Flat Tax (National Sales Tax) Debate

[LucidDreamer]

I think the answers to these questions are fairly simple.

 

Say I was collecting 1 trillion dollars in taxes from the American people. I could either create a flat tax or a graduated tax. If I create a flat tax then everyone pays the same percentage of their income to reach the trillion dollars. Let’s say 30%. This is going to drastically affect someone who makes 20,000 dollars a year lifestyle but it will not affect someone that makes 750 thousands dollars a year very much. The person that makes 750 thousand dollars a year will give more money but it will not really affect how much health care he receives, what kind of foods he eats, whether he can have a car, whether he lives in a house or an apartment. Every one of his needs can still be met with the 30% tax.

 

However the person who makes 20,000 will be drastically affected by the 6,000 dollars that he no longer has. His kids will have to go without new cloths for school, they will not be able to visit the doctor, they will not be able to afford a car, they will have to eat macaroni every day, they will live in a roach infested apartment, etc.

 

If you made a graduated tax then the wealthy person would have to pay an extra 10% to allow 20 poor families a tax reduction. This means that 20 poor families get to buy their children clothes for the new school year but the rich man has to put off buying his second corvette until next year.

 

The rich man benefits from the flat tax and the poor man benefits from the graduated tax. Most of the counter arguments against the graduated tax were created by rich men who want to obfuscate the issue so they can get that new corvette.

 

The rich man benefits from the government the most. To truly examine this issue you would have to compare the rich and poor man's lives with today’s government to their lives if there was no government at all from the times of their births. You can't still allow the rich man to keep his wealth because he acquired that wealth using the trade market that is only possible with a government. Without a strong government the technology, trade market, banking, and electrical power would not exist to allow Bill Gates to make billions.

 

Given a case of anarchy both the poor man and the rich man would have to live off of the land. Since the poor man's standards of living were already low then the rich man has benefited most from the government because there would be a very large difference between his standard of living with a government and without.

[mattd]

That scoundrel!

[mattd]

Tax reform is a big deal in the US right now. In fact, a big change may be inevitable here in the next few years with a strong GOP legislature in effect.

 

The way the system currently works is fairly mind boggling. I can see why one would want to go to a simpler system, but we shouldn't sacrifice fairness for simplicity.

[LucidDreamer]

Bush is using the excuse of trying to reform a complex system to try and cloak his true agenda, which is to lower the taxes for all of the rich corporations and rich friends that got him into office. Think about it. Republicans want to appeal to religion and business; it’s who gets them into office. The government system is full of complexity. Why would he be concentrating on taxes? Because he is going to try and reform it so that corporations and rich people get tax breaks, which means that the poor and middle class will have to take the burden. That’s so completely obvious that I don't see how anyone can argue with it.

 

[sarcasm]But of course this means that rich people can set up new businesses and hire more people and it will all trickle down to the poor people and we will all be rich because we make the rich people richer.[/sarcasm]

[chadn]

As a Libertarian I view any form of income tax as robbery.

 

We need to move to a national sales tax that excludes the essentials like food and clothing. If return the government to its original purpose there would be little need of the trillions of dollars the US government uses.

[SubJunk]

I think flat tax is a good idea. In my opinion, people shouldn't suffer for doing well.

For example, if someone makes a million dollars a year, chances are they've earned it. They havn't earned 999,999 dollars in that year, they earned a million dollars.

They already pay more tax than someone earning minimum wage, and still would in a flat tax system, so I don't see how that unfairly disadvantages poor people. I realise some people can't help but be poor, but it's my opinion that a large percentage of poor people, especially those on the benefit, are in their financial rut because of bad decisions they've made. Is it the government's fault if a woman has a few children and her husband leaves her? No. It's hers and her ex-husband's responsibility. It's unfortunate, it really really is, but giving poor people all these advantages just makes it easier for those of them who aren't motivated and sit on their asses all day living off the taxes of hard-working people to stay like that, and that benefits no one, including the poor people.

[LucidDreamer]

The main reason that there are poor people is because a capitalist society forces a certain percentage of the population to be poor. Yes, you heard me right. America could not support 300 million Bill Gates. In a capitalist society you will have a certain percentage of rich, of middle class, and of poor people. The individuals are sorted according to ability but they are also sorted according to circumstance. There simply are not enough stupid lazy people to fill the ranks of the low-income jobs. Therefore society recruits more people by circumstance: some were born into poor families, some were abused as children, some have to support family, some have chronic illness, some catch a bad break and can never get out of the rut, etc.

 

But contrary to some peoples beliefs, most of these people work hard and they are not lazy bums that sit on their asses in their government paid houses and live off of the fat government checks. They work very hard at low-paying jobs, often working two at a time for more hours than a good portion of the rich and middle class.

 

The rich have become rich because they used the system to their advantage. They are rich in part because of ability but also because of circumstance. They have thrived in a capitalist society and most of them come from middle class or upper class families where at some point one of their ancestors worked hard and moved up in society. If it wasn't one of their ancestors then it was them. This is only possible in a society that promotes upward class mobility. In order for there to be upward movement in class the rich and very upper middle class must make certain concessions. One of these concessions is the graduated tax. If the poor people's children are not helped out they will grow up in such a destitute environment that they will never get out.

 

If the poor are not given a chance to move up with these government benefits then the upward mobility disappears, resulting in an elitist society. In an elitist society the amount of people who are poor only increases and the middle class drastically shrinks. The amount of people who are rich also decreases with only a few very rich people who own almost all of the wealth. A certain amount of socialism offsets the natural tendency for the rich to acquire all of the wealth, which results in elitism. One of the important socialistic counterbalances to this tendency towards elitism is the graduated tax. Most societies where only a small percentage of the population owns all the wealth are very poor on the whole, while societies that ensure the existence of upward mobility and have a large percentage of the population in the middle class thrive. The graduated tax helps ensure that the upward mobility exists and that a healthy trade system with a large middle class produces a prosperous society.

[Severian]

I agree with Lucid

[mattd]

I agree with Lucid also, but my main concern is regarding a national sales tax. It may look like a flat tax, but is it? A dollar is worth more to a poor person than to a rich person, so does this make it truly a flat and fair tax system? I'm really open minded about this debate and am looking for answers with quantitative qualities.

[mattd]

The way I typically look at it money is as a unit of work and time (time is money). Example:

 

Person A makes 10 dollars an hour shoveling gravel. He spends 100 dollars at a store to buy necessary housewares. A ten percent tax on these items amounts to 10 dollars bringing his total expenses to 110 dollars. Now this guy has to work 11 hours in order to purchase everything.

 

Person B makes 100 dollars an hour managing a company. He spends 100 dollars at a store to buy necessary housewares. A ten percent tax on these items amounts to 10 dollars bring his total expenses to 110 dollars. This guy has to work 1.1 hours in order to purchase everything.

 

Person B doesn't have to work as hard as Person A to pay the exact same amount of tax, thereby giving Person B more purchasing power and the ability to use his leverage to get even farther ahead thn Person B. Doesn't this have a negative effect on upward mobility?

[LucidDreamer]

Yes, a national sales tax is sort of a backwards graduated tax since poorer people spend all of their money and the rich save and invest it.

[mattd]

What would a good example of a flat tax be?

[LucidDreamer]

A national sales tax would technically be a flat tax. A national 30% flat rate income tax would be too.

[Severian]

I personally think there should be no income tax and no sales tax - everything should be generated from corporation tax. That way salaries will become more transparent, and the companies would pass on the cost of corporation tax by reducing salaries anyway. (Of course, self-employed people should pay a tax too!)

[chadn]

Yes, a national sales tax is sort of a backwards graduated tax since poorer people spend all of their money and the rich save and invest it.

 

If one were to exlude essentials like food and clothing then a poor person that carefully managed their money would not pay that much in taxes. The rich who would spend millions on luxuries would pay the bulk of the tax. Does someone who make 15000 a year really need a large screen tv or a new car?

[LucidDreamer]

Well, if you exclude enough essentials then you have a luxury tax, which would be a tax aimed at the rich and upper middle class.

[SubJunk]

I know that in my country, New Zealand, a large percentage of people on the benefit sit at home and sell drugs to schoolkids.

I think flat tax is the best idea, it's just fair. Just because someone makes several million a year doesn't mean they've put in more effort than someone on minimum wage, and often it means they've worked harder. I broke my ankle kickboxing last year and as a result couldn't work for a few months so I got the benefit, as soon as I was able to work again I did, not a day later because it's not fair to live off hard-working people unless you need to.

I've experienced poverty, I've struggled a lot financially in the past, but I have always thought I should pay the same amount of tax as people in high paying jobs.

[john5746]

If one were to exlude essentials like food and clothing then a poor person that carefully managed their money would not pay that much in taxes. The rich who would spend millions on luxuries would pay the bulk of the tax. Does someone who make 15000 a year really need a large screen tv or a new car?

 

Nope. They don't need books, college, medicine, heart surgery, etc. Why if they get sick, it costs more than they make to fix them. Lets just let them die. I mean the rich NEED yachts, stocks, etc.

 

I know where people are going with this. I don't like bums living off the dole either. We are talking about people who work and pay taxes. A graduated tax rate makes sense. The trick is how graduated it should be.

[chadn]

Nope. They don't need books, college, medicine, heart surgery, etc. Why if they get sick, it costs more than they make to fix them. Lets just let them die. I mean the rich NEED yachts, stocks, etc

 

I really dont get where your going with this appeal to peoples emotions. Are you agreeing or disagreeing? In case you sont understand and could use some clarification, essentials are exluded from the sales tax. Medical care is an essential and would be tax extempt. So stop you blubbering.

[mattd]

I know that in my country' date=' New Zealand, a large percentage of people on the benefit sit at home and sell drugs to schoolkids.

I think flat tax is the best idea, it's just fair. Just because someone makes several million a year doesn't mean they've put in more effort than someone on minimum wage, and often it means they've worked harder. I broke my ankle kickboxing last year and as a result couldn't work for a few months so I got the benefit, as soon as I was able to work again I did, not a day later because it's not fair to live off hard-working people unless you need to.

I've experienced poverty, I've struggled a lot financially in the past, but I have always thought I should pay the same amount of tax as people in high paying jobs.[/quote']

 

 

The problem in amurica is that our govt. spends so much, that if everyone put in an equal share, then the poor would be in debt to the govt.

 

I say focus on spending.

[SubJunk]

i agree that a lot of spending can be cut back on. An example is the "new" fighter planes America is developing and planning to buy. America already has the most powerful planes in the world so there is no reason to buy them until the need arises especially with the country's deficit. I think government spending is a very big problem, but still believe in flat tax.

[Sayonara]

I really dont get where your going with this appeal to peoples emotions. Are you agreeing or disagreeing? In case you sont understand and could use some clarification, essentials are exluded from the sales tax.[/b'] Medical care is an essential and would be tax extempt. So stop you blubbering.

Maybe you don't get it because you didn't see the bit where he started deciding things weren't essential.

[mattd]

I was talking to a friend this morning about this subject. He believes in a national sales tax as well. His belief too, was that a nst would case upward mobility (i.e. encourage individuals to try and better themselves instead of become complacent by going out and educating themselves and getting better jobs and such).

 

His feeling was that income (in regards to earned vs unearned) shouldn't be taxed. However, he felt unearned income (capital gains, interest, and unordinary) should be taxed.

 

I like that.

 

It's more along the lines of Lincolnian philosophy, where a person's work shouldn't be taxed. I agree with that kind of philosophy. However, people who make all their money off of bets and leverage should be taxed. Unfortunately, a NST replacing all other forms of tax will not do that, and that's why I don't support it.

[LucidDreamer]

Countries like India are filled with highly educated people with no jobs. Just because someone educates themselves doesn't mean there is a job available for them. If everyone in America that didn't have a PHD were suddenly given one there wouldn't be a high-paying job waiting for every one of them. They would just be educated and poor. If there were an abundance of high paying jobs they would have already been filled by the available work force.

 

Impoverishing people doesn't give them the means to better themselves. If it did then everyone that was once poor would now be rich. Poor people have enough motivation to become better. What they need is a better means to do it.

 

If everyone who was poor suddenly moved up in socioeconomic status then some people would have to move down to fill their roles. We would still need janitors, fry cooks, dishwashers, sales clerks, Wal-Mart employees, etc.

[LucidDreamer]

His feeling was that income (in regards to earned vs unearned) shouldn't be taxed. However' date=' he felt unearned income (capital gains, interest, and unordinary) should be taxed. It's more along the lines of Lincolnian philosophy, where a person's work shouldn't be taxed. I agree with that kind of philosophy. However, people who make all their money off of bets and leverage should be taxed. Unfortunately, a NST replacing all other forms of tax will not do that, and that's why I don't support it.

[/quote']

There isn't enough money in unearned income to sustain the united states government. We would have to drastically reduce the size of the government(not Necessarily a bad thing). If the tax was high enough then everyone who was rich would soon become poor or start keeping their money in hidden safes. No one could save for retirement.

 

If you added a sales tax to the high unearned income tax then you would effectively have an income tax. If every penny you saved was taxed and every penny you spent was taxed then whats the difference between this and an income tax.

 

I think I would save all my money in a hidden location and then move to Europe to retire.