http://www.onlinetaxrevolt.com/

I hate doing taxes. I would love a flat tax, but I'm resigned to the fact it will never change. People are too addicted to the deductions and powerful players want to keep the deductions. The home mortgage one especially.

(02-19-2010 09:37 AM)Machiavelli Wrote:  I hate doing taxes. I would love a flat tax, but I'm resigned to the fact it will never change. People are too addicted to the deductions and powerful players want to keep the deductions. The home mortgage one especially.

i wonder, would those powerful players rather pay around 40% (minus deductions) or a flat tax? This isn't meant to be a rhetorical question, i certainly don't know the answer

The tax code is the way it is because thats the way the 535 want it.

I joined, I will probably be visited by the IRS for repatriotization.

I would love a flat tax. I daytrade, medical bills, and rental properties. It's horrible and I try to do it myself. Well with the Mrs's.

(02-19-2010 11:22 AM)Machiavelli Wrote:  I would love a flat tax. I daytrade, medical bills, and rental properties. It's horrible and I try to do it myself. Well with the Mrs's.

Flat Tax doesn't address:

A) People not paying taxes
B) People working under the table
C) Illegals
D) Job creation
E) the redeployment of jobs to this country from other countries

There are more.

(02-19-2010 11:22 AM)Machiavelli Wrote:  I would love a flat tax. I daytrade, medical bills, and rental properties. It's horrible and I try to do it myself. Well with the Mrs's.

What is interesting to me is that the trend in the rest of the developed world is slanting massively toward flatter (less "progressive") tax rates at the same time that the party in power here is talking about more "progressive" rates.

Ten years ago, the difference between the highest marginal rate and the lowest marginal rate for the OECD as a whole averaged about 2% less than the US (the OECD as a whole was about 2% "flatter"). Based on the latest numbers that I have seen, the OECD as a whole now averages about 10% flatter than the US. Those are straight arithmetic averages, each country counts 1, not weighted for population or income or anything else. Obviously, weighted results might be different, but I don't think weighting is really appropriate for this kind of calculation, and no matter how you weight it I would expect to see a similar trend.

The trend might not be as pronounced if weighted based on population, because one of the downward drivers is that the generally smaller Eastern European countries have been rejecting the highly graduated taxes that they came out of communism with, and replacing that tax structure with what I have called the 15-15-15 approach (15% payroll tax [think social security with no upper limit], 15% business income tax, 15% consumption tax).

I like the 15-15-15 approach for a couple of reasons. One, I think it would be easier to pass here. Note that there is no 1040, no April 15, and you keep the IRS but it really only audits businesses, not individuals. Two, if you go with just the "fair tax," the rate needs to be up around 24%. By going with three 15's, nobody is really looking at a big enough tax in any one area to start doing a lot of stupid tax avoidance things; at 15%, the reward just doesn't justify the risk. 15-15-15, with a Boortz-Linder prefund at 30% (two times 15%), would have balanced the budget in every year until 2009. When you cancel the welfare programs that become redundant because of the prefund, you probably do a few hundred billion better than that.

Rebel, I know we disagree on this, and I don't really reject a fair tax alone. I'm just not sure that would ever fly politically, and I think this might. I also don't really care whether the consumption tax follows the VAT, GST, or "fair tax" model; although there's a lot of commotion back and forth on this, at the end of the day I think we're in the same place with all three.

And I do like the idea that the tax bite is never really big enough in any one area for people to start doing a bunch of stupid crap to avoid it. Sure there will always be the crazy who flies an airplane into the IRS building (although under 15-15-15, I'm not sure he would have had an issue), but overall I think we'd get a lot more rational actions.

The Iron Curtain countries went with 15-15-15 (and in some cases it gets up to around 19%, like one of the elements in, IIRC, Romania) because they had blue ribbon teams of economists (different for each country) come in and tell them that was the best way to encourage growth.

Encourage growth? Any need for that here?

(02-19-2010 12:08 PM)Owl 69/70/75 Wrote:  

(02-19-2010 11:22 AM)Machiavelli Wrote:  I would love a flat tax. I daytrade, medical bills, and rental properties. It's horrible and I try to do it myself. Well with the Mrs's.

What is interesting to me is that the trend in the rest of the developed world is slanting massively toward flatter (less "progressive") tax rates at the same time that the party in power here is talking about more "progressive" rates.

Ten years ago, the difference between the highest marginal rate and the lowest marginal rate for the OECD as a whole averaged about 2% less than the US (the OECD as a whole was about 2% "flatter"). Based on the latest numbers that I have seen, the OECD as a whole now averages about 10% flatter than the US. Those are straight arithmetic averages, each country counts 1, not weighted for population or income or anything else. Obviously, weighted results might be different, but I don't think weighting is really appropriate for this kind of calculation, and no matter how you weight it I would expect to see a similar trend.

The trend might not be as pronounced if weighted based on population, because one of the downward drivers is that the generally smaller Eastern European countries have been rejecting the highly graduated taxes that they came out of communism with, and replacing that tax structure with what I have called the 15-15-15 approach (15% payroll tax [think social security with no upper limit], 15% business income tax, 15% consumption tax).

I like the 15-15-15 approach for a couple of reasons. One, I think it would be easier to pass here. Note that there is no 1040, no April 15, and you keep the IRS but it really only audits businesses, not individuals. Two, if you go with just the "fair tax," the rate needs to be up around 24%. By going with three 15's, nobody is really looking at a big enough tax in any one area to start doing a lot of stupid tax avoidance things; at 15%, the reward just doesn't justify the risk. 15-15-15, with a Boortz-Linder prefund at 30% (two times 15%), would have balanced the budget in every year until 2009. When you cancel the welfare programs that become redundant because of the prefund, you probably do a few hundred billion better than that.

I don't understand all the details, including the prefund, but wouldn't working "under the table" avoid these taxes?

Do you get deductions? Not that I want to see RR pensions as a deduction, and I'd be willing to sacrifice mortgage as a write off...but I am sympathetic to those w/ high medical bills. And what about charitable deductions?

A decline in charitable giving might be an "unintended" consequence. I'm not judging this plan based on that, I'm just trying to understand if there are deductions.

(02-19-2010 12:32 PM)DrTorch Wrote:  

(02-19-2010 12:08 PM)Owl 69/70/75 Wrote:  

(02-19-2010 11:22 AM)Machiavelli Wrote:  I would love a flat tax. I daytrade, medical bills, and rental properties. It's horrible and I try to do it myself. Well with the Mrs's.

What is interesting to me is that the trend in the rest of the developed world is slanting massively toward flatter (less "progressive") tax rates at the same time that the party in power here is talking about more "progressive" rates.
Ten years ago, the difference between the highest marginal rate and the lowest marginal rate for the OECD as a whole averaged about 2% less than the US (the OECD as a whole was about 2% "flatter"). Based on the latest numbers that I have seen, the OECD as a whole now averages about 10% flatter than the US. Those are straight arithmetic averages, each country counts 1, not weighted for population or income or anything else. Obviously, weighted results might be different, but I don't think weighting is really appropriate for this kind of calculation, and no matter how you weight it I would expect to see a similar trend.
The trend might not be as pronounced if weighted based on population, because one of the downward drivers is that the generally smaller Eastern European countries have been rejecting the highly graduated taxes that they came out of communism with, and replacing that tax structure with what I have called the 15-15-15 approach (15% payroll tax [think social security with no upper limit], 15% business income tax, 15% consumption tax).
I like the 15-15-15 approach for a couple of reasons. One, I think it would be easier to pass here. Note that there is no 1040, no April 15, and you keep the IRS but it really only audits businesses, not individuals. Two, if you go with just the "fair tax," the rate needs to be up around 24%. By going with three 15's, nobody is really looking at a big enough tax in any one area to start doing a lot of stupid tax avoidance things; at 15%, the reward just doesn't justify the risk. 15-15-15, with a Boortz-Linder prefund at 30% (two times 15%), would have balanced the budget in every year until 2009. When you cancel the welfare programs that become redundant because of the prefund, you probably do a few hundred billion better than that.

I don't understand all the details, including the prefund, but wouldn't working "under the table" avoid these taxes?
Do you get deductions? Not that I want to see RR pensions as a deduction, and I'd be willing to sacrifice mortgage as a write off...but I am sympathetic to those w/ high medical bills. And what about charitable deductions?
A decline in charitable giving might be an "unintended" consequence. I'm not judging this plan based on that, I'm just trying to understand if there are deductions.

The intent of 15-15-15 is that the rewards of working under the table would be too low for the risks. Since tax compliance efforts can be focused solely at the business level (you can catch all three--payroll, consumption, and business income--at that level), the expectation is that you would see much higher audit coverage and fewer evaders getting through unscathed. So lower reward and higher risk would lead to an expectation of more compliance.

There are no 1040 deductions because there is no 1040. There is no personal income tax, no April 15, no more IRS audits for individual taxpayers. Your employer deducts the equivalent of social security from your paycheck (with no upper limit) and matches it and sends it off to the feds; that's it. Individuals with investment income (capital gains, interest, dividends) would have to file to pay taxes on those, but that's it; a de minimis floor could be set to eliminate those returns for most taxpayers.

The prefund in this model is 30% of the poverty-level income for your family size (in the "fair tax" only model, the rate is not 30% but whatever the "fair tax" rate is). Divide by 12 and send you a check every month. Everybody gets it (probably EFT instead of a check). If you do this plus the French health care approach I have advocated, you end up with nobody in the country being more than a minimum wage job away from living above the poverty line.

As for charitable contributions, the research to date seems to indicate that contributions are much more a function of disposable income than tax incentives--they go up or down more with economic prosperity than with tax rates or limitations on charitable deductions. With that in mind, if this spurs growth then the logical expectation would be more--not less--charitable giving. My sense is that the research is too sketchy to be certain, but that is the way that what research has been done seems to lean.