Quote:
Originally posted by KSig RC
You're making assumptions here that don't fit; I'm also not arguing the 'fair tax' but rather placing a general 'flat tax', which with earnings i have from employment and outside sources, non-liquid assets in my name for tax purposes, along w/ my consumption, I would most likely lose money on the deal from what I am told. I am not necessarily representative, and the loss is by no means crippling (or even statistically large), I was merely providing an anecdote to back up Rudey.
Now here's the real question for the Hoosier - doesn't any sort of flat-tax proposal being tied to the 'cost of living' index implicitly tax the lowest-income members of society? Here's the thought - so let's say we go to a 10% flat tax on all purchases, then refund the cost of living at some arbitrary amount. Now, the spending done by the poor for necessities will consume a far larger percentage of their income comparatively, but you're still refunding them the same percentage as the rich. While this seems, in theory, to be "saving the poor" from oppressive taxes, the reality is that what is kept (that 77%) from the taxes will be a disproportionate amount of, say, $22,000 per year than it would be for $220,000/yr. It is correct to say that the 220k will pay much more in taxes (which they already do, i might add), but this is offset by not paying taxes on the part of that income that is NOT spent - and the fact is, in this day and age, a significant portion of that income will be saved, or invested (and these investments are protected under this legislation, no?).
I'm a Republican and fiscal conservative at heart, and even I can see why Republicans would push this legislation. Hoosier, I'm sure you do too - it saves a ton of money for those who don't spend all their wealth, and it penalizes those who cannot keep a balance in the savings account from month to month. The poor are the ones spending all their money each pay period; whether it is for necessities or non-essentials is irrelevant, the fact that they are being taxed for 100% of their income while others are not still remains. That's the reality.
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1 - nobody likes the current IRS system. I know of nobody pushing a "flat tax", it's the "Fair Tax Plan" which has the traction.
2 - if you have substantial income, you're already paying a lot of taxes
3 - all people (rich and poor) would receive the identical monthly refund ($460 in my example). This means the poor who now may pay almost no income taxes (due to deductions, earned income credit, etc.) would be paying no sales tax on their first $2000 per month in purchases, AND would pay no FICA taxes either. The poor would be better off with "The Fair Tax" plan.
4 - In addition, it gives the upper income groups more money, which they are likely to spend, buy services and products which lower income groups provide and mame.
It has a lot going for it. Don't confuse it with a flat tax.