Good grief, the progressive 'mindset' at work, always believing they can tax and spend their way to prosperity.
First off, no one ever paid those 70-90% tax rates, they merely invented all the loopholes and tax dodges that exist today. Government also did more than just create mountains of debt with tax money it collected.
Wealth is not a finite thing that only a set number of people can possess- that's typical zero sum idiot thinking. It's like believing that fire is a finite resource so rather than learn to make your own you have to go steal your neighbor's fire.
Fair taxation is good for society. Doing nothing with taxes but create mountains of debt and red tape then demanding higher rates to pay for all the fraud, waste and abuse is how societies collapse.
The higher rates, the more deductions. The more deductions, the more power has government over one's behavior. The more power has government over one's behavior, the less freedom one has.
Yeah, you could make a tax code like that, it might even be a good idea (though I would have to think even doing it that way to bring down the rates at the top you would be squeezing the middle) but how is that really a flat tax? Seems to me that if you take a two bracket approach, especially one with a multiple of the poverty line, you are going to end up with another variation on a progressive tax code, at least on the low end. What is more, I don't see the right embracing that type of code nor do I think it is what most of them are talking about when they say flat tax - remember the outrage nugget being passed around a while back about how half of people don't pay taxes or some such, which, despite being untrue, had many people offended? Those were much the same crowd pushing for a flat tax.
Yeah, I'll give you that what I said doesn't apply if you aren't taxing every dollar but I still think that is what most flat tax proponents are advocating. Do you disagree?
My experience is that the majority of flat tax advocates support a standard deduction based on income and family size. Not deductions on specific expenditures, for that gets right back into government buying votes via the tax code, but standard deductions based only on income and family size. I do think most flat tax proponents prefer a perfectly flat tax on principle, but understand that such a tax would be either crushing on low income workers, or would not raise enough revenue to fill our legitimate needs.
That seems to me like you are already moving back towards marginal brackets again.
Not marginal brackets, but effectively the same taxation rate curve, just with fewer ways to avoid it.
Consumption tax is extremely difficult to ever structure in a way that isn't a giveaway to the very rich. If you tax necessities as consumption, food and so on, then you are going to hose the poor who as a portion of budget spend much more on consumption than things like saving and investing. If you restrict it to a luxury tax, then again you are mostly sticking it to the middle as the rich comparatively spend little of their income and are likely to import luxuries anyway if the tax is high enough to actually dent the national budget. You could apply tarriffs to offset that but then you risk starting all sorts of crap with trade partners.
All in all, I don't think a consumption tax is desirable nor for that matter even sensible, why does it make sense to charge people on what they consume which is largely an interpersonal interaction as opposed to their benefit from government services? Aside from welfare, in principle I would support a wealth based tax system, the more you own of America, the more you benefit from things like police and military protection, roads, a healthy and educated workforce, etc. Regardless of how much you earn in a year, if you own billions and billions in property that the US Military is protecting, it seems only fair you pay into that protection.
The reasons a consumption tax is desirable are that it places government in the position of being rewarded for facilitating trade and establishes the individual's absolute right to the fruits of his own labor. Right now government is in the position of feudal lord or slave owner or Mafia business "partner", taking its share off the top and leaving you to get by on what is left. If government gets to determine its share and take its share off the top, it's a pretty clear principle that you work for government, if not actually belong to government.
The down side of a consumption tax is that the wealthy seldom spend everything they earn, and while a consumption tax is great on shiftless heirs and drug dealers and Nicholas Cage, it doesn't get much from the rare Warren Buffetts who don't even consume the 15% they pay in capital gains.
The FairTax gets around this to some degree by prebating what each household will spend that month on the FairTax, so that the lowest earners are subsidized, those at the poverty level pay nothing, and those above the poverty line pay an increasing amount up to about 20% if memory serves. But there's no escaping that for most very high earners, this would tax them more lightly. Without recreating our convoluted tax code in consumption tax format, that's probably just a fact of consumption taxes.
As far as the police and military protecting one's assets, that assumes one's assets are of no use to society. In reality almost all progress relies on invested capital. Our home loans, car loans, business loans, stock-funded expansions, all these depend on saved capital. No matter how much we spend protecting that wealth, the wealth itself is already earning its keep. Conversely, taxing wealth (as opposed to income) incents people to not save, or more likely to invest those savings in more enlightened countries. No more home loans, auto loans, school loans, etc. unless government creates that wealth out of thin air.