Why not just tax the rich and the poor the same?

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The endless debate between people who claim the rich should be taxed more then the poor and the people who think otherwise continues to rage. However, why does one class need to be taxed more then the other?

Why not just make it so that everyone pays a similar amount of tax? That why people can't argue that they are being treated unfairly, neither the rich nor the poor.

Thoughts?

EDIT: By "paying the same" I mean the same percent.

Because the very rich will likely find ways to evade these taxes, especially corporations.

Or looking at it another way, you could say that the rich have already taken an unfair amount of money from the poor, either indirectly or directly. Making taxes higher for higher earnings just levels the playing field a bit.

Do you mean they should pay the same amount of money (1000$) or the same percentage of money (20%)?

My idea, make individuals responsible for what they use;
-Ecotax. Tax individuals and companies for every gram of pollution they cause. One gram of CO2= 0,0X$.
-Groundtax. Tax people for the ground they possess. Of course, ground in the middle of a city is more expensive than ground in rural areas, and you could give every human being an untaxed amount of ground.
-Lend money to people instead of giving it to them. Instead of letting people pay for my study, and me paying for other people's study with high tax percentages when I'm done studying, just lend me money to pay for my study myself, making me responsible for the costs of my study. (And because the government pays me instead of a private company, the government can be 'nice'; low interest, long term, and I don't have to pay everything back in special circumstances)

In my opinion, taxes should be done not according to social status of rich or poor, but as a direct function of your income (independent of brackets). Here's a sample function i think would work well.

(Gross income-required expenditures)*15%=income tax owed.

In that equation, if someone's gross income is less than their required expenditures the government would pay them, if it is more they would pay the government and if it is equal they neither gain or lose. Required expenditures would have limits of x/person for food, y/person for housing (if you buy a big ass house for yourself, you don't get to cut that entire titanic sized mortgage from your income tax) z/person for vehicles and gas ect.

person being persons living off of the individual income of that person, where multiple people living in the same house with an income would only get to apply those breaks to one of their income taxes so that rich people can harbor a bunch of dependents and live together for 0 tax.

The richer you are, the less proportion of your wealth has to be spent on necessities.

Danyal:
My idea, make individuals responsible for what they use;
-Ecotax. Tax individuals and companies for every gram of pollution they cause. One gram of CO2= 0,0X$.
-Groundtax. Tax people for the ground they possess. Of course, ground in the middle of a city is more expensive than ground in rural areas, and you could give every human being an untaxed amount of ground.
-Lend money to people instead of giving it to them. Instead of letting people pay for my study, and me paying for other people's study with high tax percentages when I'm done studying, just lend me money to pay for my study myself, making me responsible for the costs of my study. (And because the government pays me instead of a private company, the government can be 'nice'; low interest, long term, and I don't have to pay everything back in special circumstances)

The second one isn't a thing in Australia. The other two are (though the carbon tax only recently became a thing, student loans have been around for ages).

I didn't know people who believed in the myth of working flat tax systems still existed.

Esotera:
Because the very rich will likely find ways to evade these taxes, especially corporations.

That's prejudice. You don't tax someone higher then someone else on the bases that the other one will avoid paying taxes by default and will thus only pay the same if he is taxed more.

Esotera:
Or looking at it another way, you could say that the rich have already taken an unfair amount of money from the poor, either indirectly or directly

What do you mean when you say they have "taken it from the poor directly or indirectly"? Taken it how?

thaluikhain:
The richer you are, the less proportion of your wealth has to be spent on necessities.

So what?

The obvious reason why you cannot tax the rich and the poor the same percentage is the poor do not have enough money to survive as it is. If a man only has $100 a week to support his family, that means if you take any of that money they do not have enough to eat, keep their electric on, keep their water on or a roof over their heads. The difference when you take that from the wealthy is they are not in danger of becoming homeless or starving, or freeze to death in the winter, the poor are, well, because they are poor.

The poor have no more money to give, in fact they need assistance just to survive because incomes have not kept up with the cost of living. People are born into a nation only to have it too expensive to live there, and too expensive to move. What are they to do then?

a flat percentage will hurt someone on a low income a hell of alot more than someone who is rich

Hardcore_gamer:

Esotera:
Because the very rich will likely find ways to evade these taxes, especially corporations.

That's prejudice. You don't tax someone higher then someone else on the bases that the other one will avoid paying taxes by default and will thus only pay the same if he is taxed more.

You're still left with the very rich effectively paying less taxes than everyone else. That is also a form of prejudice.

Hardcore_gamer:

Esotera:
Or looking at it another way, you could say that the rich have already taken an unfair amount of money from the poor, either indirectly or directly

What do you mean when you say they have "taken it from the poor directly or indirectly"? Taken it how?

With indirect I was thinking more of inherited wealth. Someone can inherit a lot of money for no talent other than their distant ancestors were good at enslaving Africans to work on cotton plantations, or were given a county by a King (going even further back). They should be able to keep that, but it should be taxed the hell out of so the wealth can be redistributed.

thaluikhain:
The richer you are, the less proportion of your wealth has to be spent on necessities.

So what?[/quote]

Some people can barely buy necessities. Wealth redistribution aims to fix that whilst maintaining a system where hard work is rewarded.

Hardcore_gamer:
Why not just make it so that everyone pays a similar amount of tax?

Because otherwise wealth concentrates into the hands of the few, causing all sorts of societal problems. Well, that was easier than expected!

Cheers.

The more money you have, the less additional money is worth to you. The entire system is built on this premise.

A family on $30,000 after tax spends $30,000 to live. A family on $500,000 after tax only spends $200,000 to live. Taxing them extra has zero effect on them as the money you are taking from them is relatively worthless compared to the same amount if it was taken from the first family.

If you tax them the same you are also assuming that the amount made is directly proportional to the work they do, we know that is not the case. Society without poor people would collapse because someone has to do the menial low paying jobs.

Hardcore_gamer:
The endless debate between people who claim the rich should be taxed more then the poor and the people who think otherwise continues to rage. However, why does one class need to be taxed more then the other?

Why not just make it so that everyone pays a similar amount of tax? That why people can't argue that they are being treated unfairly, neither the rich nor the poor.

Thoughts?

EDIT: By "paying the same" I mean the same percent.

The problem with this is twofold. The first is that the government needs money, and the poor people can't offer as much of their income as rich people, procentually. It's not the difference between retiring on a seaside cottage or a seaside victorian for them; it's the difference between living to see retirement age or not. If the government set a flat tax to cover its expenses, the rich could easily afford it... and the poor could not even begin to. And at the same time, that 20% you're taking from the poor is almost nothing. The bottom 50% of this country owns about 2.5% of the total amassed wealth and makes way less money than the top 1% does[1]. Lemme just repeat that, in case you missed it: the richest 1% of the country makes more money than literally half of the population combined. Is it any wonder that we have progressive tax rates? The fact is, we need the money from somewhere, and only the rich can really carry the burden. The poor simply don't have the ability to do so.

The second issue is a little more ideological in nature, but still quite valid IMO. Elizabeth Warren put it very well: "Nobody in this country became rich on their own." And if you're somehow rich, think about what you used to become rich. Think about how well you've profited from the road networks, the power grids, and all the other things that the government offered to you in comparison to a day laborer making minimum wage. Think of how much more your fleet of semi trucks carrying goods from place to place tear up the road than the single beat-up chevy Bob McEveryman drives to work. Think of how much more you have benefited from the freedoms the country offers you, as well as the protection offered by its judicial system and police force. You got more out of the system, therefore you have to put more back in.

The first issue is more pressing, to be sure, and Pyrate explained it better than I did, but I still think the second one holds meaning. ^^

Also, inb4Baff comes in and decides that we're all lying and the real reason is because we want to steal from and demonize the rich.

Err...

Yeah this is called a Progressive Tax system.

We could all argue all day and make arguments but frankly here are all of the conventional arguments both for and against.

Wikipedia:
Arguments for implementation

The higher one's income, the greater the fraction of it that tends to consist of economic rent rather than rewards for any commensurate contribution to production. By definition, economic rent is a factor payment exceeding that required to place a factor in its most productive use, so it can be taxed away entirely without impairing wealth production. Consequently, in the absence of taxes specifically levied on economic rent, a steeply progressive tax on the highest incomes can be expected to fall almost exclusively on economic rent, minimizing the excess burden of such taxation.

In a market economy, the larger an investment is, the higher its rate of return. This is due to both economies of scale and the increased range of investment opportunities. In addition to these economic forces, those who control greater amounts of capital within a society are able to participate more directly in shaping government policy, often in ways that further maximize their wealth. Thus, due to both economic and political realities within a market economy, it is a natural process for the wealthiest individuals and firms in a society to become disproportionately wealthier over time. In order to prevent the political instability resulting from the natural stratification of the populace into an ever smaller and wealthier aristocracy or moneyed class, and an ever larger working class, free market democracies should support progressive taxation and programs to enhance economic opportunity for the lower and middle classes.

A progressive tax reduces income inequality, which has been reported to have a number of societal benefits, such as lower homicide rates at all income levels.[18] A steeper progressive income tax results in an even more equal distribution of income across the board. The difference between the Gini index for an income distribution before taxation and the Gini index after taxation is an indicator for the effects of such taxation. Richard G. Wilkinson argues that in a more unequal society, even middle class people on good incomes are likely to be less healthy, less likely to be involved in community life, more likely to be obese, and more likely to be victims of violence.[19] Amongst the wealthiest quarter of countries, there is no relation between a country's wealth and general population health, but within a country, relative levels can have an effect.[20]

In response to the concern that progressive taxation creates an unfair psychological burden on the wealthy; if the utility gained from income exhibits diminishing marginal returns, as many psychologists assert (see Weber-Fechner law), then for the tax burden to be shared in a utilitarian way the tax-bill must increase non-linearly with income.

As income levels rise, marginal propensity to consume tends to drop. Thus it is often argued that economic demand can be stimulated by reducing the tax burden on lower incomes while raising the burden on higher incomes[21]

People with higher income tend to have a higher percentage of that in discretionary income, and can thus afford a greater tax burden (this is the "vertical equity" argument). Some would claim that a person earning exactly enough money to pay for food and housing cannot afford to pay any taxes without its causing material damage, while someone earning twice as much can afford to pay up to half their income in taxes.

Some believe that the wealthy have a disproportionately greater interest in maintaining societal goods typically supported by taxation such as security of property rights, defense and infrastructure, as they have much more to lose if these fail than do the poor. Public investments in defense and foreign aid often support assets abroad whose expropriation is a far greater risk than is the risk involving domestic investments.

As long as after-tax income is a strictly increasing function of gross income, there is a monetary incentive to increase compensation received. Indeed, for any particular income goal, the higher the tax rate, the more compensation one must receive to reach that income goal. For this reason, progressive income tax may increase the incentive to produce among the largest producers (if higher production is truly associated with higher compensation).

Arguments against implementation

It has been argued that progressive taxation violates the principle of equality under the law.[22]
Progressive taxes lower savings rates. High-earners have a lower average propensity to consume, so shifting the tax-burden away from them will increase the aggregate savings rate, which should increase steady state growth (if the savings rate is initially below the Golden Rule savings rate).
The classical argument against progressive taxation runs as follows:

The diminishing returns argument applies to the fraction of income used for present consumption. As income rises, diminishing returns implies that a smaller and smaller fraction of income will be spent on consumption goods. The remaining income will (of necessity) be used to purchase capital goods. This acts as a form of positive feedback that in turn yields more income for capital spending. Meanwhile (and because) these capital goods induce a decline in the costs of production which has the effect of raising real wages generally and implicitly raising the general standard of living. The income paid back on the capital helps create the disincentive to consume that creates capital spending. Thus, those capitalists who effectively manage their property are rewarded and given control of more (newly created) property, of which they are increasingly less inclined to consume and increasingly more inclined to purchase capital goods and thus further elevate the general standard of living by driving down the costs of production. As they acquire more capital goods, eventually their ownership outstrips their ability to manage and oversee what they own; however, they control only as many capital goods as can be attributed to the income of their prior capital---which previously did not exist. Therefore, their ownership does not negatively contribute to the general standard-of-living relative to counterfactual state of them not purchasing those goods. It would thus be misleading to argue that redistributing their capital may yield further increases in the standard-of-living. Doing so may well cause that effect, but doing so neglects that it was the assumption that redistribution would not happen that induced the accumulation of capital. - Eugen von Böhm-Bawerk, Karl Marx and the Close of his System, 1896

A belief that progressive taxation shifts the total economic production of society away from capital investments (tools, infrastructure, training, research) and toward present consumption goods. This could happen because high-income earners tend to pay for capital goods (through investment activities) and low-income earners tend to purchase consumables. Smithian and neo-classical growth theory says that spending more on consumption goods and less on capital goods will slow the rise of the standard of living, and possibly even reduce it since capital goods increase future production possibilities.
Brain drain and tax avoidance. High progressive taxes may encourage emigration because taxes are not internationally harmonized, so very high earners are sometimes able to relocate in order to pay less tax, or find tax havens for their income. Unlike the opposing income effect and substitution effect of leisure which may make tax progressivity neutral in terms of working hours, the emigration rate must increase with the top rates of tax.[citation needed]
The differential in the higher rates of tax between the United States and Europe are cited as a factor in the "brain drain" of high-earners to America in the 1960s, and is considered an important influence on modern "economic migration."[citation needed]
Increase in tax loopholes such as income splitting techniques.[citation needed] This creates an incentive for business owners to split their business into smaller, less efficient ones for a lower tax bracket. It also encourages production from less efficient smaller businesses than larger ones.
The increasing energy expended on tax avoidances which occur with greater progressivity produces an increase in the work of accountants and lawyers. Because tax avoidance creates no net wealth this work is unproductive, and can make taxes on the rich less efficient than on the middle class, who have less motivation to exploit tax loopholes.[citation needed]
Progressive taxes are argued to create work disincentive. Consider again someone who makes twice the minimum required to live on but pays all income above the minimum living threshold in taxes. Such a person had no monetary incentive at all to try to increase his or her income above the base level.[23]
Justice in representation: economic equity is sometimes used to argue against progressive taxation, on the grounds of representation being out-of-proportion to taxation: While the top 5% in income in most countries pay over half the taxes[24] they have only 5% of the voting weight. This argument can be reversed into the plutocratic case that if tax is to be progressive it should be accompanied by greater say in elections for those who contribute most.
Policymakers are argued to be under a pressure from lower and middle income voters to limit higher incomes by the means of progressive taxation. A few economists argue against inequity aversion: "If policy makers' primary goal is ... economic prosperity for all, they should avoid focusing on the politics of envy." (Gregory Mankiw)[25]
A study from the libertarian Institute for Policy Innovation, which aims to reduce government intervention in the economy, has concluded that progressive taxes fail to decrease real income inequality.[26]
Some[who?] libertarians, especially anarcho-capitalists, argue that only poll taxes can be economically efficient[27] in the fullest sense (the utilitarian view), and/or that equity requires each citizen to pay the full exchange value in trade for governance services such as the guarantee of property rights (the natural rights viewpoint).

Yeah I'd go with Progessive Taxes over flat taxes anyday...

That's like saying that if we need to lift a 100 pound couch, and I'm capable of lifting 500lbs on my own and you're capable of lifting 1 pound on your own, that we should both lift 50 pounds each.

And that, if I over extend myself, I might be sore a bit, but if you over extend yourself, you'll rupture a hernia, but we should make you lift the max amount you possibly can, because there's no way I should have to lift more than you.

The problem is that, raising tax on the top 1% a tiny bit (to them) generates a bucket full of revenue, but taking everything that the bottom whole 50% have on this whole mortal earth aside from grinding their bones up to make meal out of it, would be a fraction of that same revenue.

So it's insane to think they can proportionally shoulder the same burden.

Because if a poor guy earning 10 dollars pay 90% taxes. He has 1 dollar left, he will starve.
If a rich guy earning 1.000.000 dollars pay 90% taxes. He has 100.000. He will not starve, and have plenty to live for.

This is an extreme, but logically a rich man can afford to pay more without ending up worse off.

Hardcore_gamer:
That's prejudice. You don't tax someone higher then someone else on the bases that the other one will avoid paying taxes by default and will thus only pay the same if he is taxed more.

No, it's a bookkeeping fact. Large companies and rich individuals have the resources to avoid paying taxes. That's legal tax evasion; using all loopholes you can find.

The small people don't have the knowledge to do that, or resources to do either that or hire external knowledge, so they pay more.

Blablahb:

Hardcore_gamer:
That's prejudice. You don't tax someone higher then someone else on the bases that the other one will avoid paying taxes by default and will thus only pay the same if he is taxed more.

No, it's a bookkeeping fact. Large companies and rich individuals have the resources to avoid paying taxes. That's legal tax evasion; using all loopholes you can find.

The small people don't have the knowledge to do that, or resources to do either that or hire external knowledge, so they pay more.

To note, something like donating a car to charity, to get more than the car's worth back in tax deductions, is not something who can't even afford a single car can do.

Because taxing the same percentage of income isn't the same as taxing fairly or even taxing people the same in terms of what money is worth.

If one person spends 90% of their income on essential living costs and you tax him 20% of his income, well, you see the problem in the math here. And if someone who spends just 10% on their income on essentials gets taxed 20% of their income, their left with a whopping 70% of their income left, and this 70% is still many times larger than the first persons 100% of income. In short you are not taxing them both the same, your taxing one man to the point where he can't live and another so it doesn't make a difference

Now I should stress I do support capitalism and that there should be a pay gap, but so long as everyone has enough to meet their basic needs, or rather their own needs and the means to support a family. This can only be achieved through a progesssive tax system, no one will lose any sleep if a rich man can't afford a new Ferrari but everyone in the country has a roof over their head, but when people can't put food on their families table whilst people are able to take their private jet to Monte Carlo something is direly wrong in society. Of course we have the later scenario now, but it would get expidentially worse with a flat tax system as the people at the bottom pay more in real terms than than those on the top.

Aside from what's been listed there are two diffeent things to consider dealing with the uses of public funds:

1) The rich garner a higher ecconomic usage than the poor on some items. Say a public road is built to a factory site. The owner and workers drive the road the same number of times, however the existance of that road enabled the owner to earn 10 million dollars through his business, while the workers got 25 grand each for their work. The rich person got more benefit from the road and as such should consider paying more. The same goes with police or defense: the property being protected is owned more by the wealthy than the poor. In fact, if fact how many poor people scraping by just enough to eat really care if the taliban blow up the rich man's buildings?

2) Other items are to help the downtrodden so it's illogical to tax them. Hi, I need food stamps. Did you pay your taxes? Why do you think I need food stamps? Okay, bad joke but the point is true: asking people that need social security, welfare, food stamps, ect to kick in is like asking someone to pay to receive charity from the Red Cross. You might not agree with that spending, and that's another topic, but as long as the concept exists, it really would be a dick move.

What is even the point in taxing the poor? All taxes are for redistribution; the money goes to services that the poor cannot afford otherwise. When you tax the poor, what exactly is the benefit? You might as well let them keep their money and pay for their own services. Taxing the rich and giving to the poor, that I can understand. But taking money from the poor then giving them the same money back again, this I find crazy.

Nikolaz72:
Because if a poor guy earning 10 dollars pay 90% taxes. He has 1 dollar left, he will starve.
If a rich guy earning 1.000.000 dollars pay 90% taxes. He has 100.000. He will not starve, and have plenty to live for.

This is an extreme, but logically a rich man can afford to pay more without ending up worse off.

You may want to fiddle with the numbers a bit, Guy 1 is going to starve either way.

Because the government needs more money.

Simple. The poorer a person is, the more adversely a tax affects them.

Lemme elaborate on my previous post:

Lets say we have three citizens: Alice, Boris and Charlie.

Alice earns £100,
Boris earns £200,
Charlie earns £300.

Lets say we set taxes at 20% of earnings, and distributed revenue equally among citizens.

Alice pays £20 tax,
Boris pays £40 tax,
Charlie pays £60 tax,

for a total of £120. Distributed equally, this means each citizen will be given £40.

Alice now has £120, £20 up,
Boris now has £200, same as before,
Charlie now has £280, £20 less.

The effect is to take £20 from Charlie and to give it to Alice. What was the purpose of taking any money at all from Alice or Boris? You may as well just take that £20 from Charlie directly and give it to Alice.

Lets say now, edging slightly closer to realism, that there is a bureaucratic cost associated with any taxation. Call it 5% (laughably low compared to the wastage we get from public services).

Of the £20 Alice pays in tax, £1 is wasted.
Of the £40 Boris pays in tax, £2 is wasted.
Of the £60 Charlie pays in tax, £3 is wasted.

We now have £114 total revenue, with £6 wasted. That means each citizen is given £38.

Alice now has £118, £18 up,
Boris now has £198, £2 down,
Charlie now has £278, £22 down.

What if we instead just took £20 directly from Charlie and gave it to Alice? The bureaucratic cost is then just £1, and we end up with:

Alice has £119, £19 up,
Boris has £200, the same,
Charlie has £280, £20 less.

That's better, isn't it? Am I wrong?

Captcha: been there

PrinceOfShapeir:

Nikolaz72:
Because if a poor guy earning 10 dollars pay 90% taxes. He has 1 dollar left, he will starve.
If a rich guy earning 1.000.000 dollars pay 90% taxes. He has 100.000. He will not starve, and have plenty to live for.

This is an extreme, but logically a rich man can afford to pay more without ending up worse off.

You may want to fiddle with the numbers a bit, Guy 1 is going to starve either way.

Its a cruel, cruel world we live in. Guy 1 is the reason Guy 2 has to pay more taxes. Youknow, so the goverment can 'give' Guy 1 food.

Nikolaz72:
Because if a poor guy earning 10 dollars pay 90% taxes. He has 1 dollar left, he will starve.

What I would like to know is why this "poor buy" in your example is only getting payed 10 dollars and why there is a 90% tax.

In Iceland where I live people who can't find a job also get some money from the state until they can get a job so they do in fact not starve anyways, so your point isn't really valid. Or at least not in countries like mine where people who don't have jobs can get some help so that they can afford food.

Hardcore_gamer:

Nikolaz72:
Because if a poor guy earning 10 dollars pay 90% taxes. He has 1 dollar left, he will starve.

What I would like to know is why this "poor buy" in your example is only getting payed 10 dollars and why there is a 90% tax.

In Iceland where I live people who can't find a job also get some money from the state until they can get a job so they do in fact not starve anyways, so your point isn't really valid. Or at least not in countries like mine where people who don't have jobs can get some help so that they can afford food.

What I would like to know is why this is the only thing you've responded to.

Hardcore_gamer:
What I would like to know is why this "poor buy" in your example is only getting payed 10 dollars and why there is a 90% tax.

In Iceland where I live people who can't find a job also get some money from the state until they can get a job so they do in fact not starve anyways, so your point isn't really valid. Or at least not in countries like mine where people who don't have jobs can get some help so that they can afford food.

Lack of class mobility is the biggest issue.

Adam Smith, the man who is regarded more or less as the father of capitalism, said the greatest danger to a capitalist economy is the concentration of wealth. With a regressive flat tax, the rich get richer and the poor get poorer. Eventually you end up with a system more akin to feudalism.

The poor spend a greater amount of their income on necessities. You say, so what? I say, you've obviously never been poor. It's borderline impossible to get any savings going when any and all leftover income after paying for necessities goes to repairing your home, transportation, and other emergencies. It doesn't matter how hard they work, if you hit them with regressive taxes, they can't move up to a better economic strata.

The rich on the other hand are wealthy because their income allows them to acquire more savings in a month than some people make in a year. They can afford to give a higher percentage of their income to the commons. When you need money, you go where the money is. I would have thought that would be obvious.

In other words, we don't have flat tax because that would be stupid.

pyrate:
The more money you have, the less additional money is worth to you. The entire system is built on this premise.

A family on $30,000 after tax spends $30,000 to live. A family on $500,000 after tax only spends $200,000 to live. Taxing them extra has zero effect on them as the money you are taking from them is relatively worthless compared to the same amount if it was taken from the first family.

If you tax them the same you are also assuming that the amount made is directly proportional to the work they do, we know that is not the case. Society without poor people would collapse because someone has to do the menial low paying jobs.

Your take on this isn't completely right. The principle of a progressive tax is that it focuses on redistribution of wealth rather than simply paying for public goods. The family with $500000 but who needs $200000 still could place a great value on the remaining $300000, but the government acts on the assumption that the poor family or society as a whole would benefit more from the public schools or medicaid or whatever other social program that the $300000 would buy than the rich family would benefit from whatever use they would spend the money on, which is more likely to be a private function that holds no benefit to society at large.

As to your second point, the rich people are paid more because their work is deemed more difficult or unique and is thus judged to be more valuable rather than their working a greater number of hours, so the resulting income inequality is a reflection of the differing values of the work they do. Imposing a flat tax would still lead the rich to pay a higher absolute level of taxes (eg. 15% of $500000 is still more than 15% of $50000), so a flat tax would provide no further assumption than existing income patterns already provide. Low paying jobs would still exist no matter what the tax code is, so I'm not sure what you were getting at there.

Instituting a flat tax code in the US would lead to a huge loss in tax revenues, as the rich provide the vast majority of tax proceeds, and any effects to their tax bracket's rate would have a disproportionate effect on the total tax revenues. If existing tax exemptions and rebates remain in place, then the poor would still pay a lower effective tax rate, which would prevent any chance at offsetting the lower taxes on the rich. The inevitable result of any flat tax is that the provision of public goods and social programs and entitlements would decrease drastically in quantity or quality, and the government would likely be forced to scale back its reach dramatically. Some may see the inefficiency of the US government and conclude that less tax revenues would promote belt tightening that would improve efficiency and prevent unnecessary government involvement, but although some cost shaving would be beneficial to the US, the government is slow to act and cost cuts would likely lag behind tax cuts, leading to foreign borrowing to cover costs while decreasing the pool of money available to pay back interest or principal on these loans.

I think it's interesting that the rich are taxed the most while simultaneously consuming the least public goods, as they have private schools and buy their own insurance and so on, and there might be some unfairness in rich people complaining about how the government has the final say on what amount of their income they are allowed to keep, but any dramatic change in the tax code right now would be foolish political maneuvering rather than sound government

Hardcore_gamer:
The endless debate between people who claim the rich should be taxed more then the poor and the people who think otherwise continues to rage. However, why does one class need to be taxed more then the other?

Why not just make it so that everyone pays a similar amount of tax? That why people can't argue that they are being treated unfairly, neither the rich nor the poor.

Thoughts?

EDIT: By "paying the same" I mean the same percent.

Taxation isn't supposed to be "fair" in a social liberal system. It should be set up in such a way that it helps the less fortunate folks without burdening the upper classes too much.

WoW Killer:
Lemme elaborate on my previous post:

Lets say we have three citizens: Alice, Boris and Charlie.

Alice earns £100,
Boris earns £200,
Charlie earns £300.

Lets say we set taxes at 20% of earnings, and distributed revenue equally among citizens.

Alice pays £20 tax,
Boris pays £40 tax,
Charlie pays £60 tax,

for a total of £120. Distributed equally, this means each citizen will be given £40.

Alice now has £120, £20 up,
Boris now has £200, same as before,
Charlie now has £280, £20 less.

The effect is to take £20 from Charlie and to give it to Alice. What was the purpose of taking any money at all from Alice or Boris? You may as well just take that £20 from Charlie directly and give it to Alice.

Lets say now, edging slightly closer to realism, that there is a bureaucratic cost associated with any taxation. Call it 5% (laughably low compared to the wastage we get from public services).

Of the £20 Alice pays in tax, £1 is wasted.
Of the £40 Boris pays in tax, £2 is wasted.
Of the £60 Charlie pays in tax, £3 is wasted.

We now have £114 total revenue, with £6 wasted. That means each citizen is given £38.

Alice now has £118, £18 up,
Boris now has £198, £2 down,
Charlie now has £278, £22 down.

What if we instead just took £20 directly from Charlie and gave it to Alice? The bureaucratic cost is then just £1, and we end up with:

Alice has £119, £19 up,
Boris has £200, the same,
Charlie has £280, £20 less.

That's better, isn't it? Am I wrong?

Captcha: been there

Except we don't take from one and directly give to another.

Of any given tax dollar, most of it will go to other functions, such as military, police, education, research grants, etc.

So it is more like this:

Alice pays $20 in tax, $1 is wasted, $6 goes to military, $10 goes to other programs, $1 goes back.

Boris pays $30 in tax, $2 is wasted, $10 goes to military, $15 goes to other programs, $3 goes back.

Charlie pays $40 in tax, $3 is wasted, $15 goes to military, $20 goes to other programs, $5 goes back.

Redistribute and you have...

Alice is $17 down.
Boris is $27 down.
Carlie is $37 down.

generals3:

Hardcore_gamer:
The endless debate between people who claim the rich should be taxed more then the poor and the people who think otherwise continues to rage. However, why does one class need to be taxed more then the other?

Why not just make it so that everyone pays a similar amount of tax? That why people can't argue that they are being treated unfairly, neither the rich nor the poor.

Thoughts?

EDIT: By "paying the same" I mean the same percent.

Taxation isn't supposed to be "fair" in a social liberal system. It should be set up in such a way that it helps the less fortunate folks without burdening the upper classes too much.

What up fatboy!
I'd heard you were to be found lurking here.

And I agree tax isn't meant to be fair.

Pretty much anyone who seeks to justify it as an act of fairness is someone I inherantly mistrust.

Nor do I consider a similar percentage to be "the same". £10 is £10. It buys the same amount of beer whatever your income.

Hardcore_gamer:
The endless debate between people who claim the rich should be taxed more then the poor and the people who think otherwise continues to rage. However, why does one class need to be taxed more then the other?.

Because they can be.

If you tax someone with £500,000,the whole £500,000, then when your tax collector comes to collect, you can expect a gunfight to ensue.
For that person to fight to the death to protect his assets, as you have taken his entire life's worth. Or at least more than he is willing to give up.
(At this point a reasonable man just destroys his own property so that his tormentors cannot have it either).

But if you tax someone with £1,000,0000, £500,000.
He still has 500,000 reasons left not to self destruct.

And in the end, people want your money and they can take it. The only thing stopping them is your ability to either make the cost of doing so too high for them, or for them to feel that you will provide them more over the long term if they don't disenfranchise/demotivate you.

Because the rich will always shit on the poor, the people who decide the taxes are rich, they got rich by sitting back and taking the money you earn...for no other reason than because they can.

This is how it is.

It's shit.

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