jump to last post 1-4 of 4 discussions (4 posts)

How do flat taxes cost the middle and lower classes more than the wealthy and th

  1. Xenonlit profile image59
    Xenonlitposted 5 years ago

    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.

  2. Billy Hicks profile image86
    Billy Hicksposted 5 years ago

    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.

  3. WritingPrompts profile image75
    WritingPromptsposted 5 years ago

    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.

  4. LandmarkWealth profile image80
    LandmarkWealthposted 5 years ago

    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.

 
working