Why we need a flat tax

[^_^ 5,021]

The working class may be taking a beating from spending cuts used to close a cavernous deficit, Mr. Williams said, but the root of California's woes is its reliance on taxing the wealthy.

Nearly half of California's income taxes before the recession came from the top 1% of earners: households that took in more than $490,000 a year. High earners, it turns out, have especially volatile incomes—their earnings fell by more than twice as much as the rest of the population's during the recession. When they crashed, they took California's finances down with them.

Mr. Williams, a former economic forecaster for the state, spent more than a decade warning state leaders about California's over-dependence on the rich. "We created a revenue cliff," he said. "We built a large part of our government on the state's most unstable income group."

...

Tax experts say the problems at the state level could spread to Washington, as the highest earners gain a larger share of both national income and the tax burden. The top 1% paid 38% of federal income taxes in 2008, up from 25% in 1991, and they earned 20% of all national income in 2008, up from 13% in 1991, according to the Tax Foundation.

"These revenues have a narcotic effect on legislatures," said Greg Torres, president of MassINC, a nonpartisan think tank. "They become numb to the trend and think the revenue picture is improving, but they don't realize the money is ephemeral."

...

U.S. Rep. Tom McClintock (R., Calif.) has for years advocated a flat tax in California to reduce volatility and keep high-earners from leaving the state. "California has one of the most steeply disproportionate income taxes in the nation," he said. "A flatter, broader tax rate would help stabilize the most volatile of California's revenues."

http://online.wsj.com/article/SB10001424052748704604704576220491592684626.html

[mawilson 2,133]

46.9% of Americans pay no federal income taxes and some even get tax credits. 'Nuff said.

[Mr. Big Dog 10,747]

The top 1% paid 38% of federal income taxes in 2008, up from 25% in 1991, and they earned 20% of all national income in 2008, up from 13% in 1991, according to the Tax Foundation.

So, their share of all national income went up 54% between 1991 and 2008 while their share of all income taxes paid went up somewhat less in that same timeframe - 52%. This doesn't suggest that they have gotten the short end of the stick, does it?

[^_^ 5,021]

So, their share of all national income went up 54% between 1991 and 2008 while their share of all income taxes paid went up somewhat less in that same timeframe - 52%. This doesn't suggest that they have gotten the short end of the stick, does it?

You should really see a doctor about that knee jerk.

This thread isn't about whether the rich have gotten the short end or the long end of the stick. This thread questions the wisdom of relying on a volatile revenue stream as a means of paying for necessary programs.

[JohnSmith2007 353]

You should really see a doctor about that knee jerk.

This thread isn't about whether the rich have gotten the short end or the long end of the stick. This thread questions the wisdom of relying on a volatile revenue stream as a means of paying for necessary programs.

It is a little like the wisdom of taxing cigarettes to fund other programs. As the tax goes up people tend to quit smoking. As the rate of people quitting goes up the tax revenue goes down so the raise the tax more to offset the loss. This only makes more people quit. Soon you have programs that cannot be funded because there are not enough people smoking to keep the money stream going.

It all goes back to the failed idea of social engineering through taxes. It works at first but at some point it cannot continue. Taxes are for funding the government, not to redistribute wealth or to modify behavior.

[^_^ 5,021]

Taxes are for funding the government, not to redistribute wealth or to modify behavior.

Agreed. While liberals and conservatives disagree on what government should do, I can't imagine we disagree on the need to reduce volatility in the revenue stream government needs to do what it does.

[JimVaPhuong 4,863]

So, their share of all national income went up 54% between 1991 and 2008 while their share of all income taxes paid went up somewhat less in that same timeframe - 52%. This doesn't suggest that they have gotten the short end of the stick, does it?

No, their share of all national income went up by 7%, while their share of all national income taxes went up by 13%. Same two pies - proportionately different size slices.

Quoting a percentage increase of two numbers which are already percentages of something else is a statistical dirty trick. It's an intentional attempt to change two figures which are already measured with the same yardstick - percent of the national total - to two completely different yardsticks - percentages of their starting values.

[TBoneTX 46,348]

Quoting a percentage increase of two numbers which are already percentages of something else is a statistical dirty trick. It's an intentional attempt to change two figures which are already measured with the same yardstick - percent of the national total - to two completely different yardsticks - percentages of their starting values.

My head hurts. I conclude that Algebra is the national language of Algeria, si man. Edited April 3, 2011 by TBoneTX

[Brother Hesekiel 2,236]

Here's my proposal:

Annual incomes from:

$1 up to $24,000 . . . . . . . . . . . . No Income Tax

$24,001 up to $36,000 . . . . . . . 10%

$36,001 up to $48,000 . . . . . . . 20%

$48,001 up to $60,000 . . . . . . . 25%

$60,000 up to $80,000 . . . . . . . 30%

$80,001 up to $100,000 . . . . . . 35%

$100,001 up to $250,000 . . . . . 40%

$250,001 up to $500,000 . . . . . 45%

$500,000 up to $1,000,000 . . . .50%

$1,000,000 up to $5,000,000 . . 75%

$5,000,000 up to $10,000,000 . 90%

$10,000,000 to the moon . . . . . .99%

Example 1:

You make 23K: you pay nothing

Example 2:

You make $33K: you pay 10% of $9K = $900 per year

Example 3:

You make $80K: you pay $1,200 + $2,400 + $3,000 + $6,000 = $12,600 per year

Example 4:

You make $5 Million per year: you still take home more money than you can possibly spend without p*ssing it away.

[mawilson 2,133]

You make $5 Million per year: you still take home more money than you can possibly spend without p*ssing it away.

Private jets are expensive.

[Brother Hesekiel 2,236]

Private jets are expensive.

Those are corporate jets and thus tax deductible. If you bring home $5,000,000 + per year, that's only happening if a corporation (of any sort, even if it's a 1-member C or S Corp LLC) makes serious money. Think about a CEO who gets a $30,000,000 per year pay check. The jet he uses is a corporate jet. What he gets is just money to play with. Nobody needs $33,000,000 per year as long as US veterans are homeless and hungry. No taxes for the poor, fair taxes for the masses, and high taxes for those who are droening in money and have hundreds of millions or billions.

[Dakine10 5,452]

Here's my proposal:

Annual incomes from:

$1 up to $24,000 . . . . . . . . . . . . No Income Tax

$24,001 up to $36,000 . . . . . . . 10%

$36,001 up to $48,000 . . . . . . . 20%

$48,001 up to $60,000 . . . . . . . 25%

$60,000 up to $80,000 . . . . . . . 30%

$80,001 up to $100,000 . . . . . . 35%

$100,001 up to $250,000 . . . . . 40%

$250,001 up to $500,000 . . . . . 45%

$500,000 up to $1,000,000 . . . .50%

$1,000,000 up to $5,000,000 . . 75%

$5,000,000 up to $10,000,000 . 90%

$10,000,000 to the moon . . . . . .99%

That's a strange system. A guy making 4 million takes home 1 million, someone making 8 million would take home $800000, and the guy making 16 million takes home $160,000.

It's like the progressive tax code from Bizarro world.

[misterbigtoe 45]

Nobody needs $33,000,000 per year as long as US veterans are homeless and hungry. No taxes for the poor, fair taxes for the masses, and high taxes for those who are droening in money and have hundreds of millions or billions.

Hmmmm.......from each according to his ability, to each according to his need?

Who decides how much is too much? 33 million? What about 330K? Who draws the line except the one who is extending the effort or risk to be among the highest wage earners? Or are you simply advocating mediocrity and the stripping the incentive for innovation, risk and hard work from our economy?

How do you feel about the Vets who are not hungry and homeless? Plenty of them your group of those who have much more than they "need". Screw them too?

Edited April 4, 2011 by misterbigtoe

[Zero Sum 305]

I'm wealthy and suffering. Don't tax me bro.

[^_^ 5,021]

I realize it is emotionally fulfilling to hate those who have more than you do, but I have yet to hear a cogent argument from anyone on this thread in favor of greater reliance on highly-volatile revenue streams.