6 ms·

Sounds great, except a flat tax rate is extremely regressive so you either tank the amount of tax revenue the government collects, or you punish low income earn

Sounds great, except a flat tax rate is extremely regressive so you either tank the amount of tax revenue the government collects, or you punish low income earners far more than wealthy individuals.

efitz 3y ago
The regressive aspect of it is offset by the large standard deduction.
- halestock 3y ago
  That still won't solve the issue. The reason for progressive taxation is that there simply isn't a tax rate that allows you to both sufficiently fund the government and doesn't punish low income earners. The gulf between what the lowest and highest earners make is simply so vast that you can't do it without progressive taxation.
  - efitz 3y ago
    I disagree. “Funding the government “ is a policy decision; everyone needs to live within a budget. Secondly, eliminating all deductions except a standard deduction actually increases funding by avoiding the situation where megacorps don’t pay any taxes.
  - dragonwriter 3y ago
    > The reason for progressive taxation is that there simply isn't a tax rate that allows you to both sufficiently fund the government and doesn't punish low income earners. Sure there is. After eliminating deductions and special treatment (including, e.g., for capital gains), do a flat income tax at the current maximum marginal rate with a standard exemption at the level that results in the same median total tax rate as currently. You'll more than make up on the high end the revenue you’ll lose on the low end. Of course, all actual flat tax proposals are designed to be massive tax cuts, especially for the rich, which is why they tend to feature a flat rate that's similar to the marginal rate for one of the lower brackets. Do that and you can't pay for much government.
orangepurple 3y ago
Wealthy Democrats living abroad do not file US tax returns and the IRS never goes after them because they are friends with the leadership back in the country.
- halestock 3y ago
  [citation needed]
  - orangepurple 3y ago
    Hearsay from my friend who lives abroad and who was attending a Democrats abroad function and they kicked him out of the meeting after he suggested that they pass a rule that anybody who could be eligible to be elected to the board of directors should be able to pass a basic tax audit. There was support in the audience but the organizers immediately banned him. There are stories of the IRS being used as a political weapon floating around online as well.
    - thfuran 3y ago
      There are stories of alien abductions floating around online as well.
      - orangepurple 3y ago
        You're right my story is completely implausible
        thfuran 3y ago
        That's not my point. My point is that "there's stories of X floating around on the Internet" is basically the opposite of evidence.
peter303 3y ago
My state has flat tax rate of federal taxable income (after deductions). Most years its free online filing and typing 5 or 6 numbers. Takes five minutes. The tax softwares dont like that because they get half their income from state filings. I dislike that I dont get the long term capital gains discount like on federal.
laurencerowe 3y ago
Wealthy individuals already pay a far lower rate of tax on their income from investments than employees do on earned income. For a single filer in 2023 the standard deduction is $13,850. After that income is taxed differently. Income tax rates for single filer earned income (excludes social security tax of 6.2% each for employee and employer up to $160,200): 10% $0 to $11,000 12% $11,000 to $44,725 22% $44,725 to $95,375 24% $95,375 to $182,100 32% $182,100 to $231,250 35% $231,250 to $578,125 37% $578,125 or more Long term capital gains tax rates paid on most investment income (excludes 3.8% NIIT of 3.8% for those with income over $200,000): 0% $0 to $41,675 15% $41,676 to $459,750 20% $459,750 or more It's perfectly possible for a flat tax to be far more progressive than the tax system today, though its rate would be far higher than 20%. The highest effective marginal tax rates are often faced by those on lower incomes as the various transfer programs (earned income tax credit, medicare, healthcare subsidies, etc.) have uncoordinated phase outs. In 2012 it was particularly egregious and effective marginal rates approached 100% for those earning around $20,000. https://johnhcochrane.blogspot.com/2012/11/taxes-and-cliffs.html https://johnhcochrane.blogspot.com/2012/11/taxes-and-cliffs.... Personally I think it would make more sense for everyone to pay a flat tax of say 50% paired with a basic income for all (including children) and publicly funded healthcare.
- throwaway5959 3y ago
  I’d be paying over 65% in California. I would quit my job the next day.

Sounds great, except a flat tax rate is extremely regressive so you either tank the amount of tax revenue the government collects, or you punish low income earners far more than wealthy individuals.

efitz 3y ago

The regressive aspect of it is offset by the large standard deduction.

halestock 3y ago
That still won't solve the issue. The reason for progressive taxation is that there simply isn't a tax rate that allows you to both sufficiently fund the government and doesn't punish low income earners. The gulf between what the lowest and highest earners make is simply so vast that you can't do it without progressive taxation.
- efitz 3y ago
  I disagree. “Funding the government “ is a policy decision; everyone needs to live within a budget. Secondly, eliminating all deductions except a standard deduction actually increases funding by avoiding the situation where megacorps don’t pay any taxes.
- dragonwriter 3y ago
  > The reason for progressive taxation is that there simply isn't a tax rate that allows you to both sufficiently fund the government and doesn't punish low income earners. Sure there is. After eliminating deductions and special treatment (including, e.g., for capital gains), do a flat income tax at the current maximum marginal rate with a standard exemption at the level that results in the same median total tax rate as currently. You'll more than make up on the high end the revenue you’ll lose on the low end. Of course, all actual flat tax proposals are designed to be massive tax cuts, especially for the rich, which is why they tend to feature a flat rate that's similar to the marginal rate for one of the lower brackets. Do that and you can't pay for much government.

orangepurple 3y ago

Wealthy Democrats living abroad do not file US tax returns and the IRS never goes after them because they are friends with the leadership back in the country.

halestock 3y ago
[citation needed]
- orangepurple 3y ago
  Hearsay from my friend who lives abroad and who was attending a Democrats abroad function and they kicked him out of the meeting after he suggested that they pass a rule that anybody who could be eligible to be elected to the board of directors should be able to pass a basic tax audit. There was support in the audience but the organizers immediately banned him. There are stories of the IRS being used as a political weapon floating around online as well.
  - thfuran 3y ago
    There are stories of alien abductions floating around online as well.
    - orangepurple 3y ago
      You're right my story is completely implausible
      - thfuran 3y ago
        That's not my point. My point is that "there's stories of X floating around on the Internet" is basically the opposite of evidence.

peter303 3y ago

My state has flat tax rate of federal taxable income (after deductions). Most years its free online filing and typing 5 or 6 numbers. Takes five minutes. The tax softwares dont like that because they get half their income from state filings. I dislike that I dont get the long term capital gains discount like on federal.

laurencerowe 3y ago

Wealthy individuals already pay a far lower rate of tax on their income from investments than employees do on earned income. For a single filer in 2023 the standard deduction is $13,850. After that income is taxed differently. Income tax rates for single filer earned income (excludes social security tax of 6.2% each for employee and employer up to $160,200): 10% $0 to $11,000 12% $11,000 to $44,725 22% $44,725 to $95,375 24% $95,375 to $182,100 32% $182,100 to $231,250 35% $231,250 to $578,125 37% $578,125 or more Long term capital gains tax rates paid on most investment income (excludes 3.8% NIIT of 3.8% for those with income over $200,000): 0% $0 to $41,675 15% $41,676 to $459,750 20% $459,750 or more It's perfectly possible for a flat tax to be far more progressive than the tax system today, though its rate would be far higher than 20%. The highest effective marginal tax rates are often faced by those on lower incomes as the various transfer programs (earned income tax credit, medicare, healthcare subsidies, etc.) have uncoordinated phase outs. In 2012 it was particularly egregious and effective marginal rates approached 100% for those earning around $20,000. https://johnhcochrane.blogspot.com/2012/11/taxes-and-cliffs.html https://johnhcochrane.blogspot.com/2012/11/taxes-and-cliffs.... Personally I think it would make more sense for everyone to pay a flat tax of say 50% paired with a basic income for all (including children) and publicly funded healthcare.

throwaway5959 3y ago
I’d be paying over 65% in California. I would quit my job the next day.