|
I had a professor once who explained it in terms of Prada. If you make $250K a year, it might be a nice birthday present to get a $1200 Prada bag. If you make $25-30K a year - that bag could be one or two months' rent.
Same goes for the problem with a flat tax. Yes you can eliminate some red tape if you make a 10% flat tax. The Dept. of Treasury is woefully underfunded so the government would not save much in terms of reduced labor costs, but they might gain some because they could audit more and keep track of non-payers. However - to a family that makes $25-30K paying $2.5-3K in taxes is a lot. To that family making $250K - yes, they would pay a lot more in net taxes - $25K, but it would not be the difference between them being able to pay rent or get new coats for the kids that year.
A 10% flat tax would make the net tax paid for half the country go up while cutting taxes for the top one percent down to 1/4 of what they pay now? The 1%ers would also then not have as great an incentive as they have had to give generously to philanthropic projects. Tax deductable donations would go away. There is the possibility that people hiding money off shore would bring that money back - but the flaw in trickle down economic theory is that just because they have the money, doesn't mean they will spend it or invest it in businesses here. In fact, it may lead people to accumulate enough money that they can live off investments, and then under the 10% income tax plan, the very wealthy would pay no taxes.
|
Threaded Mode
