How do flat taxes cost the middle and lower classes more than the wealthy and the corporations?
Flat taxes can benefit the wealthy and the corporations when the public pays for infrastructure, business subsidies and other support for corporations. The corporations make profits, but pay no more in taxes than the consumers who paid for the infrastructure AND the products that they sell. Please stay on topic.
It's the "impact" of the money. I did a hub on this a couple weeks ago, but here's a quick example:
Assuming a 15% flat tax:
Someone who makes $20,000 a year would pay $3,000 in taxes, leaving them $17,000 to live on.
Someone who makes $100,000 a year would pay $15,000 in takes, leaving them with $85,000 to live on.
The $3,000 has a substantial impact on the person only making $20K, while there is no significant "life-style change" for the person making $100K.
It's the same with businesses, the impact is larger on those with less income.
One thing I saw proposed (by McCain 4 years ago) was a high standard deduction and then a flat tax after that. It would have given you the first $27,000 or so that you earn free and clear, and then tax everything after that at some set rate.
Without that deduction, a 10% tax could really hurt people who are poor and barely getting by on their low income. Wealthy people are able to live fine on what's left over though, and so it seems unfair if the taxes are making it hard to feed and clothe your family.
A Flat tax on the contrary in places where it has been used has generated more revenue not less from the wealthiest of individuals. The reality is that the increased revenue is more a result of the efficiency it creates by not diverting unecessary resources to the regulatory aspect of taxes. This assumes that the complex 8000 pages of tax law is consolidated into a flat tax with no itemized deductions of any significance.
The tax rate regardless of how progressive it is has always generated the same revenue as a percentage of GDP. In 1952 the highest rate was 92% and the Gov't collected about 18% of GDP. In 1988 the highest rate was 28% and the Gov't still collected 18% of GDP. For nearly a century regardless of the rate the Gov't collects the same revenue as a share of GDP. The range is always 15-20%, usually averaging 17-18%.
The only way to really increase revenue is to increase GDP. The simplification of the flat tax goes along way to increase efficiency, and hence increase economic activity which is good for all of us.
Regarding the corporate tax...It is essentially a myth. It doesn't really exist. Every corporation both public and private is concerned first with their net after tax return, the same as a worker looks at their take home pay. Every tax they incur is already priced into the goods and services the consumer pays for. It is always passed on to the consumer in price increases along with various other expenses they incur.
by Ralph Schwartz 6 years ago
Can someone define what their, or anyone else's "fair share" is?Each day I hear complaints about rich people not paying their "fair share" of taxes - someone define "fair share" for me.
by taburkett 11 years ago
The current tax code is detestible.Herman Cain recently introduced the 999 plan.Other politicians have introduced many plans previously.We have gotten nothing from the self-serving politicians.Do you believe we need a solid citizen centered plan?A plan has been formulated called the TRUE TAX that...
by ptosis 6 years ago
Tell Congress: Tax reform should help working families, not millionaires!https://petitions.signforgood.com/prote … orgood.com Want a new house? If you're in a big city or a blue state, you'd be screwed. It limits the mortgage tax deduction of $500,000 for new home purchases....
by ahorseback 6 years ago
Whatever you do follow those party lines or pay for it dearly , you WILL be shamed ?
by ga anderson 8 years ago
Much is heard of a demand that corporations and the wealthy pay their "fair share" of taxes, but I have heard little of what that share should be.With only a single restriction; that the discussion is about legal tax actions, what should that "fair share" be?One could say that...
by Shyron E Shenko 7 years ago
Trump said at the first debate that it is good business not to pay taxes, do you agree with him?At the same time he is talking about the Military shrinking. Maybe he doesn’t know that taxes pay for the Military. Taxes also pay our infrastructure, schools, police…etc.
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