How does a FlatTax with an exemption hurt the poor?

[Polarhound]

The flat tax is nothing more than getting the middle class and lowwer class to pay more taxs and allow the upper class to pay less.

The Fed will need to still pull in at least as much as it does now. Cutting the rates the upper class pays needs to be backfilled somewhere and that is where the low/middle class comes in.

I see they still don't teach classical economics in schools, only that new-age Krugmanesque shortsightedness.

To understand how it will actually work, you need to stop pretending that these changes and their results will occur in a vacuum. Classical economic theory is the study of not only effects of the changes, but the secondary, tertiary, etc. and human element.

Here is a simplified version for you and others who never learned how Economics was supposed to be taught:

Every economic action has a ripple effect. In this case, when the "rich" no longer have to pay excessively unbalanced and confiscatory rates they are NOT going to just sit on the money. Instead, they are going to do what human nature dictates: Use that money to make MORE money. New businesses, R&D, technology, factories, etc. will be invested into. The ripple effect? More goods need to be made for the factories which means more jobs. You then need people to operate those machines. You need people to transport the goods. Thanks to all of these new jobs, huge amounts of money, formerly in the pockets of the "rich" are now invested in employee salaries, resulting in not only raising the standard of living but giving them the means to buy all these new products they are making.

A flat tax would unleash the economy and money flow like you could not even begin to imagine. It is the equivalent of going from the Ford Fiesta to a Mustang.

If you think that they are just going to sit on their additional piles of money instead of following their instincts to make even more, you are woefully uninformed. If you refuse to accept this fact of human nature, then you are a fool.

 

[Incorruptible]

The flat tax is much better than the current system and would be much more effective. It's these idiot liberals and progressives who are screwing everything up.

 

[berzerker60]

You post screams more of jealousy than anything else.

Even in a flat tax system, the rich are paying more than the poor. No one is talking about taking the tax burden and dividing it up evenly. The rich will still be taking on more of that burden that the poor. The percentage of their income just happens to be the same. The final dollar amounts will be vastly different.

For all the whining about the poor, what exactly does the current system do to make them any less poor. How would a flat tax change that?

This is the most ridiculous accusation that gets made any time anyone but Warren Buffet makes this argument, at which point it switches to the equally stupid "so why doesn't he go first and just donate a bunch of money?" It's not jealousy to want a tax system that promotes opportunity and growth over doing the bidding of the 1%. I make plenty of money each year, and I'd be happy to pay more, because it would be better for the country. Some income inequality is a good thing since it promotes hard work; extreme income inequality is a serious problem for the country. Same for wealth.

The current system, though seriously flawed, doesn't force those struggling to scrape together rent, groceries, and utility bills to give 25% of that meager income to the federal government via federal income tax, on top of already existing sales taxes, social security, unemployment insurance, gas taxes, DMV fees, property taxes, and all the other taxes he already has to pay, just so the very rich can keep an extra few million that will make no difference to their daily life. I could afford to pay 25% of my income. A rich person DEFINITELY could afford 25%. A poor person cannot afford that.

However emotional you are about "welfare queens," in reality there are a huge number of working poor in this country who struggle to get by without a 40" TV and whatever other BS "luxuries" you want to accuse them of having, and I want a tax code that takes the burden off of them so they can work their way out of poverty.

But then, I guess I don't take Jesus' commandment to hate the poor, as poor people are lazy, as seriously as I ought to.

I see they still don't teach classical economics in schools, only that new-age Krugmanesque shortsightedness.

To understand how it will actually work, you need to stop pretending that these changes and their results will occur in a vacuum. Classical economic theory is the study of not only effects of the changes, but the secondary, tertiary, etc. and human element.

Here is a simplified version for you and others who never learned how Economics was supposed to be taught:

Every economic action has a ripple effect. In this case, when the "rich" no longer have to pay excessively unbalanced and confiscatory rates they are NOT going to just sit on the money. Instead, they are going to do what human nature dictates: Use that money to make MORE money. New businesses, R&D, technology, factories, etc. will be invested into. The ripple effect? More goods need to be made for the factories which means more jobs. You then need people to operate those machines. You need people to transport the goods. Thanks to all of these new jobs, huge amounts of money, formerly in the pockets of the "rich" are now invested in employee salaries, resulting in not only raising the standard of living but giving them the means to buy all these new products they are making.

A flat tax would unleash the economy and money flow like you could not even begin to imagine. It is the equivalent of going from the Ford Fiesta to a Mustang.

Classical economics doesn't work in most macro-level real world situations. If you ever took a competent economics class you'd know that. Trickle-down economics is also complete nonsense, as anyone who's payed any attention to reality of the post-Reagan world should be overwhelmingly aware of. It's a pretty theory, but it doesn't work in reality.

The top tax brackets for decades after WWII were 90%+, and we experienced immense economic growth. But I guess that all never happened because it doesn't fit your pet theory, and therefore must be wrong. Reality takes a backseat to theory, I know.

You also don't WANT too-fast, unlimited growth. Look at US economic history in the 19th and early 20th century to see how awful the unregulated boom-bust cycles were for everyone. Steady, stable growth is the ideal, not foot on the gas.

 

[dank69]

I see they still don't teach classical economics in schools, only that new-age Krugmanesque shortsightedness.

To understand how it will actually work, you need to stop pretending that these changes and their results will occur in a vacuum. Classical economic theory is the study of not only effects of the changes, but the secondary, tertiary, etc. and human element.

Here is a simplified version for you and others who never learned how Economics was supposed to be taught:

Every economic action has a ripple effect. In this case, when the "rich" no longer have to pay excessively unbalanced and confiscatory rates they are NOT going to just sit on the money. Instead, they are going to do what human nature dictates: Use that money to make MORE money. New businesses, R&D, technology, factories, etc. will be invested into. The ripple effect? More goods need to be made for the factories which means more jobs. You then need people to operate those machines. You need people to transport the goods. Thanks to all of these new jobs, huge amounts of money, formerly in the pockets of the "rich" are now invested in employee salaries, resulting in not only raising the standard of living but giving them the means to buy all these new products they are making.

A flat tax would unleash the economy and money flow like you could not even begin to imagine. It is the equivalent of going from the Ford Fiesta to a Mustang.

If you think that they are just going to sit on their additional piles of money instead of following their instincts to make even more, you are woefully uninformed. If you refuse to accept this fact of human nature, then you are a fool.

Look guys we found someone who still believes in "trickle down."

 

[fskimospy]

I see they still don't teach classical economics in schools, only that new-age Krugmanesque shortsightedness.

To understand how it will actually work, you need to stop pretending that these changes and their results will occur in a vacuum. Classical economic theory is the study of not only effects of the changes, but the secondary, tertiary, etc. and human element.

Here is a simplified version for you and others who never learned how Economics was supposed to be taught:

Every economic action has a ripple effect. In this case, when the "rich" no longer have to pay excessively unbalanced and confiscatory rates they are NOT going to just sit on the money. Instead, they are going to do what human nature dictates: Use that money to make MORE money. New businesses, R&D, technology, factories, etc. will be invested into. The ripple effect? More goods need to be made for the factories which means more jobs. You then need people to operate those machines. You need people to transport the goods. Thanks to all of these new jobs, huge amounts of money, formerly in the pockets of the "rich" are now invested in employee salaries, resulting in not only raising the standard of living but giving them the means to buy all these new products they are making.

A flat tax would unleash the economy and money flow like you could not even begin to imagine. It is the equivalent of going from the Ford Fiesta to a Mustang.

If you think that they are just going to sit on their additional piles of money instead of following their instincts to make even more, you are woefully uninformed. If you refuse to accept this fact of human nature, then you are a fool.

There is no correlation between lower marginal tax rates on the rich and increased economic growth.

None.

 

[s0me0nesmind1]

This is the most ridiculous accusation that gets made any time anyone but Warren Buffet makes this argument, at which point it switches to the equally stupid "so why doesn't he go first and just donate a bunch of money?" It's not jealousy to want a tax system that promotes opportunity and growth over doing the bidding of the 1%. I make plenty of money each year, and I'd be happy to pay more, because it would be better for the country. Some income inequality is a good thing since it promotes hard work; extreme income inequality is a serious problem for the country. Same for wealth.

The current system, though seriously flawed, doesn't force those struggling to scrape together rent, groceries, and utility bills to give 25% of that meager income to the federal government via federal income tax, on top of already existing sales taxes, social security, unemployment insurance, gas taxes, DMV fees, property taxes, and all the other taxes he already has to pay, just so the very rich can keep an extra few million that will make no difference to their daily life. I could afford to pay 25% of my income. A rich person DEFINITELY could afford 25%. A poor person cannot afford that.

However emotional you are about "welfare queens," in reality there are a huge number of working poor in this country who struggle to get by without a 40" TV and whatever other BS "luxuries" you want to accuse them of having, and I want a tax code that takes the burden off of them so they can work their way out of poverty.

But then, I guess I don't take Jesus' commandment to hate the poor, as poor people are lazy, as seriously as I ought to.


Classical economics doesn't work in most macro-level real world situations. If you ever took a competent economics class you'd know that. Trickle-down economics is also complete nonsense, as anyone who's payed any attention to reality of the post-Reagan world should be overwhelmingly aware of. It's a pretty theory, but it doesn't work in reality.

The top tax brackets for decades after WWII were 90%+, and we experienced immense economic growth. But I guess that all never happened because it doesn't fit your pet theory, and therefore must be wrong. Reality takes a backseat to theory, I know.

You also don't WANT too-fast, unlimited growth. Look at US economic history in the 19th and early 20th century to see how awful the unregulated boom-bust cycles were for everyone. Steady, stable growth is the ideal, not foot on the gas.

...You haven't step foot in a single business class, have you? Wow... Quoted for emphasis of stupidity - not even slightly, remotely, possibly even close to getting the point of the post you quoted. This has absolutely nothing to do with "Trickle down" as you LOVE to call it - and everything to do with wealthy individuals doing what is natural to them - earning more money.

Wow.

 

[brycejones]

The flat tax is much better than the current system and would be much more effective. It's these idiot liberals and progressives who are screwing everything up.

A deeply reasoned and thoughtful post with lots of supporting evidence to support the author's position. Please post on!

 

[berzerker60]

Okay, so explain what's wrong. I've taken more than a few economics classes and two on accounting, which isn't the same as a "business" class per se, but hardly leaves me completely naive.

Again, low taxes for the wealthy creating faster economic growth (which is the absolute definition of 'trickle down' economics) is simply false. It's objectively not the case that lower taxes for the top tax bracket correlates to economic growth, and the Laffer curve has been disproven time and time again. Both businesses and the 1% have accumulated more and more wealth over the past decade and simply haven't been creating jobs and spending at an increased rate, growing the economy. It's just not been happening, despite record wealth concentration and record corporate profits.

 

[dank69]

...You haven't step foot in a single business class, have you? Wow... Quoted for emphasis of stupidity - not even slightly, remotely, possibly even close to getting the point of the post you quoted. This has absolutely nothing to do with "Trickle down" as you LOVE to call it - and everything to do with wealthy individuals doing what is natural to them - earning more money.

Wow.

Is investing in America the only way to make more money?

 

[Polarhound]

There is no correlation between lower marginal tax rates on the rich and increased economic growth.

None.

There is plenty, and it was in practice in this country except for three periods: FDR's "recovery" that doubled the length of the Great Depression, LBJ to Carter, and the past half decade.

Hell, even JFK knew this:

“It is no contradiction – the most important single thing we can do to stimulate investment in today’s economy is to raise consumption by major reduction of individual income tax rates.”

“A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues.”

​

​

 

[Incorruptible]

A deeply reasoned and thoughtful post with lots of supporting evidence to support the author's position. Please post on!

You and your ilk oppose the flat tax so you can stick it to the rich. A flat tax fair is much more fair.

 

[surfsatwerk]

You and your ilk oppose the flat tax so you can stick it to the rich. A flat tax fair is much more fair.

no

 

[woolfe9998]

There is plenty, and it was in practice in this country except for three periods: FDR's "recovery" that doubled the length of the Great Depression, LBJ to Carter, and the past half decade.

Hell, even JFK knew this:

“It is no contradiction – the most important single thing we can do to stimulate investment in today’s economy is to raise consumption by major reduction of individual income tax rates.”

“A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues.”

​

​

The contention was that lower taxes on the rich won't stimulate economic growth. Those quotes have to do with lower general tax rates. The distinction is important because the wealthy won't spend the extra money from lowered taxes since they already don't spend everything they make.

 

[fskimospy]

There is plenty, and it was in practice in this country except for three periods: FDR's "recovery" that doubled the length of the Great Depression, LBJ to Carter, and the past half decade.

Hell, even JFK knew this:

“It is no contradiction – the most important single thing we can do to stimulate investment in today’s economy is to raise consumption by major reduction of individual income tax rates.”

“A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues.”

​

​

You provide quotes, I provide actual economic analysis from the Congressional Research Service:

http://www.fas.org/sgp/crs/misc/R42729.pdf

Money quote:

The results of the analysis in this report suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top statutory tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.

 

[Polarhound]

Look guys we found someone who still believes in "trickle down."

If that is all you have left in the tank, I will accept that as a concession that you have no valid debate points left and therefore concede the debate.

 

[Polarhound]

You provide quotes, I provide actual economic analysis from the Congressional Research Service:

http://www.fas.org/sgp/crs/misc/R42729.pdf

Money quote:

So because they are experts on Nuclear Warfare, we should automatically believe them to be economic PhDs?

 

[highland145]

There is plenty, and it was in practice in this country except for three periods: FDR's "recovery" that doubled the length of the Great Depression, LBJ to Carter, and the past half decade.

Hell, even JFK knew this:

“It is no contradiction – the most important single thing we can do to stimulate investment in today’s economy is to raise consumption by major reduction of individual income tax rates.”

“A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues.”

​

​

JFK didn't have the concern of importing a ton of products and manufacturing few. Is our countries "wealth", in general, going overseas?

 

[brycejones]

You and your ilk oppose the flat tax so you can stick it to the rich. A flat tax fair is much more fair.

LOL, you don't know my position on a "flat tax" I haven't given one. You have but have not provided anything to back up your position just platitudes and generalizations.

Please learn to debate effectively, provide evidence to support your position.

 

[berzerker60]

So because they are experts on Nuclear Warfare, we should automatically believe them to be economic PhDs?

What?

Author contact information:
Thomas L. Hungerford
Specialist in Public Finance
thungerford@crs.loc.gov, 7-6422

And he's citing many, many studies by economics PhDs.

Anyway, no one is saying "just trust them." He's saying "here's a study that actually uses numbers, math, and detailed analysis rather than some quote where JFK was wrong decades ago." Judge the study on its merits.

 

[s0me0nesmind1]

No one here is advocating lower tax on the rich. So I honestly don't even understand why the subject was brought up. Is that all you can bicker about?

A given with a flat tax: Closure of all loopholes that allows people like ol' Barracky that paid < 19% this year. There is only one given answer to the taxation of rich people that have the wealth and can invest in the future jobs of America: Taxing them will be a great reason to jump ship to our enemy nations to start their investment for much less.

Or do we need to learn to slap ourselves with a bat too before we learn even though the examples are everywhere:
http://www.dailymail.co.uk/news/art...ax-rate-income-1million-euros-goes-ahead.html
http://www.zerohedge.com/news/2012-...exodus-what-obama-can-learn-uks-tax-rich-plan

 

[fskimospy]

So because they are experts on Nuclear Warfare, we should automatically believe them to be economic PhDs?

What are you talking about? The FAS? They are just hosting a copy of the CRS report. If you don't like that report the CRS has a number of other ones that all say roughly the same thing. There is no correlation between top marginal rates and economic growth.

 

[DougK62]

How about the Fair Tax? As I understand it, it scraps income taxes all together and just makes a consumption tax. You can give people below the poverty line a rebate at the end of the year so that they still don't have to pay taxes. Spend more, pay more taxes. It seems "fair" to me. What are the flaws in this idea?

 

[dank69]

If that is all you have left in the tank, I will accept that as a concession that you have no valid debate points left and therefore concede the debate.

I see you studied under cybrsage, enjoy your stay here.

 

[ElFenix]

Every economic action has a ripple effect. In this case, when the "rich" no longer have to pay excessively unbalanced and confiscatory rates they are NOT going to just sit on the money. Instead, they are going to do what human nature dictates: Use that money to make MORE money. New businesses, R&D, technology, factories, etc. will be invested into. The ripple effect? More goods need to be made for the factories which means more jobs. You then need people to operate those machines. You need people to transport the goods. Thanks to all of these new jobs, huge amounts of money, formerly in the pockets of the "rich" are now invested in employee salaries, resulting in not only raising the standard of living but giving them the means to buy all these new products they are making.

we tried that in 2001 and 2003. it didn't work. the money just chased bullshit derivatives rather than r&d and factories.

tax rate cut isn't always the answer. JFK started with marginal rates as high as 90%. just because a tax rate cut may have been appropriate then, it may not be now.

 

[s0me0nesmind1]

How about the Fair Tax? As I understand it, it scraps income taxes all together and just makes a consumption tax. You can give people below the poverty line a rebate at the end of the year so that they still don't have to pay taxes. Spend more, pay more taxes. It seems "fair" to me. What are the flaws in this idea?

Because that would make a huge incentive not to spend. And if you're going to ask for a huge incentive not to spend, you might as well say "What's a great way to completely fuck up our economy and the moving of money that is necessary?