
deductions, eg, home mortgage interest, charitable donations) of $100K.
If you make $100 more, you'll pay $50 more in taxes.
Thus, your marginal rate is 50/100 = 50%
When looking at an investment in your business, your after-tax rate of return is what
matters because this is the money you can spend on yacht polish, caviar or vintage porn.
Your after-tax rate of return = 50% of your pre-tax rate of return.

Average tax rate.....
Using the above example, let's say you pay a total of $30K in state, fed, & self employment taxes.
Thus, your average rate is 30/100 = 30%.
This is the actual income tax burden you experience.

Problem....
When the tax you pay for investing additional money or effort is greater than your
average rate, this is a disincentive to do more because of diminishing returns.

 

[JerryL]

Here's the thing about taxes.

Taxes are zero-sum.

We are going to spend $X, so we need to collect $X from population Y.

You can move the burden around however you want, but you will have to average $X/Y per capita.

So whenever you say "we need to change the tax code"; you generally say "we need to raise some peoples taxes to lower the taxes of others".

So OP: Who are you raising taxes on?

 

[JerryL]

Some basics......

Corporate marginal tax rates actually go up *and down* as you move through the brackets. The rate on the top bracket ($18.3 million) is not the highest rate.

in fact: taxes on income over $18million are only 1% higher than on income between $75k and $100k.

When the tax you pay for investing additional money or effort is greater than your
average rate, this is a disincentive to do more because of diminishing returns.

As opposed to not investing with its $0 returns (negative if it's depreciable or suffers inflation)?

I mean yes; MBA school will teach you to focus on maximizing ROI; but for this to be a "disincentive", you need a better option to go to instead.

 

[9-10ths_Penguin]

Let's consider fewer points per post.

(Too much to keep track of.)
The reason they expect the future stock value to be higher is the expectation of dividends.

You're playing a game here....avoiding the issue that people buy investments to get a return on them.
One may get dividends, interest, rent, etc?
It strikes me that you're pretending that people buy index funds with no expectation of a return.
You won't call that return "dividends".
Why is that?

For a number of my investments, the return I expect is in the increase in price from when I buy until when I sell and that's it. Not all companies pay dividends to shareholders.

 

[Revoltingest]

Corporate marginal tax rates actually go up *and down* as you move through the brackets. The rate on the top bracket ($18.3 million) is not the highest rate.

in fact: taxes on income over $18million are only 1% higher than on income between $75k and $100k.

I'm avoiding such complexities when introducing basic concepts to the unfamiliar.

As opposed to not investing with its $0 returns (negative if it's depreciable or suffers inflation)?
I mean yes; MBA school will teach you to focus on maximizing ROI; but for this to be a "disincentive", you need a better option to go to instead.

Because most investments involve some risk, the better alternative might be to
park the money until a better day arrives, even if it means a loss due to inflation.
The concept of marginal tax rates driving investment decisions still applies.