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Controversial, but I’ll say it anyway: the fairest tax is a flat tax. Take, say, 15% across the board for anyone making above a threshold. Then combine that wit

• spullara 8y ago
  The reason 17% is so often raised as the right flat tax is that it has been the effective tax rate since the 1950s. https://cdn.theatlantic.com/static/mt/assets/business/marginal%20rate%20revenue%20graph.png https://cdn.theatlantic.com/static/mt/assets/business/margin...
  • larrywright 8y ago
    Thanks for that link - I didn’t realize that was the case. I remember 15% as the number that Malcom Forbes proposed when he ran for president in the ‘90s.
    • spullara 8y ago
      That was one of the references for 17% I was talking about: https://en.wikipedia.org/wiki/Steve_Forbes#Campaigns_for_president_and_major_issues https://en.wikipedia.org/wiki/Steve_Forbes#Campaigns_for_pre...
  • harryh 8y ago
    A flat tax of 17% on incomes would not net the government 17% of GDP. The flat tax would have to be much higher (close to 2x) to achieve that same income.
    • spullara 8y ago
      Why? Looking at a sample year, like 2011, you find that total personal income was $13T, the GDP was $15.5T and total tax revenue collected was $2.3T. Probably need some more data to tease out corporate vs personal tax revenue but I don't think it will be too far from a ~20% effective tax rate to reach the required revenue.
      • harryh 8y ago
        Most flat tax proposals include a fairly generous deduction so the tax only starts above a certain level of income. That pushes up the % a lot. I agree that if you start the flat tax on the first dollar of income, then it doesn't have to be so high.
        • spullara 8y ago
          97% of federal income taxes paid are by people in the top 50% of income today (above 36K, as of 2012), you would probably have to at least match that. Given that, I think I agree. It would have to be 34% for the bottom 50% to pay nothing.
• dpcx 8y ago
  But not really. If the person who now makes 85k is struggling to survive on that amount of money (ignore the fact that it's 85k... it could be 40k after taxes for example), then while its "fair" in that they both pay their percentage, the person who is struggling to survive gets the worse end of the deal.
  • larrywright 8y ago
    Kind of. You could leave in the current credits you get for dependents, for example, so that a person making $85k with a wife and three kids doesn’t pay quite as much as someone making $85k and single. It’s hard to imagine how a single person making $85k would be struggling if they weren’t mismanaging their money, but I’m willing to be convinced otherwise.
    • bryanlarsen 8y ago
      It's not the brackets that make taxes complicated, it's the exemptions. And all current exemptions are in there for a reason, so once you start cherry-picking some exemptions, it'll be hard not to bring across most of them...
    • deleted 8y ago
      [deleted]
  • davidivadavid 8y ago
    You can implement it with a floor if you want, although that makes it less "fair" in a sense as well, I suppose.
  • BeetleB 8y ago
    >(ignore the fact that it's 85k... it could be 40k after taxes for example) According to the GP's scheme, it would be over $70K after taxes. Not the best example :-) Anyone earning $85K who has $40K after taxes really needs to get someone else to do their taxes.
• rayiner 8y ago
  That’s not really enough to fund the government at the current scale. I’m in support of a flat tax too, but to be revenue neutral (and still have a carve out for low incomes) it’s have to be like 30%.
  • harryh 8y ago
    Super curious why you support a flat tax over our current progressive system.
    • rayiner 8y ago
      I think the “tax the rich to pay for services for the middle class” trend in our politics is not conducive to unity and stability. A flat tax would lessen the desire to increase taxes since everyone would have to bear an increase.
      • geofft 8y ago
        Wouldn't that only work if there were some difficult-to-overcome mechanism (like a constitutional amendment) mandating a flat tax but letting the percentage vary easily? If you don't have that, a flat tax is going to lessen the desire to increase the flat tax rate, but it isn't going to do a thing to the desire to re-implement a progressive tax.
        • rayiner 8y ago
          We’ll never get a flat tax, so this is kind of under the assumption that we somehow get and maintain one.
      • tptacek 8y ago
        Wait, isn't that sort of empirically untrue? We were less polarized when our tax code was much more complex and onerous than it is now.
        • rayiner 8y ago
• ball_of_lint 8y ago
  That's certainly fair in some senses, but if you consider money per household to be of decreasing marginal utility (your first 10k of income is a much larger jump in quality of life than your 15th 10k) then a tax that is fair based on utility rather than percentage or dollar amount is progressive.
• lovich 8y ago
  I heartily disagree. The value of a dollar to a billionaire versus someone making minimum wage is drastically different. When you are scraping by, that 15% comes out of money you need to survive or to prepare for emergencies. When you are making 10 million + that 15% is for luxuries, you're not going to be going to bed hungry or skipping medication because of it. The defense I always see brought up for a flat tax against this, and I see in this thread already, is to implement a floor. If you've done that you've already got tax brackets with different names. I am for getting rid of all exceptions and just making brackets based on income coming in which would include wages, capital gains, inheritance, etc.
  • larrywright 8y ago
    I’m not comfortable with the idea that you should just take more of someone’s money just because someone thinks they don’t need it. There’s nothing wrong with implementing a floor, either. We effectively have one today. If everyone above the floor, extending all the way to infinity, pays the same % it’s a stretch to call that a bracket.
    • lovich 8y ago
      I don't see it as a stretch, it's putting people into different buckets which is just another word for a bracket. >I’m not comfortable with the idea that you should just take more of someone’s money just because someone thinks they don’t need it. I understand that view and believe I share it. The modifier is that I don't think you can ascend to the uber rich tier of society without having had siphoned off value from society. At that point I don't think you should be taxed more just because you don't need it but because you are obligated to pay back into society and you are the one who can shoulder the burden.
      • splintercell 8y ago
        > The modifier is that I don't think you can ascend to the uber rich tier of society without having had siphoned off value from society. That's cart before the horse. Siphoning implies stealing. Then you're justifying your theft from those individuals. Value is created, and of course theft is possible, but you'ren't talking about theft, you're claiming that people just should pay more because of the virtue of having more.
• Rooster61 8y ago
  I'm for an approach closer to the Fair Tax, in which every taxpayer receives a stipend back that is an amount reasonably useful to a lower-class household and utterly useless to the super rich. Totally flat taxes tend to be regressive due to ignorance (not stupidity, very big difference) of those in the lower brackets of how to effectively handle money, and the much larger number of choices the rich have to spend their money. The more money you have, the more you can pick and choose how to spend it effectively. It's tough to do that when you are paycheck to paycheck. It's not a perfect solution, but it would tamp down considerably on loopholes. It's hard to bypass a tax paid upon consumption/service.
• geofft 8y ago
  Why exactly should taxes be "fair"? I think that whole line of argument is what gets us into the world that Intuit and H&R Block love, where we say, taxing charitable donations is "unfair," but who counts as charitable, but what about donations to your own foundation; taxing medical expenses is "unfair," but only in certain ways; taxing married couples is "unfair," but what about couples whose marriage isn't federally recognized but is state recognized, taxing the value of a research grant paying for a grad student's tuition is "unfair" if they're not even making as much money as the tax, but taxing in-kind donations generally is fair, etc. etc. etc. (It also carries with it the assumption that whatever wage you make in the first place is "fair" - that if you make $10/hour making food or $1000/hour laying people off, some process has already called that "fair" and you trust its results. There are, of course, arguments that this is right, but personally I think that's a little questionable.) The purpose of tax policy IMO is to engineer the society we want to see. We want to see a society where government is funded decently. Not too little, presumably not too much either. We also want to see a society where people who do productive things do not say "Forget this, I'm out" and move elsewhere, so (for instance) a 100% wealth tax on assets over $1M is out. This clause starts to resemble a fair tax, because the most effective emotional argument is "You can't tax me like that, it's unfair." But that's not actually the practical argument. The practical argument is "If you tax me like that, I would prefer to uproot my life and move to another country" or "If you tax me like that, I will instead choose not to be productive in ways I would have otherwise been productive, and the cost to society is a net negative." Once you think about it like that, it turns out you can tax the person who makes $1M/year significantly more than 15% before they threaten to move out, and certainly before they threaten to be less productive in meaningful ways (underemploying themselves, hiring fewer people, etc. - they're still going to have an inherent drive to do well for a while). So you have relatively little downside up to some percentage, and you have steadily increasing revenue for society. (Plus, as a bonus, you mess with the income inequality curve.) So you may as well increase that tax rate. And there's an argument that this is, indeed, the most "fair" - otherwise you are letting money go underused, because the person making $1M/year doesn't strongly care, and an effective government program is underfunded.
• SamReidHughes 8y ago
  Your proposal is unfair because it lets poor people mooch off everybody else. What would be fair is if everybody pays exactly the same amount of tax. (If that seems impractical, cap it at 50% of income and treat the unpaid portion as debt, to be paid back later, with interest.)
• RhysU 8y ago
  I heartily agree. Suppose a 20% flat income tax. One fifth of everyone's working hours ostensibly goes to the public good. Now consider progressive schemes: Why should some folks send one tenth of their time to the government while others send (incrementally) four tenths? Time is what matters. We're all dying here.