Democrats & Liberals: Archives

Well, there are no details, just a lot of promotion. Says it will do a lot of things but doesn’t explain how. And it still takes money out of individual incomes, which will never be ‘fair’ under any system…

Of course, for the true fair tax system, you should mosey on over to http://www.fairtax.org and see the plan that is actually a house bill already (HR 25) and get your congressmen to back it.

Ooops, here’s the link as a link:

Americans for Fair Taxation

Also, with the new congress the bill will probably have to be introduced and may not be HR25 anymore, I’ll find out when it does get reassigned a new number.

And it still takes money out of individual incomes, which will never be ‘fair’ under any system…

What does that mean? Do you propose taxing only corporations? What’s your definition of fair?

Rhinehold-

Although I’m almost a VAT fan, I think the likelyhood is it will never pass. It takes the power away from government and puts it in the hands of consumers.

We do need some reforms though, and some of this list makes some sense. I’d also cap federal expenditures to 20% of GDP and make them live with their means (just as we try to do). Only a 2/3 vote by the States would let them raise it.

No, by eliminating the income tax and replacing it with a sales tax, you can remove the hidden imbedded taxes that account for around 23% of the price of each product bought. Even if someone is paying no income tax directly, they are still paying THAT tax because that tax cannot be progressive in its current form.

On the other hand, by eliminating that tax and returning sales tax spent by lower income familes back to them, you can actually reduce their tax burden to a negative number. This PDF file shows the progressivity of the fair tax:

Progressivity of the FairTax

There is all kinds of information available at the site mentioned above including a FAQ page.

Yes, I’ve read their site, and I’m not convinced.

However, what’s your definition of fair? You stated without explanation that income taxes cannot be fair. Why not? And by what definition of fair?

LawnBoy, as long as you tax based in income you ensure that you will never tax anyone fairly because no one agrees on what that means. Some say that everyone paying 15% is fair, I’m sure you would disagree with that. Other say tax everything above what a person ‘needs’, I’m sure that many would disagree with that.

With an income tax you tax incomes, but you will find that many of the wealthiest people have little or no incomes to speak of. There are loopholes that they can twist and turn to their advantage. In addition, unemployment rates are affected because of the payroll taxes that employers have to pay dictates how many people they can employ and still be profitable.

However, with a sales tax you not only have a more stable source of income (people may lose their jobs and fall back on savings/borrowing, but they will still spend) but you are not able to have different tax rates on different people, and the wealthier individuals buy a lot of stuff (prepared foods compared to cheaper unprepared, more expensive cars, houses, entertainment, etc) that they aren’t able to ‘shelter’.

I guess my definition of a ‘fair tax’ is one that gets more money away from the beauracracy and taxes everyone based on the resources that they use. Instead of basing it off of what they earn base it on what they take from society. And a tax that removes ‘hidden’ taxes and causes us to have double, triple or more, taxation doesn’t seem like a good idea either…

Rhinehold,

You’re right that there will never be a system of income taxes that everyone considers fair. That does not mean that “tak(ing) money out of individual incomes … will never be ‘fair’ under any system”.

You say that income taxes cannot be fair because not everyone would agree that they are fair, then you present your favored system, describe it as ‘fair’, and don’t see the logical gap.

Just because you like the sales tax system and you think it’s fair doesn’t make it any more fair than any income tax system. It also doesn’t mean that any proposed income tax system is inherently unfair.

In fact, a lot of people have analyzed the national sales tax idea and found it wanting:

As a replacement for the existing federal tax system, a national retail sales tax is a nonstarter. The required rate would be sufficiently high to make enforcement too difficult and evasion too tempting. The historical record should suggest great caution in this regard. Even if the tax were enforceable at these rates, the implied effects on economic growth would be small at best, and certain sectors of the economy, such as employer-provided health insurance, could be affected significantly. The sales tax would raise burdens on low- and middle-income households and sharply cut taxes on the top 1 percent.

If the income tax were to be immediately abolished and replaced with a sales tax, the results could be devastating, especially in the short term. Before the new tax goes into effect, Americans would be motivated to buy as much as they could, far beyond the exchanges that would occur in the natural market. This would cause shortages, price increases, and the perfect atmosphere to blame economic problems on the “laissez-faire” tax reformers. Once the tax is implemented, buyers and sellers would be penalized a hefty 20% or more on each exchange. This would discourage trading on the market, and instead incite people to become more economically self-sufficient. The division of labor on which civilization relies would suffer a major blow, as economic activity became far more atomized than optimal in a free market. Furthermore, older folks who saved for their retirement and paid taxes on their income their entire lives would suffer a whole new assault on their livelihoods. Whole industries that are currently free from taxation would also take a beating, once the Internet is taxed, which is part of the sales taxes being contemplated.

With all due respect to Speaker Hastert, trying to eliminate the IRS by adopting a national retail sales tax is a very dumb idea.

Of course, this doesn’t even get into issues of the 16th Amendment and the possible need for another Amenendment to allow for a National Sales Tax, problems that the Center for American Progress’s proposal doesn’t have.

Rhinehold, the proposition that one can fairly assess taxation on what individuals and corporations take from society is impossible. There are enormous intangibles taken from society that would become the basis for fighting, gerry-rigging, and endlessly debating the fairness of such a system.

Do you really propose we tax those with higher fuel emissions more than those with lower? How about water? How about Las Vegas’ contribution to energy produced pollution? What about a two parent home and family as foundation for America being disrupted by a minimum wage that will not sustain a family despite both parents working full time and have little time with their children? How about taxing elected officials who vote for deficits and national debt level injurious to America’s future?

I could go on, but, I am sure you get the point. Evaluating what individuals and corporations take from society will result in huge disparities and unfairness depending on what is measured and taxed by what Congress when. Wealth and income and spending are the only two reasonably empirical methods for assessing taxation. And spending is not that great since it fosters underground marketplaces where such transactions are not recorded. We already lose 100’s of billions on lost sales taxes in this country due to underground sales transactions. Whole industries have sprung up around cash transactions to avoid taxation like landscape and gardening, home child care, maid services, etc.

The IRS needs to offer a reward for turning in information regarding cash transactions that result in prosecution, and federal tax dollars need to be assessed based on either wealth or income or both. These are the only two methods which can be reasonably enforced, relatively accurately measured and assessed, and which will not create more problems than it solves.

The tax code now exceeds a staggering 60,000 pages, prompting Americans to waste 6.2 billion hours just completing their returns every year. Deciphering it costs the country $203.4 billion a year, according to the Tax Foundation. Its complexities generate additional job-killing distortions throughout our economy.

The Flat Tax with a single low rate of 17% is the answer. Personal exemptions would be given as follows Married Filing Jointly $24,400, Single $12,200, Single Head of Household $15,650. Plus a roughly $5500 exemption per dependent child. These exemption would cover the first income made by each up to the exemption amount. That is it, no other deductions or exemptions period.

Tax forms would fit on a postcard and include three boxes.

1) Your Wages, Salary, and Pension:_________
2) Marital Status: Single___, Married (filing jointly)___, Single Head of Household___
3) How many dependent children do you have?____

If you would like to see how easy this would be and what your tax liability would be under the 17% Flat Tax go to the site below. There you will be able to fill in the three boxes and calculate your taxes under the system. (Do not use commas in your dollar figures.)

http://www.cse.org/flattax/index.php

If we are to ever simplify the current tax code we will have to start from scratch. All special-interest loopholes, deductions and exemptions must be yanked out by their roots or these weeds will continue to grow and spread.

The millions of dollars saved by completing your taxes in roughly 1 minute and the overwhelming reduction in IRS spending would go along way towards improving the economy.

ah, ah, ah!!!! Kirk. Tried to slip a fast one in there didn’t you? Or was it an oversight that you didn’t include on your postcard with wages, salary and pension, “INCOME”?

Do you really expect the wealthy to get off scott free in your plan?

no, no, no!!!! David,

Don’t try to read anything in to this that is not there. That is how we get into trouble. Besides that, like I would want the wealthy to not pay their share while I have to pay mine.

Notice I said That is it, no other deductions or exemptions period. Investment income is reported on a 1099 is income, you would have report it just as you do now.

Where as a sales tax or VAT could be very difficult to collect. As you can imagine the Barter System would flourish under those schemes. Not to mention the fact that people would work very hard to become more self suffecient if they could save the 20% most say would be required of a sales tax. Think of the number of gardens and home made items that would suddenly be generated.

The 20% tax collected under a sales tax or VAT tax scheme would also be very tempting for those marginally ethical vendors. I suspect the amount of tax fruad would increase significantly with those types of inducements.

We do need some reforms though, and some of this list makes some sense. I’d also cap federal expenditures to 20% of GDP and make them live with their means (just as we try to do).

Democrats just introduced some legislation (Senate bill S.19 - full text here) to curb spending, In short, it restores the pay-as-you-go rule (no more governing beyond their means), reinstates mandatory spending cuts, and stops “fast tracking” legislation that increases the deficit.

Urge you’re representatives to support it.

BTW, Just like on Social Security, Bush hasn’t introduced an actual plan for simplifying the tax system. Just some vague statements about needing to simplify it.

Kirk, thank your for clarifying. We are then, in 100% agreement on this issue. Your initial comment however, did leave out the word ‘income’ on your proposed post card tax form. That is why I asked if this was your intent.

Thank you AP for the link on the Senate Bill. I will read it tomorrow and walk the talk with my Senators if appropriate.

Kirk,

I agree with you AFTER David corrected the intent to include “income”.

Where I have a problem (slight as it may be) is why does married make any difference?

I agree with a deduction for dependant children under 18, not the married part or the single head of household.

Head of household must have a dependandant child anyway to qualify, we already gave a deduction for that in your program didn’t we?

Everyone has a SS# now, even dependant children, you can just leave more spaces for more SS#’s, it still fits on a postcard.

If you want to make it simple, make it simple!

Beagle,

1) Married, basically just doubles the initial exemption for a single person. This allows a husband and wife to submit their taxes as a couple rather than as two single filers. So, one return rather than two. Unmarried couples would have to file two separate returns.

2) Single Head of Household covers Single parents with a dependent child living in their home. If you were single without a dependent child living in your home you could not claim the dependent child credit. Only the Single Head of Household could file as a single and claim a dependent child. The small increase in the exemption for a single Head of Household would be to help defray the costs of child care so that the filer could go to work.

Kirk, there must be a cutoff poverty level of income. With the minimum wage below sustenance living standards, a single parent making 7$ an hour cannot even afford an apartment in America today. Unless you want to reinstate a welfare system in America, a povertly/middle class income based on number of dependents must be drawn and those falling below are exempt.

It is far preferable to keep low wage earners working than it is to tax them out of car, home, and job.

David,

there must be a cutoff poverty level of income. With the minimum wage below sustenance living standards, a single parent making 7$ an hour cannot even afford an apartment in America today. Unless you want to reinstate a welfare system in America, a povertly/middle class income based on number of dependents must be drawn and those falling below are exempt.

That is covered through the exemptions listed above and again below.

Personal exemptions would be given as follows Married Filing Jointly $24,400, Single $12,200, Single Head of Household $15,650. Plus a roughly $5500 exemption per dependent child.

So, a single parent with one child would have the first $21,150 in income exempted from taxation. With 2 children the exemption would increase to $26,650.

If that single head of household parent with 2 children earned $30,000 they would pay $570 in taxes.

Kirk,

I understand the tax system, and the married fileing joint, however…
…Married couple files joint, only one works and makes 100k, they get a deduction of $24,400.

Unmarried couple, only one works,and makes 100k, they get a deduction of $12,200

Both of the previous examples work at the same type of desk job in the same office, 40 hours a week.

Single auto mechanic, so ugly nobody would marry him,( he has to wear a porkchop around his neck to pet the dog),He works 12 hrs. a day, 7 days a week, and makes 100k, he gets a deduction of $12,200.

Who gets the biggest hosing in this program?

I didn’t even mention that the ugly mechanic gets no free company car, has to buy all his own tools, and when his tired ass gets home he has to fix dinner, clean his house and do laundry.
Nor did I mention a gay couple, with only one working that couldn’t get married if they wanted to.
Social issues have no place in the Federal tax code, that should be a seperate issue.

You would also have to deal with the dependant child issue with reguards to their earnings.
( rich people with a business can hire their children for nonexistant jobs, pay them(on paper) just under the amount that they can still claim them, and the child pays nothing) Joe lunchbucket can’t do that.

You also have farmers that set up a LLC (limited liabilty corp.), now their kids REALLY do work, you also have paperboys, the kid that mows lawns ect.

To get bipartisan support on any simple and fair tax system you need people that can take partisianship, special intrest favors, and social issues and put them in a bucket outside, come up with a fair and simple plan that seperates scams from honest right/wrong of a tax system.

Put it all into a simple instruction booklet, in laymans terms, that can be filed on a postcard.
( Sorry H+R blockhead and ABA tax lawyers) bean counters should count beans, and lawyers should defend the rights of people under the law.

I would love to work in a think tank that could deal with those guidelines in reforming the tax system.

Thats my opinion, and I’m sticking to it.

Here is what we all paid in taxes in 2002. The income figures are adjusted gross income. This will help see what we are dealing with when taxes are discussed.

The top 50 per cent made 85.77% of the income.

The top 1% are all those who earn over $285,424. They earn 16.12% of the adjusted gross income. They pay 33.71% of the income tax. Their average tax rate is 27.25%

The next 4% earn between $126,525 to 285,424. They earn 14.43% of the adjusted gross income. They pay 20.09% of the income tax. Their average tax rate is 22.95%

The next 5% make between $92,663 to $126,525. They earn 11.22% of the adjusted gross income. They pay 11.93% of the income tax. Their average tax rate is 20.51%

The next 25% earn between $56,401 and $92,663 They earn 22.60 % of the adjusted gross income. They pay 16.99% of the income tax. Their average tax rate is 16.99%.

The next 15% earn between $28,654 and $56,401 They earn 21.40% of the adjusted gross income. They pay 12.60% of the income tax. Their average tax rate is 14.66%.

The bottom 50 per cent make below $28,654. They earn 14.23% of the adjusted gross income. They pay 3.50% of the income taxes. Their average tax rate is 3.21%. This group is not catagorized the way the top 50% is. This is taxable income from $1 to $28,643.

We all pay Social Security on up to $90,000 this year.

Source: IRS-2002 Updated October 20, 2004

http://www.taxfoundation.org/prtopincometable.html

(I typed all of this up from charts on the above web site, so please correct me if I have made any mistakes.)

The top one per cent earned $985,781,000,000. The bottom 50% earn $869,749,000,000.

The top one per cent earn 116 billion and 31 million dollars more than all of the bottom 50% combined.

There are 1,283,000 people in the top 1%.
There are 64,162,000 people in the bottom 50%.
I don’t know if taxes have changed since 2002 for any group.

Beagle,

Lets say an unmarried couple each work and earn $50K each for a total of $100K they file separate returns and get a $12,200 exemption each for a total exemption of $24,400.

Now lets say you have a married couple and only one works earning $100K they file jointly and get only a $12,200 exemption.

Is that what you are advocating? Ignoring marital status and applying the exemption only to those who work?

For the auto mechanic, he is a single person making $100K per year. He will have lower living expenses than either of the examples you used or I used above. Therefore, he should get a smaller exemption. Labor laws also allow a worker to avoid the type of overtime hours you have based your example on if they choose.

I didn’t even mention that the ugly mechanic gets no free company car

Company cars or Car Allowances are not free. I know, I have had both. On a company car the employee must maintain records of the miles the vehicle was driven for anything other than official business purposes. At the end of the year the employee gets a W2 with the non-business miles converted to income. With the car allowance, you simply get a W2 at the end of the year with all the car allowance paid during the year listed as income.

( rich people with a business can hire their children for nonexistant jobs, pay them(on paper) just under the amount that they can still claim them, and the child pays nothing

You can no longer claim a child as a dependent once they earn $3,100.00 this year. I have a daughter attending college who earned just under $4,000 last year during the summer and college breaks. College tuition, books, room and board etc will cost me roughly $18K per year. Even though there is no way in hell that she could support herself on $4,000 I can no longer claim her and take the tuition paid credit toward my taxes.

The child and parent (employer) would also have to FICA and Medicare Taxes a total of 12.4% of what is being shown as the total wages.

you also have paperboys, the kid that mows lawns ect.

Again if a child earns less than $3,100 they can be claimed as a dependent. If they earn less than $12,200 they pay no income taxes.

Ann,

That means that the Top 10% of wage earners (over $92,663 per year) earn nearly 42% of wages and pay nearly 66% of income taxes.

If you expand that to the Top 35% of wage earners (over $56,401 per year) they earn just over 64% of wages and pay nearly 83% of income taxes.

That is rather odd isn’t it that the Top 10% pay nearly 66% of income taxes and the Top 35 % pays nearly 83% of the income taxes considering how Bush’s tax cuts only benefited the rich. What do you think the percentages may have been before the tax cuts?

That is rather odd isn?t it that the Top 10% pay nearly 66% of income taxes and the Top 35 % pays nearly 83% of the income taxes considering how Bush?s tax cuts only benefited the rich. What do you think the percentages may have been before the tax cuts? by Kirk

Kirk, please read this part again:

The bottom 50 per cent make below $28,654. They earn 14.23% of the adjusted gross income. They pay 3.50% of the income taxes. Their average tax rate is 3.21%. This group is not catagorized the way the top 50% is. This is taxable income from $1 to $28,643.

The top one per cent earned $985,781,000,000. The bottom 50% earn $869,749,000,000.

The top one per cent earn 116 billion and 31 million dollars more than all of the bottom 50% combined.

There are 1,283,000 people in the top 1%.
There are 64,162,000 people in the bottom 50%.
**** ****
It is a matter of division. When you have that many people earning the low wages of the bottom 50% and you divide it by 64,162,000 then they are in a lower bracket. They always were.

The earnings of the bottom 50% is money that is for necessities like food, shelter, car, daycare, utilities, insurance and health costs. It should not be taxed at all.

It takes about $60,000 to meet the minimum standard of living now. That is to make the house payment, groceries, clothing, utilities, cable, car payment,gas,and insurance for your home and car plus health insurance (and the high deductibles, prescription drugs, and school activity expenses, sales tax,state tax and federal taxes and a million other things. It takes money to work. Day care, gas, clothing, lunches ect.

The benefit the bottom 50% received was the money for those with children. I am glad they received that. I hear that is temporary.

The AMT is messing up the tax cut for the middle class. They lose their deductions when they hit that.

State and local taxes have went up to make up for the cuts made by Bush. Many lost money if you figure the raid on medicare and our national treasury and the billions of interest that are being paid on the debt. Look how hard it is going to be to pay the Social Security bonds back. The tax cut for those who didn’t need it is going to cost us in ways that are not just financial. We can do less as a society because of it. It is weakening our nation.

The flat taxers want to have the same rate for all except the very poor as if wages earned and the millions earned are the same.

The rich pay the same rate as everyone at the beginning and with each increase in earnings they go to the next higher bracket. That is fair.

The no tax and flat tax crowd assumes equal footing and equal benefits and the same meal. They are not eating the same meal, in the same amounts, at the same table.

At the end of the day, the rich still have far more disposable income, chances for deductions and money, than the poor.

The rich want to give a few crumbs to the poor whenever they are moved to do so while they keep getting richer.

All this flat tax talk is just to fool the average middle class joe into thinking he will somehow get a break. He won’t.

We have a government that has an army, a CIA, a State Dept, a Treasury, a Justice Dept, and a lot of other programs that must be funded.

We have a graduated income tax, and you can mess with it all you want, but you can’t make poor people pay for government, and you can’t make middle class people pay for all of it.

Government is a burden, but it also bestows benefits. Those who have the most are those who receive the most benefit, for it is their wealth that our stability helps create and maintain.

Who does the military protect in far away places? It protects Americans and their business interests. Our economic strength flows from that.

We have to pay for our military and our debt, which is probably 80% of the budget, if we never paid another entitlement, if we killed every piece of social legislation.

Bush has reduced the budget for veterans and medicaid. He said the programs were not producing results! What is his definition of results? Profit? Never mind the health benefits. He is also cutting the budget for policeman and education.

Most of the rich got rich the way the country was before Bush. Now they want to pull the ladder up and keep the status quo. They think they earned ALL THEIR MONEY themselves without ANY help. In reality, they have been successful because of where they live and work and do business and ALL OF US.

The reason for the rich to pay more for the government is because they benefit the most from the government.

The government spends billions on the military. Who benefits more — the soldier from the lower class background who is risking her life in our volunteer army for what may be her only chance at a college education, or the wealthy family who never have to worry about their children getting drafted to defend our country?

If the upper class will not contribute blood to our country’s defense, then they should be willing to provide a greater share of the money.

The no tax and flat taxers need to think about making our country stonger from the inside, rather than sucking it dry.

Ann,

The earnings of the bottom 50% is money that is for necessities like food, shelter, car, daycare, utilities, insurance and health costs. It should not be taxed at all.

Look at your own figures. The lowest 50% pay only 3.5% of the income taxes that is pretty close to not at all. You also must consider who those 50% are. According to the Bureau of Labor Statistics;

Minimum wage workers tend to be young. Slightly over half of workers earning $5.15 or less were under age 25, and about one-fourth were age 16-19. Among teenagers, about 10 percent earned $5.15 or less. About 2 percent of workers age 25 and over earned the minimum wage or less.

This shows that the majority of the lowest 50% are teens or young adults just starting their work life. Data also shows that of the low wage workers under 24 years of age 52.7% have never been married. Based on these statistics it must be concluded that the large majority of low wage workers
Are not supporting families but instead are still being at least partially supported by their parents.

Under the Flat Tax system the lowest 50% especially those with children would see their tax burden reduced.

The Flat Tax with a single low rate of 17% is the answer. Personal exemptions would be given as follows Married Filing Jointly $24,400, Single $12,200, Single Head of Household $15,650. Plus a roughly $5500 exemption per dependent child. These exemption would cover the first income made by each up to the exemption amount. That is it, no other deductions or exemptions period.

Using the figures you posted, the average wage earner in the lower 50% has an Adjusted Gross Income $13,555 per year. Even if the most sever tax situation of filing single is used the tax liability for this worker would be $563.00. If however they were to be taxed under the flat tax plan their total tax liability would be $230.00.

If a married couple both earned the $13,555 AGI would be $27,110 and the tax liability would be $1,123 under the current system and $461 under the flat tax. If that couple had a child the tax liability under both systems would be $0.

I used TurboTax to calculate the tax liability under the current system for each scenario and the link I posted earlier to calculate the tax liability under the Flat Tax plan.

Under each of these scenarios except where no tax in due, the low wage worker is better off under the Flat Tax system. So, my question to you is why are you so opposed to the Flat Tax plan if as you say you are concerned with the plight of the low wage worker?

When the bottom 50 percent pay 3.5% average taxes, that means the top level pay 7% and the bottom pay 0%.

A flat tax of 20 percent would increase their taxes because of no deductions.

Figures don’t lie, but they can be warped around.

The middle class will be hurt the most by the flat tax. We paid 10% this year due to the tax structure. As a couple we maxed out the 401k and took the standard deduction and didn’t hit the alternative minimum tax (AMT).

The flat tax would tax the sale of your home.

Ann,

A flat tax of 20 percent would increase their taxes because of no deductions

First off it is a Flat Tax of 17% being proposed not 20%.

Second, I have shown you usign TurboTax and the current tax code that low wage workers would see a lower tax liability under the 17% Flat Tax. I don’t know how else to show you that the no deductions argument just doesn’t hold water.

The personal exemption under the current tax structure is $3,100 as long as your AGI is not over $107,000. A married couple filing jointly then has personal exemptions of $6,200. Under the Flat Tax they would have the first $24,400 in income exempt from taxes. The additional $18,200 of exemptions for this couple would more than cover most couples additional itemized deductions.

If that couple also has a child under the current system their personal exemption would be $9,300 plus the $1,000 child credit. Again tihs is if your AGI is under $107,000. However under the Flat Tax the first $29,900 in income would be exempt from taxes. Again the additional $19,600 should more than cover most couples itemized deductions.

I apologize for the “figures can be warped” remark. I didn’t mean yours, I meant any figure could be. I had medical testing done yesterday, and was sleepy and miserable from being hungry from no food the day before and no coffee yesterday.

Now, back to the taxing situation. I was referring to losing deductions like the unearned credit for the working poor. I don’t like unearned credit because that means people aren’t being paid a living wage, so the government refunds them money they haven’t paid in as taxes. I am glad they get the money, but it seems like tax payers are paying the workers for what the business should be paying them. The taxpayer is propping up business’s low wages while the businesses are raking in the big bucks.

If the rich and the poor will pay less taxes, then who will pay the Federal expenses and the war? Would that be the middle class?

If the country is in debt now and the present fed income tax averages 22% how could the flat tax work if it is 17%?

Recalculating our taxes, for 2004, they were 13% of taxable income and almost 10% of total adjusted gross income. That is as a couple with the standard deduction.

Figuring our taxes using your standard deduction and the taxes would be $132 more with the flat tax of 17% if the w2 had deducted our 401k on the wages and earning line.. But if the 401k isn’t deducted it would be $3800 more.

I worry about what will be added as taxable and taken away as far as deductions.

When Bush cuts the federal budget, our state and property taxes go up. You have to figure that in too.

I wouldn’t care about an extra $132 in taxes. I have always been proud that we made enough money to pay taxes! I know they are necessary and am glad we all pay together for highways, public schools, our firemen and policemen, ect. However that $3800 would be rough!

It seems that too much is being decided at one time. It is like chaos is being created in every area. What is the rush? Why was everything saved until after the election? Why did Bush say he was going to rush in and do a lot of changes and then “quack like a duck”?

Correction: The tax would be $1512 more if we use the flat tax and the 401k wasn’t deducted from the wage box on our W2. If we didn’t have a 401k, then the flat tax would cost $150 more taxes.

I had posted that it would be $3800 more. The calculator had a figure stored in memory and skewed the figures.

I am getting the different postings about taxes mixed together, plus the websites referred to and Bush’s flat tax. I was posting about the form in Kirk’s Jan 31st posting. I assumed it was the form for the beginning post.

There is a flat 25% credit for retirement savings in Lawnboy’s beginning post on flat taxes, but the flat tax is 25%.

That 25% retirement credit is a good idea, because the way it is now the higher paid employees get a better tax break.

Ann,

If you would like to see how easy this would be and what your tax liability would be under the 17% Flat Tax go to the site below. There you will be able to fill in the three boxes and calculate your taxes under the system. (Do not use commas in your dollar figures.)

http://www.cse.org/flattax/index.php

And yes, your 401K would still be before tax contributions.

If the country is in debt now and the present fed income tax averages 22% how could the flat tax work if it is 17%?

Because the current average 22% is calculated based on Adjusted Gross Income while the Flat Tax is calculated on all non-exempt income. Since many high wage earners have opportunities to take advantage of large tax shelters their AGI is much less than what their non-exempt income would be. So 22% of a smaller AGI would be actuall slightly less than 17% of a larger non-exempt income.

Where the higher wage earners would come out ahead is in the massive reduction in tax preparation time and expense of CPAs, Tax Consultants and tax sheltering vehicles. This would more than offset any increase in taxes they would see from the higher non-exempt income. So, in other words this is income redistribution from the CPAs, Tax Consultants to the General Fund.

Not to mention the major budget reduction for the IRS. That in itself would likely add millions to the General Fund.

I used the tax form and it was $150 more for us using the flat tax. No biggie. It was simple. Ours was almost that simple this year because of using the standard deduction.

However, I typed in $15,000 for a couple with two children. They owed 0 taxes, but they received no earned income credit.

Using $15,000 and 1 head of household with 2 children it was 0 taxes, but no earned income credit.

Typing in $24,000 for a couple with 2 children it was again 0 taxes and no earned income credit.

The lower income group need something added to replace the unearned credit or a $5000 credit needs to be added for those with children that make under $30,000.

Most people don’t realize this, but the deductions on home interest doesn’t help most of those who are in the bottom 65% because the standard deduction is about the same as their deductions will be.

The main thing on the flat tax would be what we would pay taxes on. If we have to pay on selling our investments, car or home without deducting the basis, then the flat tax would not be as good as the tax we have now.

Probably the biggest killer of the flat tax is the fact that it will wipe out a whole industry of CPAs, tax Consultants, tax software and tax sheltering vehicles. What jobs would replace those?

If social security payroll taxes were replaced with the flat tax then it would have to be a higher flat tax. It would weaken Social Security because as it is now, those who draw it are the ones who pay in, where if it is part of the general fund they would start treating it as if it were welfare.

Don’t forget that the Social Security taxes have helped fund the budget. I don’t understand how Social Security could be taken out of the gdp.

Taxes would have to be more progressive. The rich would have to pay more because they have more.

The rich are going to have to pay a higher tax if this country is ever going to get out of debt so we stop paying billions in interest.

Without studying it, it seems like a progressive flat tax should be 30% for those making over 1 million, 20% for those making $400,000 to 1 million, 15% for those making $90,000 to $400,000 and 10% on $50,000 to $90,000. 0 taxes on under $50,000 and an unearned credit of $5000 for those who earn less than $30,000. That tax is if there are no special tax breaks.

If there is no tax on business then the owners should pay 35%, at least, on their income. But if they didn’t draw income, there should be an estate tax to keep it from never having taxes paid on their money.

It would take someone with more knowledge than I have on taxes to come up with a fair tax system by using facts and figures of income and outgo that the government have statistics on.

Ann,

The lower income group need something added to replace the unearned credit or a $5000 credit needs to be added for those with children that make under $30,000.

OK, so we give these people a $5000 gift. And make no mistake about it, it is a gift as they had to do nothing to earn it.

A couple with children earn $29,800 and we the people give them a $5,000 gift raising their total income to $34,800. what about the couple with children who earn $30,500. Where is their gift? They have now effectively been made the low age earners by your un-earned income gift.

Where is the encouragement for those earning below $30,000 to try and improve their earning power? That $5,000 gift is the equivalent of a $2.40 per hour raise for a full time worker. If there is on the job training I could take that would net me a promotion and a $2.00 an hour raise why would I? I would loose over $800 in income.

As for FICA Taxes they would still be taken out of your check as they are now and businesses would still have to pay taxes.

There are people who work 40 hours a week and would be better off on welfare. That is what the unearned credit is for. They have to work to get the credit. It is to make sure those who work get enough to keep them from total poverty. They need to make a living wage.

I am not sure what the cut off is now. It may just be $15,000. I posted it should be $30,000. I think it isn’t that wage now. You could put in different amounts in a federal tax software and see. Or look it up on the IRS.gov site. I think it is progressive.

They do earn the money. It is their employer who isn’t paying it, so the government steps in and pays it.

The business they are working for should pay the $5000 not the taxpayers. But the business isn’t paying a living wage or the person lost their job ect.

It costs money to work. Day care, a car that will make it to work, lunches ect.

We should strive to have more compassion. Jesus said “What you have done to the least among you, you have also done to me.”

A person can get in some terrible situations and need help like that. I would rather pay more taxes to help them until our cheap wage business owners take their responsibilty more seriously.

The scenario you created would be rare. They need a break. Except for politians who are breaking promises or starting unecessary wars, I try not to critisize anyone. It may not seem like it to some, but most people are doing their best and trying very hard.

A lot of those who get unearned credit don’t have parents to help them out. They have to pay rent and utilities and make do with what is left. Life is grim for them. Why should they be miserable when they work as hard as anyone else?

There is a great need in this world for nice people. It isn’t all about money.

Ann,

They do earn the money. It is their employer who isn’t paying it, so the government steps in and pays it.

The business they are working for should pay the $5000 not the taxpayers. But the business isn’t paying a living wage or the person lost their job ect.

It also costs money to be in business. Just because it is a business doesn’t mean it is rich. There are many businesses that are starting out or struggling to stay in business just as there are workers who struggle. Maybe the business can’t afford to pay the extra $5000. Or maybe they could if they fired one of their employees and then paid that money to the rest. Personally, I would rather see that extra person working. Or maybe the worker has no marketable skills except their physical labor.

I know what it is like to struggle to pay your bills and make sure your family has food on the table. When my wife and I started out we both had just started college and then we did something stupid in regards to the timing and had a baby. So, I went to school full time during the day and worked nights. My wife worked days and went to school at night. We literally passed our daughter back and forth to each other in the college parking lot.

Once I graduated I still was not making enough money to support us so again I worked days and my wife worked nights. I also took a second job cleaning the bathrooms in a semi tractor body factory. So, when my wife got home from work just after midnight, I would go clean the bathrooms come home sleep for a few hours and then go to my real job.

I say all that not for sympathy but to show that if you want to bad enough, there are ways to provide for your family. We qualified for food stamps, WIC and several other government programs. But, my wife and I decided that it was not the fault of the government or our neighbors that we were in the situation it was our own. So, we did a lot of things we really did not want to do to avoid making someone else foot our bills.

Jesus said “What you have done to the least among you, you have also done to me.”

And that is exactly why I am involved with the High School Youth Ministry at our Church. In fact I am the Service Project Coordinator for the youth group. We do mission work like construction at a children’s home, food and toy drives at Christmas / Thanksgiving, and volunteer at a local homeless shelter. You see, I have no issue with giving someone a hand up who find themselves in temporary hardship or those that for physical or health reasons can’t help themselves. What I do have a problem with is a handout to people who do not seem to want to help themselves by doing what it takes to improve their knowledge or skills in order to get a better job. Or getting a second job so that they don’t have to rely on we the people for their subsistence. We have far too many people in this country who immediately turn to government as the solution to all their problems.

I know that I am painting with a broad brush when I say those things, and I know that there are people who fall into situations that truly need assistance. I just don’t think that taxpayer dollars and government are necessarily the most efficient way to help those people in the long run. It has been said “Give a man a fish and he will eat that day; teach a man to fish and he will eat for a lifetime.” In other words a hand out is that a hand out that chases away the hunger for today. Yet unless the person is given a hand up he will be hungry again tomorrow.

A lot of those who get unearned credit don’t have parents to help them out.
That should read earned credit not unearned credit. It is money earned that their employer didn’t pay them.

We qualified for food stamps, WIC and several other government programs. But, my wife and I decided that it was not the fault of the government or our neighbors that we were in the situation it was our own. So, we did a lot of things we really did not want to do to avoid making someone else foot our bills.

We could have taken welfare at times when we were younger, but we didn’t take it either. N-ot everyone has a choice. It is government help or live on the streets. Wic or malnutrition.

What I do have a problem with is a handout to people who do not seem to want to help themselves by doing what it takes to improve their knowledge or skills in order to get a better job. Or getting a second job so that they don’t have to rely on we the people for their subsistence…….Or maybe the worker has no marketable skills except their physical labor.

When did “physical labor” become almost worthless? Everyone should have to work physically hard at a job for a year. They would value it more.

It is sad when young couples have to take all their time working and have so little time left for their children. In our area, decent day care was nonexistant and I refused to leave my children and work. My husband didn’t want me to leave them either. I am still glad I stayed home with them.

Some do use earned income credit to further their education. Not everyone has parents that can watch the children while they go to class. It is expensive to even take part time classes when you have to hire a sitter and drive a long ways and keep a job too.

I know a couple who are going to use their earned income credit to go bankrupt. They couldn’t afford to go bankrupt before. What is wrong with that picture?

The quality of family life is pitiful in our country and it promises to get worse.

Germany had a 35 hour work week. It was raised recently to a 40 hour work week in order to compete globally. Imagine having 5 hours less to spend with your family.

I have heard the real reason the republicans want to destroy Social Security is to be more competitive overseas.

As the leader of the free world, our country should improve the quality of life in the world, not make it even worse. If all countries would set the standards of 35 hour work weeks at full pay, a retirement like social security for all working people and national health insurance it would level the playing field.

Life will get grimmer and grimmer for the average person if every country keeps cutting out programs and increasing working hours to compete in the world economy. And the rich will get richer.

Every country should expect the rich to pay a lot more than the working class. The tax should be progressive, if not, the wealthy will not pay any taxes and will play one country against the other.

“Give a man a fish and he will eat that day; teach a man to fish and he will eat for a lifetime.”

Not everyone has a fishing pole or lives near the water.

Social Security is put in the flat tax pot, that the employer match is not lost.

Above should read “We need to make sure, if Social Security is put in the flat tax pot, that the employer match is not lost.

That was a real computer error. Part of it didn’t transfer to post.