News Is a Flat Tax the Solution for American Taxpayers?

[kyleb]

there are most defiantly many reasons besides laziness, but my argument that discussing the reasons only takes time from resolving the issues. i think andrew14's point is very valid issue against taxing the wealthy harder, regardless of the fact that his argument was oversimplified. also, are you ignoring my question on purpose Zero?


and GENIERE, i still would like to hear about why you support sales tax only as opposed to income tax only; assuming you find your way back to participating in this thread that is.

 

[Zero]

Originally posted by kyleb
there are most defiantly many reasons besides laziness, but my argument that discussing the reasons only takes time from resolving the issues. i think andrew14's point is very valid issue against taxing the wealthy harder, regardless of the fact that his argument was oversimplified. also, are you ignoring my question on purpose Zero?


and GENIERE, i still would like to hear about why you support sales tax only as opposed to income tax only; assuming you find your way back to participating in this thread that is.

Laziness is the LAST issue to address, not the first. It is very nearly an invalid place to start, which is why I dismissed it.

As far as your question: I still don't get it?

 

[kyleb]

well if you are going to argue that we should pander to lazy people as long as there are other issues to deal with, i think you have stepped out of the bounds of reasonable logic; so i suppose i withdraw my question anyway.

 

[GENIERE]

Kyleb - Just for you.

Simply a question of efficiency.

Few people could argue that the present system is efficient, needing a large bureaucracy and enforcement system. The 101,000+ pages of taxcode are convoluted and subjectively interpreted to the benifit of those that can employ experts.

To repeat, any tax system can be regressive, flat, or progressive based on how it's structured.

With a sales tax, the seller or provider of a service would be taxed. Obviously there are far fewer businesses than individuals. They simply pay a tax based on receipts as they already do in most states. IRS Bureaucracy would shrink enormously, not to mention the HR Block type industry, corporate attourneys, and corporate accountants. All of which are paid by tax dollars however indirectly. I fail to see how that helps the poor among us.

Which Agency is Larger?
----------------IRS-----------FBI-----------Border Patrol

Annual Budget---$7.8 billion--$3.0 billion--$0.7 billion

# of Employees---100,551-------11,271--------6,848

Source: Department of Treasury, Internal Revenue Service, FY 99 Budget in Brief, for FY 1998. Congressional Research Service, for FY 1997

How Big is the Tax Code?

----------------------Numberof Pages---Number of Words

Internal Revenue Code-9,471------------5.75 million

Tax Code Regulations--91,824-----------1.3 million

Total Tax Law---------101,295----------7.05 million

War and Peace---------1,444------------660,000

The Holy Bible--------1,291------------774,746

Source: Commerce Clearing House, Standard Federal Tax Reporter, 1996. Commerce Clearing House, Standard Federal Tax Reporter, 1997. The Library of Congress, Congressional Research Service


Regards

 

[kyleb]

Originally posted by GENIERE
Kyleb - Just for you.

lol thanks GENIERE, i think you explained it for yourself as well though; or at least you get something out of it anyway because you made me a believer in the shift to a sales only tax system.

 

[Tog_Neve]

There are many comments I could make going back through this thread...but fortunately most were redirected later on...LOL

Kyleb -

the best i can tell, the rich pay less a percentage on income on tax as most people; what do you have against bringing balance to that?

I would be very interested in where you have come up with this idea? As income is increased in this country so is the tax percentage.

Have heard it stated before that 90% of the tax income is paid by 10% of the population. If you check the numbers you will find that to be true. I pay about 15% income tax which if I put it at a generous $2500. Now take a person who makes $1 mill a year. They are put in the 37% tax bracket and pay $370,000. It takes 148 people making what I make to pay the same amount that one person was paying.

And if you check the IRS statistics for even last year www.irs.ustreas.gov[/URL] you will find supporting information to the same. California last year had more returns filed with incomes greater than $1mill than any other state. California was also the largest in total collection than any other state.

As far as eliminating income tax and applying a sales tax. I see that as causing more harm than good. Granted it would be a more evenly spread tax and one that would be paid by all, rich or poor...and would be more of a usage tax. OUr current system does not really take into account standards of living for different area. Someone making $50K a year in South Dakota may be living high on the hog (so to speak) while the same in NYC is barely stepping out of a box under a bridge. But yet they pay the same percentage of taxes.
However sales taxes are hard to project. Peoples spending habits change. Thus attempting to balance a budget based solely on a sales tax would be difficult. Plus if it was to high it would slow down purchasing. I would start to think hard about buying that new car if there were an extra 10% added onto it for a tax. Instead thinking of the used car for a fraction of the cost and thus paying a fraction of the tax. And as you mentioned the possible reduction in accounting staff...Lots of jobs lost there. Then if it got to high as far a sales tax is concerned you could have increase in imported good of our own products. It could get cheaper to buy that new car in Canada and bring it back into the states than it would to buy it at the local dealer. Thus also causing a possible slow down in the economy and loss of jobs as well.
Your best bet for a sales tax would be to place a small (.25-1%) across the board for goods. It is small enough to not really deter anyone from making or breaking a purchase but yet large enough to bring in a heafty chuck of change to the budget.

One site has a thing up on their page [PLAIN]www.cato.org/pubs/pas/pa-272.html[/URL]. they are talking about a 15% sales tax. That would be totally outrageous. Her in my town we pay a sales tax of 8% as it is...then tack on another 15% and that Pepsi I was buying is now up to a $1.25. That new Kia that was priced at $10K is now $12.3K. Guess what? I am going to go buy that car in a state that has lower sale tax. And jack up the price of gas more as well. Tennessee has an average sales tax of 9.35% with a state running at 7%. They have the highest average in the nation. Add another 15% onto that. Remember a while back Folks in TN stormed the capital when they were talking about raising the sales tax again...what would they do if there was another 15% added on??

Just some thoughts on it. Sales tax has some merits but overall to many drawbacks to be effective or efficient. Plus overall the impact would not be worth it. Maybe a small amount that would not even really be noticed could generate a good bit of revenue to the fed...but the fed could not rely solely on sales tax because it is not a predictable amount.

 

[Dissident Dan]

OK, we have how much money it takes to run the IRS. How much do they take in? How much less would it cost to run the IRS with any proposed change? How much more/less would they take in with said proposed change?

 

[kyleb]

Originally posted by Tog_Neve
I would be very interested in where you have come up with this idea? As income is increased in this country so is the tax percentage.

understood, but also as capital is more readily available it becomes easier to find loopholes to avoid taxation; so while they have a higher percentage on taxable income, most have a lower much lower percentage of their income being taxed; at least that is what i have seen of it. however, i am interested in the statistics you were referring to. i dug around the site a bit but failed to come up with the information in question; any chance you could you provide a more direct link?

 

[GlamGein]

I have some questions about this flat tax if any of you are up to answering:

Why do Married people get a write-off or benefits or whatever? Please excuse my ignorance.
It doesn't seem fair that if a tax was to be equal, why should married people have to pay less?

As for Democrats not liking the idea, imagine what 17% is to a working single mother compared to the CEO of a big corporation. The CEO would have what, one less SUV or Airplane, while the mother would have less food for her child. Big difference there.

 

[damgo]

Like I think Njorl pointed out at the beginning of this thread, focusing on the complexity of the tax laws / cost of the IRS etc is a red herring. The amount of money they spend in trivial in comparison to the total amount of tax collected: ~2,000 billion a year. I would bet a lot of that 0.5% that goes to the IRS wouldn't be significantly affected by altering the tax code.

In any case, we can probably all agree that a simpler system with less loopholes and special provisions is desirable. Such a system could be basically identical to the current one, flat, sales, whatever.

For some background, here is one of the OMB's pages with a breakdown of US Federal revenue/spending. They are usually fairly non-partisan.
http://w3.access.gpo.gov/usbudget/fy2000/guide02.html

 

[Zero]

Originally posted by GlamGein

As for Democrats not liking the idea, imagine what 17% is to a working single mother compared to the CEO of a big corporation. The CEO would have what, one less SUV or Airplane, while the mother would have less food for her child. Big difference there.

A working single mother is LAZY, that's why she isn't a millionaire...haven't you read this thread?

 

[Tog_Neve]

kyleB

http://www.irs.ustreas.gov/taxstats/article/0,,id=102886,00.html
That one you will see that it shows "State with the highest number (of returns with AGI>$1 million) which is California.

http://www.irs.ustreas.gov/pub/irs-soi/02db06co.xls
Shows total gross IR collections
Showing California as paying $232,301,672,000 which is about $50 Billion more than NY (#2).

And would agree that with the increase in the income comes the ability to find more loopholes by hiring more accountants and the like.
But does not change the fact that even if they make a billion dollars but are able to report only a million then they are still paying as to the figures mentioned above...it would take 148 of me to equal the same amount as what that person paid.


Tog

 

[kyleb]

oh sure, more total but less %; when i say flat tax i mean not the same for everyone but get rid of the loopholes as well. however GENIERE has me sold on sales tax only now, that sounds like a really good system. oh, and thanks for the links.

 

[Dissident Dan]

http://www.irs.ustreas.gov/taxstats/article/0,,id=102886,00.html reports gross individual income tax collections as 1.178 trillion. Add in all the other tax collections, and you get 2.09 trillion.

http://www.cia.gov/cia/publications/factbook/geos/us.html reports the 2001 GDP at 10.082 trillion. Gross individual income tax collections are 11.6% of that. Total gross tax collections are 20.7% of that.

According to http://quickfacts.census.gov/qfd/states/00000.html, per capita money income in 1999 was $21,587. They estimate that there were 284,796,887 in 2001. If we use a figure of $22K per person, with 285 million people, we have $6.27 trillion. To get the $1.178 trillion out of a flat tax rate from that, you need a rate of about 28%. That's a hefty chunk of change for someone who makes $10K a year. Instead of $10K, he has $7200.

-------
EDIT

I messed up, it's 18.8%, or 19% rounded, that the tax rate would need to be for a flat tax to generate the same amount of income...it seems to me that a lot of people are evading their taxes..

Anyway, for someone who makes $10K/year, that would be reduced to ~$8100/year.

 

[Tog_Neve]

Geniere and Kyleb

You put out some statistics but let us examine them some more.

----------------IRS------------FBI---------Border Patrol
Annual Budget--$7.8b----------$3.0b----------$0.7b
# of Emp------100,551---------11,271---------6,848
budget/emp-----77,572---------266,169-------102,196
Avg Sal----------------approx 39,000/yr----------- (GS level 7 at about 6 years)
Showing that a larger percentage of budgetary funds is used to pay salaries in the IRS than in FBI or border patrol. Which is understandable...The FBI and Border Patrol have more hardware to maintain and such. Whereas the IRS is more of a simple people organization.

Lets look at those tax code numbers
-----------------Num Pages--------Num Words-------avg words/page
IR Code -----------9,471----------5.75 mil----------607
Tax Code Regs-----91,824----------1.3 mil-----------14
War and Peace-----1,444-----------660,000-----------457
Holy Bible--------1,291-----------774,746-----------600
So the IR code is about as condense as the Bible.

Now this is not stating that the tax code could use a revamp...even if structure is left the same the tax code could be cleaned up a bit. Many left over tid bits of things that are out dated and such...similar to laws in most states that have relevance for things 100 years ago but none now.

And Kyleb I fail to see how Geniere has brought forth anything that would show how benificial an elimination of income tax and bringing in sales tax would be benificial in any way. Maybe I missed it. But as someone else pointed out the sales tax would have to be in the range of 20% or more in order to cover the cost. Put that on top of your local sales tax as well and you could be paying close to 30% sales tax. That would be on pretty much everything sold...including the trip to McDonalds.

A sales tax based system for the federal gment is not stable enough to account for accurately. We evaluate the sales index on a monthly basis. And it changes monthly...sales go up and down depending on what is going on in the world, the time of year, and many many other factors. However you can accurately predict income for the nation. YOu can more accurately predict that if 95% of the nation is employed and making 30K per year then next year close to 95% of the nation will be employed and probably making at least 30K per year if not closer to 32K per year (raises to equal possible inflation index).

Tog

 

[Dissident Dan]

To advocates of a flat taxing rate:

Do you find it acceptable to make everyone pay 18%? That seems unreasonably high for people below the poverty line. It seems unreasonably low for fat cats whose companies require the SEC, EPA, Trademark and Patents offices, and various other government organizations to be run.

 

[russ_watters]

Originally posted by Dissident Dan
To advocates of a flat taxing rate:

Do you find it acceptable to make everyone pay 18%? That seems unreasonably high for people below the poverty line. It seems unreasonably low for fat cats whose companies require the SEC, EPA, Trademark and Patents offices, and various other government organizations to be run.

Yeah, I said that 2 pages ago, but it was conveniently ignored. Its always conveniently ignored.

 

[Njorl]

Originally posted by GENIERE
Njori - The average overpayment by taxpayers who do not itemize such things as motgage payments was less than $500.00 per the GAO. It seems unlikely that half would default for lack of about 1/2 months morgage payment. Those that might are likely to be under the income level of $35,000.00/yr. who would pay no taxes.


Regards

This is an illogical conclusion. Those who chose not to itemize usually know that their overpayment will be small. Most are in the late years of their mortgage. Someone in the first years of a mortgage would wind up paying about $3000-$6000 thousand more per year. That's $250 to $500 dollars a month. That is foreclosure for millions.

Njorl