NationStates Jolt Archive

One of the roles of government is to cultivate an economic environment in which the market can create jobs, wealth, and stability for the population at large, while still protecting its citizens' fundamental rights. It only makes sense then that a government tax its citizens so that it may provide these services for everyone's own good.

Without arguing the merit of income taxes altogether (as opposed to revenue generation through other taxation methods, such as property or sales taxes), I believe that a person should be taxed in direct proportion to their salary, as opposed to our current "graduated" income taxation system. However, the first $20,000 of taxes should be exempt. This is my logic:

Let's say take five hypothetical people, Person A, Person B, Person C, Person D, and Person E. Person A is a college student who works summers and makes approximately $5,000 per year. Person B is uneducated, untrained, and hard working, but not very bright; he works at a fast food restaurant and earns $12,000 per year. Person C is a factory worker who owns a small house and earns $33,000 per year. Person D is an successful attorney who owns a solo law practice and earns $100,000 per year. Person E is CEO of a mattress factory that distributes high quality mattresses to most of the West Coast; she earns $1,000,000 per year.

Under the current tax system, these hypothetical people could pay the following amounts in federal income tax:

Person A: $500 = 10%
Person B: $1,500 = 12.5%
Person C: $5,256 = 15.9%
Person D: $24,315 = 24.3%
Person E: $362,198 = 36.2%

After tax credits and deductions, these numbers would change dramatically; all of our hypothetical people would likely experience a reduction in federal income tax, however their portions relative to one another would remain virtually unchanged. But more importantly, under this system, a few of the more wiley rich people have the right accountants working for them and, through deductions and credits, can often pay fewer taxes than even middle-class or poor Americans.

Hypothetically, after deductions, the federal income taxes may look something like this:

Person A: $100 = 2%
Person B: $1,100 = 9.2%
Person C: $4,000 = 12.1%
Person D: $9,000 = 9%
Person E: $50,000 = 5%

But because these numbers now depend on deductions and credits, this begs the question: why isn't someone who makes ten times as much money paying ten times as much in taxes? Consider this hypothetical scenario:

Tensions rise between South America's drug cartels and the U.S. military; the cartels and their underlings decide to wage an orchastrated war against United States interests by blowing up roads and bridges in the United States. If successful, all the hypothetical people above would lose their jobs, be penniless, starving, and on the street. Fortunately, since the military's operations (funded by our tax dollars) are successful, everything keeps rolling on. Since Person E has ten times as much to lose as Person D, no more, no less, it makes sense that Person E should pay ten times as much as Person D to protect her income. Because Person D makes three times as much as Person C, it makes sense that he should pay three times as much to protect his income, and so on.

What I would propose instead would be a flat tax system, giving an exemption on the first $20,000 of everyone's income. Let's say that it was determined that the government would need to collect, on average, 25% of a person's income to maintain all of the services and protections it currently provides. The tax burden for our hypothetical people would look like this:

Person A: $0 = 0%
Person B: $0 = 0%
Person C: $3,250 = 9.8%
Person D: $20,000 = 20%
Person E: $245,000 = 24.5%

The difference would be that NO income deductions would be allowed. This way, everyone would pay their fair share, the poorest of Americans would be exempt from income tax, and the richest would not be able to deduct their vacation to the Cayman Islands as a business expense.

Well, considering that flat income taxes don't affect fabulously rich people as much as it does poor people, I'm against it.

rich people will always find a way to pay less tax. if it were a priority for our society we could remove all their loopholes NOW and be done with it.

flat tax would bring the economy to a grinding halt. so much of it is dependant on the housing boom. without the mortgage deductions who could afford to buy a mcmansion? then all the auxilliary purchases (drapes, appliances, furniture) would stop.

rich people will always find a way to pay less tax.


Yeah, as long as there are deductions (which is what this proposal would eliminate). :p

Flat income tax rate is a bad idea. Tax the socks off the rich, leave the rest of us alone.

Flat income tax rate is a bad idea. Tax the socks off the rich, leave the rest of us alone.


Even with the loop holes, the rich already pay far more taxes than the average person.
The rich should be penalized for being more succesful at making money?

Yeah, as long as there are deductions (which is what this proposal would eliminate). :p
without deductions they would just find a way that their income doesnt count as income. there is always a way. the rich will find it.

yes, carniverous lickers, the rich should be punished for supplying people with jobs and stimulating the economy with their investments.

how dare they become rich in the first place?

if i want to be lazy, i should be able to STEAL from the rich. Since I'm not successful, nobody else should be successful either.

(socialism is such a righteous concept: demand that the wealthy and middle class folks pay your way.)

without deductions they would just find a way that their income doesnt count as income. there is always a way. the rich will find it.


Well, you can't argue with that logic...:rolleyes:

Even with the loop holes, the rich already pay far more taxes than the average person.
The rich should be penalized for being more succesful at making money?The rich pay more money in taxes than the average joe (most of the time; if you have a really good accountant, you might not pay taxes at all), but they often pay a lower percentage of their income to the government.
After a certain amount of income, the rest is luxury, pure and simple.
If I had my way, the first $40,000 would be yours to keep (per family), and everything after that would be taxed 50%. Everything after $100,000 would be taxed 60%, everything after $200,000 would be taxed 70%, and everything over $250,000 would be taxed 75%. If you and your SO each make $40,000, then your family would end up with $60,000 after taxes. If, on the other hand, you each work your asses off at minimum wage jobs to make $20,000, then you should pay no taxes.
If you happen to make $1,000,000, then you end up with $312,500 after taxes. No complaining. They are still obscenely rich.
If you make more, you keep more in the end. You also give more back to society. As it should be.

I dont like the idea of rich/er people being on a same percentage of tax as the 'poor' they should be taxed more.

if i want to be lazy, i should be able to STEAL from the rich. Since I'm not successful, nobody else should be successful either.

(socialism is such a righteous concept: demand that the wealthy and middle class folks pay your way.)That'd be true, if the poor were in fact just lazy. They are not. They work just as hard as the rich, if not harder.

Your idea is not bad as it still protect the lowest income worker, but it make a big lost in government budget:

Current:
Person A: $500 = 10%
Person B: $1,500 = 12.5%
Person C: $5,256 = 15.9%
Person D: $24,315 = 24.3%
Person E: $362,198 = 36.2%
Total of 393 769$

Option
Person A: $0 = 0%
Person B: $0 = 0%
Person C: $3,250 = 9.8%
Person D: $20,000 = 20%
Person E: $245,000 = 24.5%
Total of 268 250$

I've got a novel idea: how about do what the founding fathers intended and get rid of the income tax altogether!

That'd be true, if the poor were in fact just lazy. They are not. They work just as hard as the rich, if not harder.

I don't know about that. Even if you're of limited potential, you can have a pretty comfortable life if you make good decisions. Although I know plenty of people who struggle financially, I've only known a few poor people--and they all seem to be poor because of their own bad decisions.

Everyone should become Regional Powers and not International and then Taxes wouldnt be such an issue.

Even with the loop holes, the rich already pay far more taxes than the average person.
The rich should be penalized for being more succesful at making money?If that's the way you ask the question, yes. A rich person can afford to pay more taxes than a poor person. Taxing a poor guy that makes a thousand dollars is gonna hurt him more than a higher tax rate would someone that makes 10,000.

The rich pay more money in taxes than the average joe (most of the time; if you have a really good accountant, you might not pay taxes at all), but they often pay a lower percentage of their income to the government.
After a certain amount of income, the rest is luxury, pure and simple.

Ehh. Wrong. People who make lots of money, spend lots more, and that money goes into the economy, ultimately employing more workers, creating new jobs, putting money into sales tax among other things. Why assume people can afford to give two bites of food to the government for every one they make? Some people have more financial obligations than the average working class hero.

Your idea is not bad as it still protect the lowest income worker, but it make a big lost in government budget:

Current:
Person A: $500 = 10%
Person B: $1,500 = 12.5%
Person C: $5,256 = 15.9%
Person D: $24,315 = 24.3%
Person E: $362,198 = 36.2%
Total of 393 769$

Option
Person A: $0 = 0%
Person B: $0 = 0%
Person C: $3,250 = 9.8%
Person D: $20,000 = 20%
Person E: $245,000 = 24.5%
Total of 268 250$

I definitely see your point, but I think you're not reading the hypothetical situation correctly. First, the numbers you included are the rates without any deductions. The hypothetical rates after deductions and credits were:


Person A: $100 = 2%
Person B: $1,100 = 9.2%
Person C: $4,000 = 12.1%
Person D: $9,000 = 9%
Person E: $50,000 = 5%

Secondly, you presume that there are equal numbers of persons A, B, C, D, and E. In reality, the hypothetical people just represent certain economic classes. There are way more persons C and D than there are persons A, B, and E. Don't get me wrong: I pulled the 25% figure out of my butt, however the point was that the rate would be a constant, so the deductions and the credits now enjoyed by the rich would be enjoyed by everyone equally.

If that's the way you ask the question, yes. A rich person can afford to pay more taxes than a poor person. Taxing a poor guy that makes a thousand dollars is gonna hurt him more than a higher tax rate would someone that makes 10,000.


Right, but how is this different from how it would look under my proposal? I remind you again:

Person A: $0 = 0%
Person B: $0 = 0%
Person C: $3,250 = 9.8%
Person D: $20,000 = 20%
Person E: $245,000 = 24.5%

Ehh. Wrong. People who make lots of money, spend lots more, and that money goes into the economy, ultimately employing more workers, creating new jobs, putting money into sales tax among other things.And if all the money that a select few are currently making (and spending) were more fairly distributed (higher minimum wage), the economic benifits would be exactly the same. All of what you said their spending does is true, but it makes no sense that you use it as justification for keeping the rich rich and the poor poor.


Why assume people can afford to give two bites of food to the government for every one they make? Some people have more financial obligations than the average working class hero.Hey, check it out. That's the same arguement that my dad makes to explain why he's a cheap bastard when it comes to child support. He has a massive mortgage (financial obligation), that he chose to take on.
If you can't afford to pay income tax because of other "financial obligations", then you are living above your means.

I definitely see your point, but I think you're not reading the hypothetical situation correctly. First, the numbers you included are the rates without any deductions. The hypothetical rates after deductions and credits were:


Person A: $100 = 2%
Person B: $1,100 = 9.2%
Person C: $4,000 = 12.1%
Person D: $9,000 = 9%
Person E: $50,000 = 5%

Secondly, you presume that there are equal numbers of persons A, B, C, D, and E. In reality, the hypothetical people just represent certain economic classes. There are way more persons C and D than there are persons A, B, and E. Don't get me wrong: I pulled the 25% figure out of my butt, however the point was that the rate would be a constant, so the deductions and the credits now enjoyed by the rich would be enjoyed by everyone equally.I was answering CL, wasn't I? ;)
Your system isn't a flat tax system. Its a flat tax system with a 20,000 dollar exemption. Flat tax systems suck, while yours doesn't.

I do not approve of any sort of income tax at all, or property tax, for that matter. I want to see a fair tax, a tax on consumption. Under that, a federal sales tax is placed on everything except food, essentials such as diapers, and basic clothing. It’s the best thing for the poor and the rich alike. You are only taxed on what you spend.

I've got a novel idea: how about do what the founding fathers intended and get rid of the income tax altogether!
It's not practical. This is not the world of 1776. Unlike then, there is now a big government to fund.

if i want to be lazy, i should be able to STEAL from the rich. Since I'm not successful, nobody else should be successful either.

(socialism is such a righteous concept: demand that the wealthy and middle class folks pay your way.)
Why do conservatives think that welfare is the be-all and end-all of socialism? I would rather have the poor working hard than collecting cheques for nothing.

I disagree with any income tax.

Income is compensation for the labor that an individual provides to society, and we should not tax based on what someone contributes to society, as it discourages contribution to society. A consumption tax that taxes what people take from society is the fair way to go about it.

And if all the money that a select few are currently making (and spending) were more fairly distributed (higher minimum wage), the economic benifits would be exactly the same. All of what you said their spending does is true, but it makes no sense that you use it as justification for keeping the rich rich and the poor poor.

justification: financial freedom. what a man earns/has, he gets to keep. he worked for it... why should someone else he doesn't know get to live off his work/ideas? If his dad was rich and decided that all his hard work's fruits should go to his son, so be it (though those who inherit wealth have perhaps a weaker argument against it being stolen from them than do those who earn their own wealth).

...as opposed to the socialist creed: that which someone else earns should be mine to keep.

i'm wondering if some people are raised to think that it's okay to steal, that other people's property is not to be respected...

...as opposed to the socialist creed: that which someone else earns should be mine to keep....as opposed to the free market capitalist creed: that which I rightfully cheated my workers out of should be mine to keep.

I disagree with any income tax.

Income is compensation for the labor that an individual provides to society, and we should not tax based on what someone contributes to society, as it discourages contribution to society. A consumption tax that taxes what people take from society is the fair way to go about it.

yeah, we probably need some taxes, but socialists should be mindful of this:

If you punish the rich for their success, who will want to become successful? If people stop starting businesses, where is the poor/middle-class worker going to find work?

Answer that question satisfactorily and I will be surprised and impressed.

...as opposed to the free market capitalist creed: that which I rightfully cheated my workers out of should be mine to keep.

I am 99% sure you are saying that out of completely untrained perception.

Can you please explain this in economic or even merely financial terms or data?

(In other words, don't say "Owners make millions, while the factory workers who actually make the goods make far less.")

yeah, we probably need some taxes, but socialists should be mindful of this:

If you punish the rich for their success, who will want to become successful? If people stop starting businesses, where is the poor/middle-class worker going to find work?

Answer that question satisfactorily and I will be surprised and impressed.

They like to think that a person's drive for success will be fulfilled by their love for their trade and self actualisation. Like someone is really proud of their ability with a broom or keyboard.

I am 99% sure you are saying that out of completely untrained perception.Actually, I only find that Frang's overgeneralization deserves an overgeneralization in return. (I tend to be a bit irritable when I'm tired...)

Why do conservatives think that welfare is the be-all and end-all of socialism? I would rather have the poor working hard than collecting cheques for nothing.

me too

why would you work hard if you have no chance at all of moving up (a la Communism, stuck in your trade)?

Why would you work hard if you can't be fired (unions, anyone?)?

Light a fire under someone's ass and he will work hard. How do you do that? Give him incentives like bonuses for good performance. Hire supervisors from within the manufacturing line. etc. Companies have less disposable income to pay bonuses or supervisors (or employ people, for that matter) if they are taxed out the rear end.

hehe

good night, fellows and ladies.
hurting the rich cannot help the poor. leave the rich alone, and they will provide jobs for the poor until kingdom come (hehe).

They like to think that a person's drive for success will be fulfilled by their love for their trade and self actualisation. Like someone is really proud of their ability with a broom or keyboard.

Grimaces and turns to dust off the golden keyboard on the mantel (-le) for the tenth time today.

hehe

If you punish the rich for their success, who will want to become successful?People who are not in their line of work purely for the money will always be motivated to be sucessful.

If people stop starting businesses, where is the poor/middle-class worker going to find work?In buisnesses run by the people.

It is not harder to be rich than it is to be poor, so I do not see why people would want to stop making $100,000 a year, even if a large portion of that is taken away by the government, when the alternative is to work 60 hours a week in exchange for a salary that doesn't quite manage to put you above the poverty line.

I do not approve of any sort of income tax at all, or property tax, for that matter. I want to see a fair tax, a tax on consumption. Under that, a federal sales tax is placed on everything except food, essentials such as diapers, and basic clothing. It’s the best thing for the poor and the rich alike. You are only taxed on what you spend.


Frankly, I love that idea (in theory). But the problem would remain, rich people would spend more out of country to limit their taxes. I'd rather see an income ceiling, (a person could net no more than $5 million a year) and all the income after that goes to the government (unless it is directed solely into the advancement of the owned company or into charity). But of course, that was FDR's idea first, and being the socialist Uber genius he was, a great idea.

me too

why would you work hard if you have no chance at all of moving up (a la Communism, stuck in your trade)?

Why would you work hard if you can't be fired (unions, anyone?)?

Light a fire under someone's ass and he will work hard. How do you do that? Give him incentives like bonuses for good performance. Hire supervisors from within the manufacturing line. etc. Companies have less disposable income to pay bonuses or supervisors (or employ people, for that matter) if they are taxed out the rear end.

hehe

good night, fellows and ladies.
hurting the rich cannot help the poor. leave the rich alone, and they will provide jobs for the poor until kingdom come (hehe).



The south, why does it have to exist?

Frankly, I love that idea (in theory). But the problem would remain, rich people would spend more out of country to limit their taxes. I'd rather see an income ceiling, (a person could net no more than $5 million a year) and all the income after that goes to the government (unless it is directed solely into the advancement of the owned company or into charity). But of course, that was FDR's idea first, and being the socialist Uber genius he was, a great idea.$5,000,000 seems a little high to me. Who needs more than $100,000? The cap should be higher, but not by too much. I vote $250,000.

The Fair (http://fairtax.org) Tax is the best way to raise revenue that was ever devised.

From the website:

Simply put, the FairTax replaces the way we're currently taxed - based on our annual income - with a tax on goods and services. The FairTax is a voluntary “consumption" tax: the more you buy, the more you pay in taxes, the less you buy, the less you pay in taxes.
It's simple.

Everyone pays their fair share of taxes, and with the FairTax rebate, spending up to the poverty level is tax free. The Federal government is fully funded, including Social Security and Medicare, and you don't need an expert to determine your Federal taxes.
It's simple.

There are many more details in the FAQ, but it comes down to this: Only retail sales are taxed. Not investments, not savings, not second-hand sales. Not a cent is withheld from a paycheck. Typical tax is estimated to be about 23%, but you can expect to see prices fall as the embedded taxes disappear.

I don't know about that. Even if you're of limited potential, you can have a pretty comfortable life if you make good decisions. Although I know plenty of people who struggle financially, I've only known a few poor people--and they all seem to be poor because of their own bad decisions.

My family used to be poor. We lived in a rather ramshackle house with no heat and the roof was falling in. My mom had to work 10 hours a day to support two kids whose dead-beat dads would do nothing for them because "i have other kids to feed" (which was hilarious seeing how we were there first but, such is life) and even working 10 hours a day in order to feed, clothe, and otherwise provide the essentials for school age children (like electricity and kerosene heat), we had to scrape by on welfare. SOOOO, poverty is not just a function of relative laziness. When you can only secure a minimum wage job, and are subsequently being taxed out the ass because your city looks like a war zone, sometimes you can't afford to even live. Cost of living seems to be rising faster than wages...

Oh, and before anybody chalks up having two children as a bad decision, at the time she decided to have us, my mom was gainfully employed, married, and living in a decent house. Lay-offs and men who can't grow up suck, but such is life. Not everyone's poor because they choose to be.

Oh, and before anybody chalks up having two children as a bad decision, at the time she decided to have us, my mom was gainfully employed, married, and living in a decent house. Lay-offs and men who can't grow up suck, but such is life. Not everyone's poor because they choose to be.True story. 20 years ago, my mother was young, educated, hardworking, sucessful... She owned property in her early twenties, for god's sake.
She is not stupid, or lazy, but bad luck has landed us below the poverty line. Way below the poverty line. I try to work to help out and all, but it's not enough. And yet she still pays income tax. :confused:
Some people are born into poverty, and chances are, they will never get out. These people are working harder than your average suit, guaranteed, and they do not get rewarded for their hard work. They get taxed. They are taxed by the government that will not raise the minimum wage, or help them out in any meaningful way.

Tax the rich. They will still be rich. Maybe a lot less, by their own standards, but they will still be rich. If they complain, they can come live with me for a few days, and see how good they have it.

Yep. And under my proposal, the poor wouldn't pay income tax.