A Flat Tax Isn't Simpler, Right?

[retire@40]

What about the family that has a small business or a farm worth 2 or 3 million, but only breaks even every year on cash flow?

Read the previous posts for the answer on this.

 

[Alan]

I don't see a need for a break for owning more than one home. Anyone that can afford more than one home does not need a special break.

No arguments from me. However I can see all the politicians with the thousands of lobbyists and special interest groups funding their election campaigns not following the advice of the likes of us.

I'm really just saying that I can't see any type of radical, simple, tax reform happening any time soon, whether it's a flat tax or a national RE tax or something else.

 

[deserat]

I think the US has a VAT tax, it's called sales tax, but it is just levied at the local level - it's a consumption tax - and for anyone who says a VAT taxes everything in the line of production - uhhh, well, I used to pay 16% VAT in Germany but it is now 19%----those taxes are filtered down to the consumer...always.

Notice I say the VAT used to be 16% but is now 19% - problem with the VAT is it can be raised and has been raised over the years - think about that - 20% of what you pay for a product is tax.....that's a huge amount. Oh, and they also tax income and property here in Germany.

The Europeans find ways to get around this - they come to the US with large suitcases to buy clothes and electronics - I don't buy clothes nor electronics in Europe - way too expensive. What is cheap here? Booze - well, beer and wine (except in the northern tier countries which have alcoholism issues with their populations - but then they just travel to more southern countries to purchase their libations) and certain German foods that are available in Aldi......

Fewer people have cars (gas is four times the price in the US), fewer people have smart-phones (although when I go to Brussels, I see a lot of people with iPhones and iPads, but then Brussels is analogous to DC in the US - the government bubble town) - I live in the country so more people have houses, but most people live in flats.

Plus, it is easier to administer and manage the taxes in a European member state merely due to scale....everytime I come back to the US I marvel as just how damn big the place is. To drive five hours in Europe I can be in Italy or southern France.....I can't get from southern FL to northern FL in that time let alone to the end of the panhandle - amazing......

Hmm - I guess I sort of highjacked the thread - I guess the bottom line is, taxes are a necessary evil, but just because it works well in one place or is based on a specific philosophy in another place doesn't mean it work well in the US. Plus, people will behave in ways to avoid paying the taxes....they do it here in Europe as much as they can get away with it.....witness the Greeks and Italians.

 

[MichaelB]

Well, I guess I was close to the mark in my previous comment. Flat tax is so ill-defined everyone concludes something different. The word "fair" is also being applied here. "Fair" and "tax" are mutually exclusive words that never should be used together.

Taxes are taxes. What we pay is (painfully) evident, what we receive is not, what others receive is clear as day - to us. They are the expression of unfairness, injustice and waste. That politicians can channel this into positive energy is an ability to be respected (and feared).

 

[haha]

+1

Keep the progressive rate structure, and get the rates down some by removing most of the deductions.

Statists usually reject this because one of the ways they can smack down high earners is the phaseout of deductions and tax credits with income thresholds.

Repeal the income tax and go 100% with a sales tax. Take the ensuing recession, and then enjoy a thriving economy without the extreme debt buildup for a very long time.

Ha

 

[Hamlet]

Sure, but we got pretty much exactly this in the the tax reform of 1986. I don't think it should be impossible to do the same thing again.

Get the R's to give up the "no new taxes ever" mantra in return for the D's giving up the "only raise taxes on the rich" mantra and we will be good to go.

Statists usually reject this because one of the ways they can smack down high earners is the phaseout of deductions and tax credits with income thresholds.

 

[Chuckanut]

Wasn't there a Chinese philosopher who said, "The more taxes you have and the more laws you have, the more tax evaders and lawbreakers you have."

 

[samclem]

I don't think it should be impossible to do the same thing again.

It's impossible now, but it will certainly be possible if political cards get reshuffled in an election. The two important questions would be:
1) Will the public be mollified by tinkering with the existing taxcode, or do they demand fundamental change to the way we raise revenue.
2) Whether we just ammend the current tax code or start anew, what mechanisms can be put into place to defend against a regrowth of tax code complexity? We had the reforms of 1986, and here we are with a still more complex and impenetrable system. No one can possibly understand all of the present law. Supermajorities, a constitutional amendment--something should be done to keep the tax code "clean" for the long term so businesses and individuals can plan, and so we don't end up here again. If we decide we need more or less money then change the tax rates, but can we please not try to use the tax code to micromanage the economy and people's behavior?

 

[harley]

Wasn't there a Chinese philosopher who said, "The more taxes you have and the more laws you have, the more tax evaders and lawbreakers you have."

Lao Tzu. He's right again.

 

[Hamlet]

1. I don't think the general public has a big problem with the basic structure of our Federal taxes. It's the complexity and unfairness of some of the loopholes/credits that sticks in the craw. It bothered me a lot when I was the one getting the shaft. It bothers me a little less now that I am the one doing the shafting, but it still does bother me.
2. I'm leery of changes like a supermajority. I think the dangers of that may be worse than the dangers of a crazy tax code. The 60 vote requirement in the Senate has made the country borderline ungovernable. I think the tax code is just like a garden-- you need to weed it regularly. It took 25 years to get this messed up again, if we have to cut the code back down every 25 years, well, there are worse things.

It's impossible now, but it will certainly be possible if political cards get reshuffled in an election. The two important questions would be:
1) Will the public be mollified by tinkering with the existing taxcode, or do they demand fundamental change to the way we raise revenue.
2) Whether we just ammend the current tax code or start anew, what mechanisms can be put into place to defend against a regrowth of tax code complexity? We had the reforms of 1986, and here we are with a still more complex and impenetrable system. No one can possibly understand all of the present law. Supermajorities, a constitutional amendment--something should be done to keep the tax code "clean" for the long term so businesses and individuals can plan, and so we don't end up here again. If we decide we need more or less money then change the tax rates, but can we please not try to use the tax code to micromanage the economy and people's behavior?