Posted on 10/14/2011 6:40:56 AM PDT by SeekAndFind
For a number of years now, people have asked me whether I prefer a “flat tax” or a “fair tax.” Both are problematic.
The “flat tax” is typically conceived as a replacement for the existing personal income tax. This is fine, but it ignores the payroll tax, which is really just another form of income tax. So, it is only half of an income tax reform. In practice, quite a few countries have gone this route, beginning especially with Russia in 2001, and the results have been very good. These countries have generally replaced their income tax systems, but have kept what amounts to relatively high payroll taxes.
I would like to see a top-to-bottom income tax reform, which includes payroll taxes. Or, I should say, which does not include payroll taxes: I would like to see the payroll tax system eliminated entirely and integrated into a single income tax system. Neither Hong Kong nor Singapore, which are models of what can be achieved with a flat tax system (or nearly so in Singapore), have a payroll tax. The result is that taxation on the lowest incomes is very low, and the overall system has a high degree of progressivity despite modest top rates.
Hong Kong’s flat tax system, with no payroll or sales/VAT taxes, generates about 13% of GDP in revenue per year, with a top tax rate of 16%. This is quite good, and shows excellent efficiency and high compliance. However, 13% of GDP is still rather short of the 18.5% of GDP that the U.S. Federal tax system has generated over the past several decades. So, we would have to decide either to reduce spending considerably — which might be nice, but is a separate discussion — or generate more revenue somehow.
(Excerpt) Read more at forbes.com ...
Sorry this writer just showed himself to be and idiot. You would not be able to avoid the impact of an energy tax because it would show up in everything you buy. Prices at Walmart would go up because all of the goods are brought in by Truck. Prices at DisneyWorld would go up because all of those rides and exhibits use vast amount of electricity. Do you ride the bus or a train to work. The price just went up.
“Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius — and a lot of courage — to move in the opposite direction.” - Albert Einstein
No tax system seems fair if governmental spending is too high.
As hard as they have tried at times, Congress has never been able to change the tax system to make Federal revenues more than 20% of GDP. Federal Revenue has remained at 18 - 20% of GDP back to the origination of the income tax. Whenever they try to raise it more, markets and behaviour adapt and the government never really nets more income. The only thing that nets the Feds more is growth of the GDP.
Other than DennisR's comment, the entire thread is arguing over HOW to collect a tax.
Nobody is talking about HOW MUCH is acceptable.
Seems like, until we can all agree on what an "ALTERNATIVE MAXIMUM TAX" is, that all these plans are just book-selling vehicles.
Is it 10% of gross domestic incomes? Is it $40,000 per person? $50,000?
If you can't put a max on per person contributions, then we can't put a limit on government spending, or tax chicanery.
I’m not judging based on personal gain of any of the systems.
But under the Fair Tax I think I’d do worse vs. today’s system (assuming I actually spend everything I make...which I don’t). So I guess it would be ok. But then my State would need to switch to a higher sales tax as well as the income tax wouldn’t be viable. So that 23% would be more like 33% (assuming an 10% sales tax for the state).
Still not saying that’s a killer, but man that is inviting black markets. The 999 plan is better to me as it will reduce fraud and it doesn’t tax any one area of our economy with stifling high rates.
But just about anything is better than today’s system (even though I probably pay less under todays system). Today’s system is pay to play...Company/Union/People pay lobbyist. Lobbyist pays Politician. Politician passes laws giving company/union/people money from the tax coffers. Repeat cycle.
Fair tax fixes this as does a true flat tax (no deductions) and the 999 plan. Of course they will still lobby but it will be more transparent what they are getting as it will hit the governments budget as a payout and not hidden in a tax loophole.
But according to Boortz the 999 plan is a transition to the Fair tax. So if one prefers the Fair Tax, I’d think they’d support the 999 plan.
You have a good point, but I don’t think there should be a max tax per person. That’s crazy.
Instead we should (like this article did discuss) have a max tax based on GDP. What should our revenues be based on our GDP?
No one is talking about “cutting” the Fed budget!!
This fellow is grossly misinformed or deliberately misleading, Warning to others, don’t waste your time here, there is nothing worth reading.
Bitsy, we have that problem right now with our current tax code. These loons can raise/lower capital gains, personal marginal rates, corporate taxes....etc., at will by legislation with an agreeable President.
I have been saying let's do the flat tax but with significant congressional oversight that would put a lot of stopbap measures in place to prevent easy access/change to the rates. Super majorities, in other words.
lol.
Gale: All right, ya hayseeds, it's a good point. But it's crazy!
Feisty Hayseed: Well, which is it, young feller?
You think I have a good point or that I'm a crazy?
Mean to say, if'n I have a good point, I ain't a crazy.
And if'n I'm a crazy, I'm not a-gonna have a good point. You see...
Gale: Shut up!
Feisty Hayseed: Okay then.
Gale: Everybody has a good point!
Evelle: Y'all can just forget that part about bein' crazy now.
Gale: Better still to get down to the point.
Evelle: Yeah, y'all hear that, don't ya?
[Everybody makes a good point. Gale looks at the now-empty thread]
Gale: Shit! Where'd all the Freepers go?
Teller's voices: We're still here, sir.
Evelle: They're making their point as you commanded, Gale.
Oh, but there would be if the 'Rats were back in: they'd immediately start monkeying around with the simple concept to make it complicated in the name of their twisted notion of "fairness". Let's see, were to start: they'd exclude food and medicine from the sales tax, raise rates across the board with an emphasis on the corporate tax and reintroduce a bracketed income tax.
The only ways to make Cain's proposal entirely salutary involve Constitutional amendments: repealing the 16th and/or a Constitutionally required supermajority requirement for tax rate increases. I still like Cain, probably better than anyone else in the race (though Gingrich and Santorum would be fine, too, and I could take Perry or Bachmann), but as proposed 9-9-9 isn't entirely something I could get behind.
I agree.
And the enforcement against such black marketing will have to be that much higher than it is now.
Not to mention my philosophical and practical concerns over the prebate.
In fact, my biggest beef against the triple nine plan is that it is being touted as a middle step to the fair tax. I am fine with it needing to be tweaked over time, but not with that particular end game.
The author, Lewis, may be more or less on our side, but his preference for an energy tax over a sales tax is coastal urbanite prejudice. An energy tax shifts the tax burden to the heartland, and out in these parts is probably more regressive than a sales tax.
No need to. There is no necessary constraint.
Nobody talks about cutting a household budget until something happens...until a breadwinner loses a job, unexpected car repair, etc.
Needs to be some "rock and hardplace" pincer move around congress before a budget even has meaning.
I like some of your ideas, but you are talking about largely dismantling the Federal structure. Good luck with that....
YOU are flat out, bald faced LIAR!
The Fairtax does not require that anyone register for the prebate period! If they want a prebate check they must register to receive it and show that they are in the country legally and have a legal social security number.
The propensity for folks to engage in “black marketing” is in direct correlation to the pain involved in staying above board.
Keep that pain low, and there will be little black marketing.
As always the devil is in the details.
(Of course, that dictum suggests that with its layer upon layer of intricate detail, our present tax code is of demonic origin.)
I agree!
Most people in this country today have absolutely NO idea as to how much tax the REALLY pay and we are going to have GREAT difficulty getting spending under control until they do! The fairtax would make that abundantly clear to them and THEN we can get some REAL spending restraint on the federal government
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.