Monday, October 31, 2011

Flat Taxes & "Fairness"

Whenever anyone starts talking about "fairness" in a political context it raises a huge red flag to me, as it usually indicates a total lack of objective reasoning in favor of ideological propaganda. Most political commentary against a flat tax is a prime example, claiming that it wouldn't be fair since it would cut taxes for the rich while raising them for the poor. This type of reasoning is based only on the current system, ignoring the fact that it is harder to get much fairer than a tax where everyone pays exactly the same rate. The only way a flat tax isn't fair is if you believe that wealth should be seized from the rich and redistributed to the poor, that the wealthiest should bear a tax burden far greater than what is their fair share mathematically, and that the poorest should get tax "refunds" of money that they never even paid. Now you might think that's a good system, but it has nothing to do with fairness.

The problem with any flat tax proposal is its contrast with the current system, which taxes the rich at higher rates and transfers some of their money to the poor. Because the current system is so unfair, those who benefit from that unfairness, whether individually or politically, do not want anything fair. If you have gone for years paying no income tax, or have even received money that you never paid in from the earned income tax credit, why would you want a fair system that actually asks you to pay a proportional amount of your income? Likewise, if you see your political constituency as those who receive government benefits, rather than those who pay for them, you want to transfer even more benefits to your supporters, not force them to contribute.

In my opinion a true flat income tax is probably not politically viable in the U.S. And I'm not sure a flat tax that is loaded down with a maze of deductions and rules like the current system would be all that much better. But those who oppose a flat tax on the basis of "fairness" don't want anything fair. What they want is a system that conforms to their ideology, whereby the rich pay an ever-increasing proportion of their income, while the poorest receive greater and greater handouts of that money.

21 comments:

  1. Taxes are always unfair to someone, somewhere, regardless of the tax system.

    As far as a flat income tax rate, the only one I think is "fair" is something called a "modified" flat tax, where you have the first say 25K (or any other "fair" amount) subtracted from the income before applying the income tax rate percentage.

    One would still have the issue of "fairly" defining what "income" is, and what are other "fair" deductions are are allowed.

    What I find funny about Perry's proposal is that one still has the choice of the current system or his "20%" flat tax system... and yet he says this would simplify things????

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  2. I think a rather compelling argument can be made along fairness lines for a progressive income tax.

    The poor have a much larger portion of their available funds tied up in necessary costs (food, rent, clothing, healthcare (if even affordable at all) A flat tax cuts into a much higher percentage of the poor's discretionary funds than it does the rich's.

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  3. Well said, UNRR. The only way "fairness" can be justified is by redefining it based on the burden of life and how much more percentage-wise the poor have to pay for the basics. Just as Mr Forth says above.

    But you've stated it clearly: what could be more fair than everyone paying the exact same proportional share on their income? It is the definition of fairness.

    Anon points out the first political hurdle: we would still have to offer some deduction for the lowest incomes. I don't have a problem with that, and it should be enough to satisfy people like Mr Forth.

    The other hurdle is the comparison to the status quo, because going to a flat tax is a tax cut for everyone paying more than the new flat tax. Objectively, a flat tax is fair, but the left will demonize any attempt by pointing out how much the richest will benefit.

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  4. "A flat tax cuts into a much higher percentage of the poor's discretionary funds than it does the rich's."

    So do things like sales taxes and gas taxes, at an even higher rate, since everyone pays not only the same percentage, but the same amount for the same use. This is also true of pretty much every government fee, which is a tax by another name.

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  5. the problem is that the rich wield a much greater share of economic power - effectively, they in a way decide how poor the poor should be since they are higher up the economic chain. the wealthy decide what the poor will make.

    also, when you are poor it's hard to *live cheap* but the wealthier you are, you have a choice to accept cheaper options and have more disposable income.

    i would rather be taxed at a higher rate than poor people. i can choose to live cheaper to free up disposable income and they can't. my work environment is better than theirs. i have greater security. in a sense, i'm privileged, and privilege entails responsibility. i benefit from the oppression and exploitation of the poor, and i feel paying a higher rate of taxes is the only moral solution there.

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  6. Doesn't matter if you believe in the whorizontal, you're still gonna croak and make the flowers grow; then, while your body's eaten by grubsNworms, your indelible soul rises to be judged on what YOU alone have done with your finite existence. Y'better think summore on where you wanna spend eternity. Here's what I did. I was involved in an severe accident at 15 with my sweetheart, 17 (you can read about it on my profile). Nevertheless, I found what few other human mortals on this swiftly, decaying planet have yet to discover: a Way Home, past this violence and materialism that has so engulfed our populace on this journey to our demise; because you’re ignorant on how to rise above the whorizontal and one-outta-one shall croak sometime, somewhere soon, God has set-up this magnificent feature on the Way either Upstairs or downtown: the Warning. Everyone (me, too) living on this planet will see and feel the Warning lasting about 20ish minutes, showing U.S. a gorgeous picture of Heaven, Purgatory, and dagnasty Hell. Remember, God doesn’t condemn; we condemn ourselves by our sinful lifestyles of unbelief. The Warning’s just a wake-up call. Don’t believe me? You will soon. God bless you with discernment: atheism is cool, isn't it, till you croak...

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  7. UNRR. The only way "fairness" can be justified is by redefining it based on the burden of life and how much more percentage-wise the poor have to pay for the basics. Just as Mr Forth says above.

    But you've stated it clearly: what could be more fair than everyone paying the exact same proportional share on their income? It is the definition of fairness.

    Anon points out the residential alarm system monitoring
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    first political hurdle: we would still have to offer some deduction for the lowest incomes. I don't have a problem with that, and it should be enough to satisfy people like Mr Forth.

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  8. This "flat tax" can be an income tax system by which everyone pays identical tax rate in spite of their cash flow. Flat tax systems are in place in lots of states from the U. Ohydrates. Advocates involving flat tax systems argue that the flat tax is fair because everybody pays identical tax price. In inclusion, flat tax systems eradicate deductions, tax credits, and most exemptions, and thus eliminating biases toward certain conduct and activities. Eliminating breaks, tax credit, and complex tax mounting brackets also simplifies the actual tax signal, making submission easier. Some proponents of the flat tax would like to see the actual Federal Type 1040 replaced by way of simple write-up card on which you compose your salary and increase it by one tax rate.

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