First of all, any model that shows a significant increase would never fly. Some models show very little change. Most models have the same or similar standard deduction and exemption levels we currently use, but only have one marginal tax rate, and all other deductions are removed. It could be said, the middle class and rich are affected more by it. Some will pay more, some will pay less. The poor will seldom pay anything different. The rich have deductions up the yin-yang they take off then pay taxes at a higher margin, but on less of a percentage of their income. The middle class also often deduct retirement plans, medical, education, interest on loans, etc. They also generally pay a 25% or higher margin. The idea of a flat tax is to make things simpler and more fair.
Last time I saw a calculation of it, the rate was 17%. That was in the early 90's however. The standard deduction and exemptions for a family of four was at $30,000 also. More than what was in place at the time. This was to account for the 2% increase in the marginal rate, and then some to make it attractive. I don't advocate making more people pay nothing however. When 51% of the population pay no extra money on tax increases, watch your wallet and arm yourself. Time for a revolution.
Speaking of the poor paying taxes, I say they should. Not because I want them to pay more, but because I want them to have a reason not to raise taxes on the rest of us. It's just not fair to have 47% of the tax payers pay no income tax, and be voters who can say "yes, raise taxes" when tax increases are talked about.
Some thing I have advocated more than once is to do a one time mandatory wage increase on all workers who pay payroll taxes (social security and medicare). Most of us see the 6.2% and 1.45% come out of our checks. What some of you don't know is that the employer matches this to the federal government, so they get 15.3% of your wage level. Say you make $100 per day. (simple for calculation) After you pay the payroll taxes, you have $92.35 per day. You would now get enough more with a mandatory wage increase to still make the $92.35. This would make a mandated wage increase of 7.65%. This 7.65% would take that $100 to $107.65. Once both sides of the tax are paid, and seen by the employee (taxpayer,) they see what they really pay. Oh, I forget. When you apply the new rate of 14.213% to the $107.65, the payroll tax is now $15.3 per $100 instead of $7.45. The employee still gets the effective $92.35 per day, but now sees nearly all the tax paid that goes to the feds on his or her behalf.
This concept also needs a change in name. We rename the tax to something like "Social Tax." We can maintain the current income tax system, go to a flat tax, etc. However, what ever we do. When tax rates are to be raised or lowered, the other systems stay the same, and this new social tax increases or decreases so that everyone has a share of burden. We need some type of restrain on the voters to beep taxes manageable, because we all know.... Congress won't!
I didn't double-check my math, but I think you all get the idea.
Reply With Quote
That's just one example of the special interests at play throughout our tax system. Let's give a tax break for going green...oh, and if you celebrate your newfound efficiency by buying a Chevy Suburban we'll give you a tax break as well.
). And state income tax deductions for those of us living in states that tax our income would be nice as well. Let's not forget the influence that religion has on national politics. Those of us who he will absolutely want that 10% of our income we give the Church credited back to us as a reduction of our taxable income. And if I donate appreciated property I'll want that deduction as well. If I'm selling a long-term asset it sure would be nice to pay a lower capital gains rate, plus I'm stimulating the economy by turning over assets several times rather than holding them to avoid tax. If I'm over a certain age (but still able to vote remember!) I'll need a special tax break too! And the list goes on and on.
