Right Thinking From The Left Coast
I find that the harder I work, the more luck I seem to have. - Thomas Jefferson

Flat Tax Blues
by Lee

Some fucking numbnuts writing in my local dogturd scoop is actually arguing that the current tax code shows why a flat tax hurts the poor and helps those eeeeeeevil rich folks.

So what about the “fantastic growth waiting to burst forth”? Has leveling out federal income tax rates produced a cornucopia of financial benefits?

The answer is probably yes — if you’re a millionaire. And probably no — if you’re almost anyone else. Flattened, and thus lower, tax rates have contributed to huge increases in the wealth of the wealthy, but so far most people haven’t seen significant economic improvement.

Then there’s this.

Under Forbes’ largely forgotten flat-tax proposal, taxpayers would have paid 17% in taxes on all income beyond $36,000 a year, excluding pensions and profits from the sale of investments. The system was to be so simple, the candidate said, that most taxpayers would fill out a form the size of a postcard.

No such system was adopted or even seriously considered, but President Bush has achieved something close to the flat-rate structure by cutting tax rates on earned income and particularly on dividends and investment profits.

Aha!  Therein lies the rub.  Under any successful flat tax structure there are few to no deductions of any kind.  What we’ve got today is a tax structure which has been, as the author says, “flattened” in terms of the basic numbers, but which still has ten thousand different ways of gaming the system.  Since the poor, by virtue of their poverty, cannot afford to hire professional tax preparers, these loopholes will be primarily used by the more affluent.

Man, you really have to love the progressive tax to believe the line of bullshit in this article.

Posted by Lee on 04/17/06 at 01:06 PM (Discuss this in the forums)

Comments


Posted by on 04/17/06 at 03:08 PM from United States

Wow, what a bad article.  I highly recommend that peoploe check it out - just for the entertainment value.  They love comparing the country’s economic performance for the years leading up to 2001 with the years after 2001.  Hmmmm, what could have happened in 2001?  According to this article, the only thing that happened was Bush’s economic policies took hold.  Funny, I remember a few other things happening as well.

Of course, my favorite part of the article was the last couple of paragraphs:

Maria Bautista of Concord, Calif., who took part in a recent Los Angeles Times/Bloomberg poll, said that the economy was performing “fairly well,” but that she paid too much in taxes.

“The rich absolutely do not pay enough in taxes,” said Bautista, an assistant special-education teacher. “There are less and less in the middle; either you make it big or you get left behind.”

Well, if Maria Bautista, who “took part in a recent Los Angeles Times/Bloomberg poll” said that “The rich absolutely do not pay enough in taxes”, well then it must be true.  Unless of course she gets contradicted by someone who is even more of an expert on the subject, like say, my postman or the perfume spritzer at the mall.

Posted by on 04/17/06 at 03:33 PM from United States

If Forbes flat tax proposal (17% of anything over $36,000) had been in effect since I began working, I would never have paid federal income tax…

Posted by on 04/17/06 at 03:36 PM from United States

Well, if Maria Bautista, who “took part in a recent Los Angeles Times/Bloomberg poll” said that “The rich absolutely do not pay enough in taxes”, well then it must be true.

“Its failings notwithstanding, there is much to be said in favor of journalism in that by giving us the opinion of the uneducated, it keeps us in touch with the ignorance of the community.”—Oscar Wilde

(Man..I’ve been gone a long time..Hi again everybody, if anyone remembers who I am. :-) )

Posted by on 04/17/06 at 03:37 PM from United States

A flat tax would be fair to everybody. And God knows, nothing can be fair in this country, we have to make certain groups of people more fair than others.

Posted by on 04/17/06 at 03:41 PM from United States

I paid an 18% flat tax on my income while I was working in Chile.  The Chilean tax structure was set up by some Ivy League Gringos and it worked great.  It’s simple and everyone pays their fair share...even the poor folk.

Posted by on 04/17/06 at 03:45 PM from United States

Where do they find these “educated” columnists that have no comprehension of economics?

Progressive income taxes are socialism, nothing more or less.

Posted by on 04/17/06 at 03:52 PM from United States

If it has the word “progressive” in it for any reason, it is evil…

Posted by bb on 04/17/06 at 04:55 PM from United States

I just wrote a check in the amount of $14,000 to the US Treasury which, in addition to the amounts withheld from my wife’s paychecks and my paychecks, will result in total federal income tax payments to the US Government of approximately $100,000 for tax year 2005.

The point is that (1) the economy was good to us in 2005 and (2) we’re likely considered “rich” and I bet the $100,000 in federal income tax that we paid this year is a hell of a lot more than Maria Bautista paid (she and I live in the same county). 

I also bet that I didn’t get any more federal benefits than she did, so I’m not sure why she would think that I didn’t pay enough tax this year.  I drive a six year old pickup, didn’t have a vacation at all last year and live in a house that is certainly not anything to consider mansion-like (it’s a 2,800 sq ft house on an 8,000 sq ft lot).  According to some, I’m rich, but my lifestyle hardly indicates that.  I’m comfortable, without a doubt, but I don’t have anything in my life that would indicate I am showered with luxury.  I mow my own lawn to save a few bucks, shop at Costco (also to save a few bucks) and even bring my lunch to work (again, to save a few bucks).

Is the idea that I should pay even more than $100,000 in federal taxes next year?  What notion of fairness does that satisfy?  Simply because my income is such that I can pay more?

Posted by Aaron - Free Will on 04/17/06 at 05:14 PM from United States

Uh, I left “progressive” Illinois six months ago, which has one of the worst unemployment rates in the midwest and collapsing median income, and came to a normal state, where I landed a job that paid enough to live on my own within 3 days of getting off the train, got a better one within 4 months, and am now in line for a promotion because there’s a shortage of skilled workers like me in our booming economy.

I’m not even a college grad at this point, I’m taking classes towards a business degree and am going to use some of my new ludicrous overcompensation to get my web design certifications in line. Anybody who doesn’t think the economy is booming is on meth, or just plain lazy, or lazy because they’re on meth.

Posted by on 04/17/06 at 05:26 PM from United States

Originally posted by Mark_M

“Its failings notwithstanding, there is much to be said in favor of journalism in that by giving us the opinion of the uneducated, it keeps us in touch with the ignorance of the community.”—Oscar Wilde

While I get your point, and I would agree with you if the quote had been presented in the fashion of the “Interview with the ‘Man on the Street’”, in my opinion it was presented more as “and here is what our resident expert on the subject (the assistant special ed teacher) had to say about _______”.  How on earth would Maria Bautista know how much the “rich” pay in taxes, or how many people there are “in the middle”?

Posted by reagan80 on 04/17/06 at 05:37 PM from United States

I hope Neal Boortz flies up that columnist’s ass and craps on his (or her?) brain.

Posted by dakrat on 04/17/06 at 05:50 PM from United States

I flipped to CSPAN2 over this weekend and caught a small portion of Neal Boortz in a debate with someone over his “Fair Tax” book.  He was talking about how people like to trot out the phrase that “The rich get richer, and the poor get poorer.”

His reply was that of course the rich get richer, because they keep doing the things that got them rich, and the same goes for the poor.

Posted by Drumwaster on 04/17/06 at 06:14 PM from United States

You 12-steppers will recognize this:

“Insanity is doing the same things over and over again and expecting different results.”

Those payments from the government will never get you out of the ghetto, people. They are supposed to be just enough to keep you alive, not enough to get you that annual trip to Disney World…

Posted by Miguelito on 04/17/06 at 06:40 PM from United States

will result in total federal income tax payments to the US Government of approximately $100,000 for tax year 2005.

The point is that (1) the economy was good to us in 2005 and (2) we’re likely considered “rich”

Dude.. if your TAX was $100k.. you ARE rich.  Or at least you earned a shitload of money this year. 

Even when I sold a big chunk of my stock options in 2001 and grossed $150k on that sale alone, my total taxes for the year didn’t add up to $100k.

Not that I don’t think you probably got soaked in high percentages… but still… I’d love to be earning enough to pay $100k in taxes… at the same rate I paid now.. I’m not saying raise me up to even larger rates. :)

Posted by Mister Minit on 04/17/06 at 06:48 PM from United Kingdom

Dude.. if your TAX was $100k.. you ARE rich.

I think that someone’s just showing off.

Posted by bb on 04/17/06 at 07:02 PM from United States

How do you define rich?  Last year I made about $155k in salary and about $15k in bonus and my wife made about $150k in salary and $65k in bonus.  I know, it sounds like a lot, and it is, but in the Bay Area, it really isn’t rich.  It’s far from it. 

We paid $100k in federal income tax on about $350k in income and got hit with the AMT bigtime.

I’m not trying to show off, as I’ve also had years where I had an income of near zero (’02 and ‘03, in fact).  My point was to ask why I should be taxed even more.  Isn’t paying $100k in taxes more than fair?  I certainly don’t take that much out of the system.  My question remains...if the person quoted in the story thinks that her taxes were already too high, and she thinks that I should pay more, what’s the reason?  Am I taking more out of the system?

Posted by on 04/17/06 at 07:40 PM from United States

Dude.. if your TAX was $100k.. you ARE rich.

I think that someone’s just showing off.

And I think someone else sounds like a true liberal.

bb sounds like a true conservative to me.  He and his wife make a good living.  A damned good living.  However, he is not too good or proud to mow his own grass and take a sack lunch to work.

Yet, too many liberals think the government not only owes them a check each week, but a hearty meal to boot.  AND, they think it should be paid for by bb and his wife.

I salute you, bb.  All power to you and your wife.  And $100,000 is more than enough, in my opinion, for individuals to pay yearly in income taxes.

Posted by Hal_10000 on 04/17/06 at 09:40 PM from United States

The thing about a flat tax is that we currently pay $265 billion a year in tax compliance costs.  We spend hours and hours on our taxes, we get tossed in jail if the IRS gives us the wrong advice.  Cato just put out a study.  Since 1994, the tax compliance cost has increased by $150 billion—three times the Bush “tax cut”.

The problem with Forbes’ proposal is that it harkens back to 1986, when we were supposed to get a flat tax.  It will leave the door open for more political garbage and 60,000 more pages of regs.  I’m on board with the Fair Tax myself....

Posted by bb on 04/17/06 at 09:53 PM from United States

Thanks, RepMom.  I was taught to not waste money and I still look for every way reasonable to save money.  I couldn’t imagine spending $7 on a sandwich when I can make one at home a lot cheaper.

As for the taxes, I’m not even bitching about paying what we paid.  I understand that it costs a lot to run a country and we have to pay in.  What I don’t understand is when people tell me that I’m not paying enough.

Posted by Nethicus on 04/17/06 at 10:37 PM from United States

bb is rich.  But bb doesn’t know it because he lives in Tax TheRichSo.  If bb moved out here to central Illinois, he could buy 30 houses and still have cash to roll around in piles of $100s if he so wanted.

Unfortunately, the Flat Tax will not truly compensate for areas with higher costs of living compared to those of lower costs of living.  In Central Illinois, a Tax Ceiling of $36,000 would exempt about 95% of a township.  In Tax TheRichSo, it would exempt about 5% of the people.  Everyone else would pay taxes.

Don’t get me wrong, it would be light-years better than our arcahic tax code.  In today’s tax code, those on the Left Coast who are earning 60-75k are getting speared by the government, who is shooting them into the 50k+ tax bracket, so they pay 30% or more base tax (outside of deductions).  Throw in a 10% CA State Income Tax, and a local sales tax that floats between 7.5 and 9.5%, and someone earning 75k is effectively taking home 37.5 k, or less, after taxes.  That more than a 50% tax if there are no deductions and you include FICA and Social Security!  Now, you tell me if you can afford a California Mortagage on 3k a month take-home?  Yeah, didn’t think so.

But 75k outside of the coasts is actually fabulous.  Here, it’s a huge income.  You could live like a king here.  The weather’s a bit shitty at times, but at least you can afford a house payment.

The fairest of all taxes would be the VAT (value-added tax, also known as a Federal sales tax).  It taxes you on how much you consume.  Nothing to file-- everything is added into price.

Unfortunately, the VAT doesn’t have a minimum value.  The poor get slammed with it because they have to pay more for everyday items, and because there’s no filing, they get no EIC.

IMHO, the best world would be a mix of the Flat Tax and the VAT.  I’m thinking a Flat Income Tax of 10% with a 15000 standard deduction, +8000 for spouse, and +3000 for every child up to four (maxes out at $35,000).  The tax is adjusted each year for the previous year’s inflation.  On top of this tax is an 8% VAT.  Couple this with massive Federal Government program eliminations and budget trimming, the government could turn a hefty “profit” and start paying down the national debt.

Once the country is debt-free, and the government has established an emergency reserve (for distaster relief and wartime budgets), the VTA/Flat Tax can be reduced to alleviate tax pressure on the economy.

Sounds good?  great, glad you’re on board.  Vote for Me in 2008.  And while you’re at it, we’ll need about 500 like-thinking people to run for US Representative, and 33 to run for Senator.

Posted by on 04/17/06 at 10:54 PM from United States

bb is rich.  But bb doesn’t know it because he lives in Tax TheRichSo.  If bb moved out here to central Illinois, he could buy 30 houses and still have cash to roll around in piles of $100s if he so wanted.

If we moved there he probably also wouldn’t be making as much money as he is now because of the lower standard of living.

Posted by on 04/17/06 at 11:22 PM from United States

Oddly enough, on tonight’s local news, Oregon Senator Ron Weiden (D) is proposing a flat tax with 3 levels: 15%, 25% & 35%. Even stranger, If IIRC, Weiden opposed Forbes’ initial ideas. Typical leftist.

Posted by Drumwaster on 04/17/06 at 11:41 PM from United States

a flat tax with 3 levels: 15%, 25% & 35%.

*blinkblink*

Isn’t this like saying “progressive tax”? Either it’s a flat tax, or it isn’t (and the successful get punished by having to pay more tax).

Posted by Miguelito on 04/18/06 at 12:25 AM from United States

bb.. I think you’d be hard pressed to find many that don’t consider $350k/year to not place one into “rich” territory.. albeit the lower edge, especially considering you’re in SF. :)

According to the top 20% of tax payers that most use as the “official” “rich” line, it’s only like $76k for a family of 4 and $82k (or whatever) for a single person.  Yes, in CA that’s not all that much compared to other locations.. believe me, I’m down in San Diego.  Luckily I bought my home in 2001.

Hell, I’m finally officially earning 6 figures not counting any bonuses or options now, and I think I’m getting soaked on taxes!  I don’t have a problem with taxes for things the gov’t is meant to provide like defense, but these days, the social programs are rediculous. 

I feel the same way you do, I’m glad I’m making what I am, and am living comfortably, but sure don’t feel what I’d consider “rich.” Though I gotta say, if even $350k a year still doesn’t feel much better, SF is just way too damn expensive.. I’d move. 

and no.. I don’t think you don’t pay a fair share.. I’m assuming that $100k wasn’t all your taxes either, just fed.  I know I paid way over 50% when I add fed, CA state, Soc security, etc, and that’s with deductions for mortgage interest, and property taxes.

Posted by Miguelito on 04/18/06 at 12:31 AM from United States

BTW, those that don’t understand how other’s can’t see through the BS that “progressives” love to throw out there saying that a flax tax would actually pass more burden from the evil rich to the pure innocent poor and middle class… I know plenty of people that firmly believe it.  It’s frustrating as hell to get into converstations (or, more often mail threads) where they try to prove that a flat tax is just another way for the republikkkans to shift the taxes away from their neo-con fascist corporate buddies onto the blue-collar working man.

Otherwise intelligent people turn into blithering idiots over topics like this.

Posted by HARLEY on 04/18/06 at 04:45 AM from United States

Sounds good?  great, glad you’re on board.  Vote for Me in 2008.  And while you’re at it, we’ll need about 500 like-thinking people to run for US Representative, and 33 to run for Senator.

ah if only...........

Id love to see that inistuted, me and my wife together make abit more than 50,000 a year, dependiong on how much she wnat to work.
We live reasonably well, nothing fancy but we got a nice house with payments of only 134$ a month and 2 reletivly new trucks and SUV’s.
Here in North East Missouri one can live VERY well on 75,000 a year.... and you can pack a gun anywhere except the bar.. LOL…

Posted by on 04/18/06 at 08:19 AM from Canada

Uh, I left “progressive” Illinois six months ago, which has one of the worst unemployment rates in the midwest and collapsing median income,

But, but, Illinois has a flat income tax of 3%. The reason Aaron’s part of Illinois does so poorly is because enviro lefties determined coal is icky and we shouldn’t use it anymore. However, if that coal was oil, we’d tell the Middle East to fuck off and Iran to piss up a rope. Yet another ample supply of energy we have in the U.S. but refuse to use.

Posted by on 04/18/06 at 09:18 AM from United States

Doesn’t buring coal produce large amounts of smoke which can help ruin the environment?

Posted by Nethicus on 04/18/06 at 10:49 AM from United States

You know, we can convert coal into gasoline-- it’s just very expensive.  Oil needs to be above $60 a gallon before it becomes cost effective.

Hey, wait a minute…

you can read more here about the Fischer-Tropsch process…

http://en.wikipedia.org/wiki/Fischer-Tropsch_process

Posted by on 04/18/06 at 11:01 AM from United States

I think a national sales tax is the best idea for taxation.  What we have now is just plain nuts.

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