Taxes are certain, What about method?

Which income tax method is best?

  • Flat tax rate

    Votes: 9 60.0%
  • Varying tax rate

    Votes: 3 20.0%
  • Varying tax rate with tax deductions

    Votes: 2 13.3%
  • Per capita tax.

    Votes: 1 6.7%

  • Total voters
    15
  • Poll closed .
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Jeremiah

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I am curious about the opinions of people here on taxes. While their necessity is undeniable, the method used to collect can be hotly debated. Income tax is the main discussion for this thread.

Which is better?

Flat tax.
Varying rate dependent upon income level.
Varying rate dependent upon income level with tax deductions.
Per capital tax (how the US federal government collected taxes before the 16th amendment.)


IMHO, the flat tax is the best idea. Lets say a 10% tax rate for easy math. If I make $10k a year, my taxes shall be $1k. If I make $10M a year, taxes will be $1M. This means I will never cross a threshold pay level and end up taking home less money after a pay raise.

At this time, the US tax code is ridiculous. Each year, millions of Americans prepare tax paperwork starting in January hoping to finish by 15 April. Many families are uncertain until the final documents are filed. This is a huge waste of manpower at every level. With a flat tax, the IRS could be substantially cut down. This alone will save the government millions.

Tax breaks for the rich. How unfair is this? The highest tax bracket in America is roughly 33%. The lowest tax bracket is much closer to 10%. How is this fair?
 

chevre

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In principle the flat tax is a nice idea, but... you have to realize how much of the tax burden is carried by the rich right now. If we even out the burden (percentage-wise), it would mean a certain increase for everyone else, in order to balance out what the rich aren't paying anymore.

Cutting down the IRS may save millions, but that's peanuts these days. We're about to throw $700 billion at Wall St. And, let's not forget Iraq and Afghanistan. And well, if Obama gets in office, he's already suggested new ways for the government to spend our money.

So, for that reason I don't think the flat tax is very feasible. In my opinion, it seems that the flat tax backers always pick a pretty low percentage.. but in reality, I think the rate would be significantly higher. So, unless you're rolling in the dough, it's a losing proposition for you.

Also, I think the rich are unfairly villainized by people. It's like there's some sort of animosity, where people think it just fell into their laps and that they don't deserve what they have. In reality, many people worked their way up to that status, through hard work and effort. And, let us not forget that small businesses often file under individual income tax brackets. So, higher taxes for the "rich" will hurt them, and perhaps mean they can't keep their current staffing any longer.

And well, in all fairness, is it really okay to ask someone to give away nearly half of his/her income in taxes when it's all said and done? You could say they don't need it, which may be true, but does that just put it up for grabs by the government?

And in case y'all think I'm backing the rich because I am.. I'm not :p. I happened to be in one of the lowest tax brackets last year.. and because of the "economic stimulus", I paid $0 net federal income tax.
 

Peachy

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My country is founded on the principle that every person should carry a burden appropriate to their skills and capabilities. That rules out a flat tax. It may be a simple method, but it goes against nature and common sense.
My German teacher used to say "YOu can't eat more than one steak a day", so I'm all in favor for a varying tax rate that increases for rich people. If someone makes 20,000 Euros a year, they will probably need all the money to buy food, clothing, housing, transporation etc. So they should be allowed to keep most of it. Someone who makes 2 million Euros a year will most likely only need 1/10 of that money to pay for food, housing, clothing etc. The rest of the money is simply for luxury, so I have no moral problem to take away half of the rich person's income and use it for government purposes, like education, roads, safety etc. Even with 1 million Euros a year, the rich person has a significantly better life than the guy with 20,000 EUR, so things are still in perspective.

And don't get me started on deductibles. German income tax laws allow me to deduct a pile of expenses from my income tax for various reasons. It's so complicated nowadays that no one really understands what and why you can deduct expenses from your tax - people just try to find the loopholes to get out of paying higher taxes. So cutting back on deductibles is probably a good idea, although I believe some things you still remain tax deductable, like higher expenses for people with disabilities etc.

Oh, and on the subject of whether or not it's fair to take away 50% of someone's income? Yes, it is. Because people with high income usually benefit more from the stuff taxes are used for - they travel more, so use the roads more often (poor people can't afford to travel), they need a higher level of security (poor people don't need to worry about being robbed so much), and their companies rely on skilled workers to make a profit, so a good education of the general public is in their interest too.

Peachy
 

recovery

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I pretty much agree with what peachy said about the Rich should be taxed more. There may not be many rich people in the world. But The goverment can earn allot from them without being greedy and taking away too many lecturies that the rich person has.

However, I do not like the idea of placing the % in bands. Because some I know was complaining that he had earned like 1K more than last year, yet has to pay more than an extra K in tax simply due to moving up in band. So At the end of the day he got less for earning more. Its silly really. So try to make some variable where the percentage will change for every extra penny earned rather than every Thousand dollars. As for those people borderline may be notice an unexpected rise in taxes, or maybe the opposite a pleasant deduction if they fall below it. But this makes things less predictable and more risking depending how big the differences are between the bands and how close you are from changing bands.
 

Fire2box

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Personally I would rather have just everyone pay exactly the same amount wither it be lower class or high class. Any other way would end up screwing some social class over which most likely will be the middle and high class.
 

whitefox

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I'm not going to get into how the tax money, however wisely it has the opportunity to be collected, is going to disappear into a black hole anyway, so here's my proposition: I like the idea (in theory) of a flat tax. (In theory) I think that people should be taxed on what they buy, and not exactly on what they already own. Someone who buys more stuff should be charged more than someone who doesn't buy as much stuff. I suppose I like the idea that if someone owns something, it should not be taxed, because (in theory) it should have been taxed upon purchase.

Of course, in the real world, this would become a massive train reck of ideals, so I can't really say that is what I put my full support behind. At the moment, in the United States, a reform of the tax brackets would be nice, with different percents for the different classes, based on wealth as a "bracket". Say a person makes $100,000 to $250,000, and at the time that bracket compromised 30% of the overall wealth in the USA. That person would pay taxes based on the number of people in that bracket, and the 30% of the total wealth. This would require those that make less money (but a larger amount of the population) to pay less taxes, because, as a whole, their bracket only compromises a smaller amount of the total wealth.

That's just an idea. I don't pay taxes yet (technically I'm not allowed to, since I can't (legally) work), but the future doesn't look to bright on that front. I'll enjoy my ignorant bliss until that time.
 

Lil Snap

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I think the flat tax is the most equitable, within reason. Anyone that earns less than, say 25,000 for example, would be exempt, as there are exemptions now. If there was anything I would change would be to add 1 tier for people that earn more than, say a million dollars, that would increase their share by some percentage. I would have very few deductions, only health expenses, education expenses, and maybe home ownership. This way, we are all pulling together, sharing the same burden, regardless of our station in life.

Something radically different needs to be done, or we are in for it. We are over 10 TRILLION in debt and our leadership wants to add another 725 Billion and change for the credit boondoggle we are in. There is no excuse for this behavior in a capitalist economy. The banks got into this mess on their own greed, shouldn't they have to bear the consequences? (Sorry for the rant. .every time I see the news, I get mad)
 

NEJay

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I pretty much agree with what peachy said about the Rich should be taxed more.
So if you tax rich people and businesses more, and they decide to move said businesses to a place with a lower tax rate, say, India... And take all those jobs with them, who is going to employ and pay us small guys?

The US is in the top 10% in the world regarding tax rates for businesses. This is a large reason you see former American businesses flocking elsewhere (well that, and Clinton's lovely NAFTA debacle). It is also the reason McCain is pushing for tax breaks for businesses... To come more in line with the world market, as an incentive for businesses to stay here, and for new ones to take root here.

These businesses provide the livelihood for all of us. Without a paycheck from them, we will lose the standard of living America is accustomed to. People just don't seem to understand this "trickle down" effect when everyone starts shouting "OMG, McCain wants to lower taxes for the rich!!1!", and amusingly support Obama's increases in taxation on everyone instead. :confused:
 

Ace

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A flat tax favors everyone. A progressive tax punishes those who have worked hard to be able to afford the luxuries in life and for most people, it is lifes luxuries that drive us to be more productive and work hard so that we can afford them. I'm also what you would call a young entrepreneur, I own my own small business.

I can explain the benefit of tax breaks to small businesses pretty easily. Lately, business has been doing well for me and I've been looking at hiring someone to do some of the clerical/secretarial stuff for me so that I can concentrate on building my business and have some more free time. If my taxes go up, I will not be able to afford to hire someone to do that for me. You read that right, if my taxes go up, a job will not be available to someone. I can easily hire an intern to do this for no money.

As for personal taxes, it's pretty simple, the more I have to spend in taxes, and I am by no means rich, the less money I will have to spend on other things which employ other people. One thing, I've been looking at buying a new car (and I absolutely will buy another american car) , the one I have is fine, but she's getting older and has over 100K miles on it so I'd like something new. If my taxes go up, I will stall buying a new car and try to get the most out of the one I have. On another note. If my taxes are lowered, and a flat tax will do this, I will likely spend more money on other things. I've been wanting a washer/dryer, but instead of me spending money on that, it went to the government, likely for some silly social program like welfare, or mowing the grass on the side of the interstates. If my taxes are lowered, I might hire a cleaning person to clean my apartment every week or so to save me from one of my least favorite weekly rituals.

Sorry for ranting, taxes are one of my pet peeves. To put it simply, if Obama wins, I will have less money, if I have less money, I have less to spend. If I have less to spend, people then lose their jobs and ask for a handout from the government, which is how the democratic party has popularity.
 

ade

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from what i know of my own tax calculations (total taxation) and from i've seen of others', there's a broad band within society where the total taxation varies little. most people will be lightened of their financial burden to the tune of 50 - 60% (actually, it could be more now, with our government the way it is, those percentages were based on calulations from a while ago); a sardony within this socially motivated taxation is that the richer you are, the lesser percentage of tax you pay; this is due to richer persons having access to accountants who advise on how to move money about and so avoid personal taxation.
i could um and ah over which method of taxation i'd prefer for ages but, i'd first want see solid guarantees, with a forfeiture of blood, that the revenue collected would not be squandered on meaningless and pointless government officials, bodies and strategies and that every pound taken would go directly back into rebuilding and maintaining the essential underpinnings of society. without that solid guarantee and the accountability, taxation is just theft.
and that's probably why 'tax' is still used in the context of theft and robbery.
 
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A flat tax, with a single deduction that is equal to 150% of the Federal Poverty Level Income. No, I don't know what the rate would be, probably somewhere around 20%.
 

BromeTeks

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I personally support a per-capita tax. That way, the obscenely rich, who make heaps of money anyways, are still making heaps, but slightly smaller heaps still. Tax rates would then go down based on who makes less money to the point where the low income people hardly get taxed at all, giving them money to spend on things they need, like food and rent.

Through this method, the rich still get to live their lives in comfort, and the poor are able to live their lives.
 
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I personally support a per-capita tax. That way, the obscenely rich, who make heaps of money anyways, are still making heaps, but slightly smaller heaps still. Tax rates would then go down based on who makes less money to the point where the low income people hardly get taxed at all, giving them money to spend on things they need, like food and rent.

Through this method, the rich still get to live their lives in comfort, and the poor are able to live their lives.
A per capita tax is one where everyone pays the same amount, income has nothing to do with it.
 

Jeremiah

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Currently, the US tax system is a bureaucratic mess. The rich currently are taxed at a high percentage rate, but are able to deduct massive tax deductions because of the current system. Lets review the current tax code and determine fairness.

Last I heard, a self employed person can deduct certain business expenses. One of these deductions is up to $100,000 dollars for a vehicle for business purposes. This deduction may be restricted to not allow yearly purchases, but still highly favors the rich. A doctor, lawyer, or real estate agent may use this $100,000 (or more) to purchase a luxury vehicle to save on taxes. The vehicle must meet certain requirements, one of which may require it to be classified by the EPA as a truck. The EPA considers SUV's to be in the same vehicle class as pickups. Therefore, a Hummer H1, or a Cadillac Escalade will be acceptable. A construction contractor normally cannot make full use of this deduction even though he actually needs a real truck. A contractor I know managed to make full use of this deduction once upon purchasing a Class 8 dump truck with 8 axles. The truck cost almost a quarter million dollars. The small business loan was for a decade, but the profits from the truck barely covered the truck payment, road tax, fuel, driver expense, and maintenance costs. Once the truck was put into use, its value dropped below $100k. After the truck had outlived its usefullnes, it was sold for below $40,000. The other vehicle purchases over the years never exceded half of the available deduction simply because the extra vehicle cost could not be justified.

Another deductable expense is travel. If the travel can somehow relate to the business, such as meeting a client, it is deductable. Can anyone guess why First class seats on a airline are often refered to the "Business Class"? Because self employed can save enough on taxes to afford the upgrade. Everone else is stuck in coach. As much as I would enjoy flying to the Bahamas first class, I have neither the income, or clientle to justify it. Then again, I have never flown out of the country on my own dime. My employer flew me overseas once at their expense. I flew second class.

Home ownership is part of the American Dream. Here again is a deduction for the privelidged. The maximum home loan that one can normally get is directly relatated to monthly income. The highest home loan that I can afford is roughly $150,000 dollars. I could deduct the yearly interest payments from my taxes, but that will not add up to much. To afford such a payment, I would have to make budget cuts elsewhere. At the other extreme, someone clearing $250,000 income a year can easily purchase a million dollar home and not impact their lifestyle while enjoying a much nicer tax break. Second homes also have a tax deduction. This could be a summer home, vacation home, or recreational vehicle. Any guess why someone would purchase a million dollar motorhome and not worry much about actually using it? Yes, another nice tax deduction. I own a recreational vehicle, but cannot deduct the interest payments from my taxes because I cannot afford to purchase a home anywhere near where I work. Yes, I live in a trailer down by the river. At least I own it...

Charitable or political contributions are another unfair deduction. Someone with a few extra million laying around can give it away to enjoy another tax deduction. While encouraging charity sounds good, this is easily abused. Giving millions to politicians and politiacl parties to maintain favorable influence should not receive a tax break. This corrupts our political system. Giving to charity is good, but not every non-profit organization should should be a tax deductible contribution. Giving millions to PETA, NRA, or the Air Force Sergeants Association could be a nice way to share my wealth (if I had any). Oh, these groups lobby Washington to further their own agenda. How convenient, I just found another way to influence Washington and save on tax expenses at the same time. Is it fair for me to pay higher taxes to cover someone else who would rather influence Washington than pay taxes with their excess.

Medical exemptions are another potential abuse waiting to happen. Yes, low income people may be unable to shoulder such a heavy tax burden, but, with allowance comes abuse. Reconstructive surgery is one area that bothers me. Sometimes, a car accident causes facial damage. These surgeries are often expensive, but necessary. Those that can afford it or have insurance are able to get this fixed. Those that actually need a tax break probably cannot afford the surgery in the first place. I met an Air Force Senior Master Sergeant who was at Kobul Towers in Saudi Arabia when terrorists set off an explive filled tank truck. Most of the left side of his face is still scared from the blast that killed 18 others. He cannot afford to repair that damage, and his medical insurance does not cover cosmetic surgery. Only repairs required to return him to duty were performed. A supermodel can deduct a nose job while the rest of us live with scars. Other expensive medical ailments have similar disparities. Only those that can afford the required medical equipment get the tax advantage. IMHO, these deductions also favor the privelidged.

As for the current tax rate increases, I have noticed each time my pay goes up, my standard of living moves up not so much. Does anyone know why the 1040EZ tax form does not just give income ranges and tax percent? This allows the percentage to be hidden and partially cover up the jumps. Woe to him who gets a small pay increase and crosses an abitrary threshold, for his actual pay check with go DOWN! Many years ago, I spent some time chatting with an older neighbor. He was a skilled laborer at a local lumber mill until he became disabled. He complaned one day to me about the last pay increase he received. The $0.50 per hour raise bumped him up to the next tax bracket. After getting his pay stub, he promptly went into the manager's office and complained. The meeting resulted in his hourly wage dropping back to the previous level and both parties happy. I was about 13 years old at the time. Some times I wonder how many times this scenario has occured. By punishing those that are close to jumping brackets, we help keep wages lower and lose out on potential tax revenue.

Entering the final tax bracket is a huge jump. Many people do not want to make that jump. To circumvent it, some people ask for greater benefits instead of a pay increase. If given the option, a company would probably prefer to provide a company car than to increase someone's wages the same amount. The car benefits the company because it is an asset that will save on taxes. The expense of the vehicle lowers profits. The employee saves taxes and has a higher standard of living. Everyone wins except the average American. Those already in the highest tax bracket can continue to make full use of this tactic, and often do! Why do you think the top executives in huge corparations receive so many percs and special priveleges? To save on taxes! The reason excutives often want millions for years to come is to have some of the money taxed in a lower bracket. Garanteed income of $249K over the next 5 years is better than $1M this year. Add in stock options, health care coverage for years, and other percs just to sweeten the deal for everyone but the average American.

This is why I support the flat tax: no loopholes, tax shelters, or coruption. Just plain, simple, and honest. This is why no politician could ever consider such a concept.
 
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Peachy's respond was the most humane one in this thread so far, some of the others make me fear for the future of mankind.
 
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Peachy's respond was the most humane one in this thread so far, some of the others make me fear for the future of mankind.
The big problem with a graduated tax rate is that by making 1 more dollar, euro, or what ever can make your tax payment jump by a large amount.

For example a 45% change to 50% at $1,000,000 is a jump of $50,000 in the amount owed. All because you made $1 more than the other guy.
 

ade

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For example a 45% change to 50% at $1,000,000 is a jump of $50,000 in the amount owed. All because you made $1 more than the other guy.
a similar thing happens throughout the range of incomes.
but what, exactly, would someone be doing to actually earn a million? you've got to bear in mind that an economy is finite and that there's only so much money/capital to go round (this is also true for the global economy). i can't see anyone who actually earns a million and i can't see any justification for the remuneration structures within society other than a minority retaining the bulk of an inherited national wealth for themselves (a perpetuation of the class system).
 

Fire2box

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If I was confusing with my post what I meant by agreeing with a flat tax rate is everyone be taxed the same exact amount. It should not cost more for the government to protect a rich person then a poor person. If all legal adults were taxed a flat fee every month or every year I would then view the system as 100% fair. Not to mention it would also finally get those idiots in Washington to stop spending so %&*$ing damn out of control.
 
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a similar thing happens throughout the range of incomes.
but what, exactly, would someone be doing to actually earn a million? you've got to bear in mind that an economy is finite and that there's only so much money/capital to go round (this is also true for the global economy). i can't see anyone who actually earns a million and i can't see any justification for the remuneration structures within society other than a minority retaining the bulk of an inherited national wealth for themselves (a perpetuation of the class system).
That depends upon what you mean by "earn." Plenty of athletes, actors, business owners, etc. make $1 Million or more. Do they "earn" it, well that is for you to decide.

Here's an interesting statement from Warren Buffet from last year.

Buffett cited himself, the third-richest person in the world, as an example. Last year, Buffett said, he was taxed at 17.7 percent on his taxable income of more than $46 million. His receptionist was taxed at about 30 percent.
Buffett Slams Tax System Disparities - washingtonpost.com
 
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