Under a Flat Tax would the Rich/Wealthy still pay more money
23 Oct 2011, 10:00 am
Under a Flat Tax would the Rich/Wealthy still pay more money in taxes after all wouldnt 18% of 30 million dollars be more than 18% of 10 000 dollars ?
A Brief Guide to the Flat TaxBy Daniel Mitchell, Ph.D.
July 7, 2005
Frequently Asked Questions
Q: Should the rich pay more?
A: Under a flat tax, the rich do pay more than the poor. A wealthy taxpayer with 100 times more taxable income than his neighbor will pay 100 times more in taxes. However, a flat tax does not impose special penalties on those who contribute the most to the nation's prosperity by subjecting them to punitive and discriminatory tax rates. For those who think the "rich" should pay a higher percentage of their income, the generous family allowance effectively creates a modest level of "progressivity." For instance, a family with an annual income of $20,000 faces a tax rate of zero. Wealthy taxpayers also benefit from the family allowance, but the effective tax rate on an income of $1 million will be only a tiny fraction below the statutory tax rate.
This approach is much fairer than the current system, which penalizes investors, entrepreneurs, and others who create wealth for the American economy while simultaneously providing myriad deductions, credits, exemptions, and other preferences that are much more likely to be exploited by upper-income taxpayers. The flat tax eliminates these special-interest loopholes, ensuring that the rich play by the same rules as other taxpayers.
http://www.heritage.org/research/report ... e-flat-tax
23 Oct 2011, 11:46 am
A: Under a flat tax, the rich do pay more than the poor. A wealthy taxpayer with 100 times more taxable income than his neighbor will pay 100 times more in taxes. However, a flat tax does not impose special penalties on those who contribute the most to the nation's prosperity by subjecting them to punitive and discriminatory tax rates. For those who think the "rich" should pay a higher percentage of their income, the generous family allowance effectively creates a modest level of "progressivity." For instance, a family with an annual income of $20,000 faces a tax rate of zero. Wealthy taxpayers also benefit from the family allowance, but the effective tax rate on an income of $1 million will be only a tiny fraction below the statutory tax rate.
What makes you think that being ultra-rich makes one more productive?
One's wealth might be the result of productivity. But it could be because of inheritance or special favors from the politicians obtained by action of the lobbyists. If there were a definite relation between income and productivity I would by the flat rate tax (with bottom cutoff) in a micro-second.
ruveyn
ruveyn
24 Oct 2011, 11:50 am
A Brief Guide to the Flat TaxBy Daniel Mitchell, Ph.D.
July 7, 2005
Frequently Asked Questions
Q: Should the rich pay more?
A: Under a flat tax, the rich do pay more than the poor. A wealthy taxpayer with 100 times more taxable income than his neighbor will pay 100 times more in taxes. However, a flat tax does not impose special penalties on those who contribute the most to the nation's prosperity by subjecting them to punitive and discriminatory tax rates. For those who think the "rich" should pay a higher percentage of their income, the generous family allowance effectively creates a modest level of "progressivity." For instance, a family with an annual income of $20,000 faces a tax rate of zero. Wealthy taxpayers also benefit from the family allowance, but the effective tax rate on an income of $1 million will be only a tiny fraction below the statutory tax rate.
This approach is much fairer than the current system, which penalizes investors, entrepreneurs, and others who create wealth for the American economy while simultaneously providing myriad deductions, credits, exemptions, and other preferences that are much more likely to be exploited by upper-income taxpayers. The flat tax eliminates these special-interest loopholes, ensuring that the rich play by the same rules as other taxpayers.
http://www.heritage.org/research/report ... e-flat-tax
Typical, slanted agitprop. A flat tax rate is not a sine qua non for eliminating, "myriad deductions, credits, exempted and other preferences." It is perfectly possible to close these off without touching progressive taxation.
The backbone of the economy is consumer spending, and the vast majority of consumers are lower and middle income earners. A move to flat taxes is a regressive step, because it impacts income before non-discretionary spending is taken into account. I suggest two alternatives:
1) A flat tax on income after a deduction for groceries, rent (not mortgages), education, and medical/dental expenses. Low income earners who must spend 80% or 90% of their incomes on these necessities of life, pay tax on only that residual portion of their incomes. On the other hand, middle and upper income earners will see that tax applied to a much wider income.
-OR-
2) Imposition of a value-added tax, which exempts groceries, rent, education, insurance, and medical/dental expenses. Upper income earners consume more, and will pay more tax as a direct result of that consumption.
_________________
--James
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