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Flat-tax proposals: Too simple to work? [Most commented]

October 26, 2011 |  1:56 pm

Rick Perry - taxes
The flat-tax proposals by Republican presidential candidates Herman Cain, Newt Gingrich and Rick Perry may seem appealing in their simplicity, but the editorial board warns against them. The board writes:

The simplicity of a single rate might be the most appealing aspect of the flat tax to taxpayers, but the majority of its benefits would come from broadening the tax base, lowering rates and removing disincentives to save and invest. The biggest downside is that by sharply reducing the rates collected from the highest earners, it would force the lower and middle classes to cover more of the cost of government than under the current system of graduated rates.

Making the flat tax an option, as Gingrich and Perry favor, is a worst-of-both-worlds approach. It wouldn't reduce taxpayers' paperwork and expenses; they'd still need to calculate how much they'd owe under the current system to see whether they would pay less with the flat tax. Instead, it would let lower-income taxpayers and the elderly hold onto the valuable tax breaks that the flat tax would eliminate, while letting higher incomes take advantage of the flat tax's lower rates. In other words, it's status quo for those with lower incomes, but a boon to the wealthy.

Lawmakers can achieve the legitimate economic goals of the flat tax without abandoning graduated rates. One example is the tax overhaul that President Reagan signed into law in 1986, which eliminated enough tax breaks to allow brackets to be consolidated and the top rate lowered significantly. Flat-tax advocates are right to call for a radically simpler code, but they're focusing on the wrong problem.

 

This argument instantly sparked a debate, which has had editorial writer Jon Healey replying to reader comments with further insight. You can find the full discussion here. Till then, here’s a sampling of comments that express the variety of ways readers think our country’s tax system should work.

A not-so-flat flat tax

As a Republican, I endorse the idea of a flat tax, but I also support brackets to avoid putting too much weight on the lower levels, as low earners know well that 9% of $20,000 is a far greater personal burdern than 9% of $200,000.  We should not punish wealthy and successful people, but we have to strike a balance. 

--TimBowman

The best way to level the playing field?

Getting rid of deduction and subsidies, killing crony capitalism, reducing the influence of lobbyist would all be the result of a flat tax. It could also be done with a graduated income tax, but a flat tax, starting at 20,000 dollars for singles and 30,000 dollars for families is more fair. Treat everybody the same regardless of income, color, or creed. 

--HenryC

Tax wealth

If you want to tax wealth, then tax wealth.

Wealth is assets.  Assets are property, whether real or personal.

So if you want to tax wealth, you need an asset tax and sales tax and can do away with the income tax.

It's really simple, if it has a record title showing ownership, it gets taxed.

Just like your car tax or your home property tax.

No deductions, no anything.  A measly 3% national asset and sales tax would balance the books and begin paying down the debt.

--SoCal_Bozo

Our "progressive” tax systems are "fascist charities"

Social welfare ultimately comes from the rich giving to the poor under our current progressive tax system. However, the problem with this "fascist charity" is that the receivers of aid are not grateful at all to the people who are paying extra taxes for them. They call them names, protest them, hate them, and call them greedy.

It also creates a false economy of tax lawyers who's only contribution to society is to make sure that some rich who are willing to fight the taxes don't pay taxes. 

Ultimately our "progressive" tax systems ends up being more regressive than at first glance. The true rich people simply stash their wealth overseas or hire lawyers, leaving the upper-middle class and middle class footing the bill for a growing bulge of people who cannot pay fair taxes.

Yet you have a class of wealthy tax-dodging democratic politicians who have power because they use other people's money to keep a underclass of citizens dependent on them.

Cain's flat tax is probably the boldest plan for America, but it represents change. It has the proper protections for people below the poverty line and is engineered so everyone pays less net taxes-- although if you're a heavy consumer you'll end up paying a bit more with the sales tax. But this encourages people to manage their own capital wisely. The extra money if their pockets would be their own payroll, and not from the government.

--shaheen13

What's offensive about a consumption tax? 

Remind me:  What's offensive about a consumption tax?  After all, everyone's a consumer and everyone needs to pay for whatever is consumed.  The fact that some are "more able" to pay for what they consume seems to me to be irrelevant.  If someone can't/is less able to pay, perhaps they could re-evaluate what's important to consume.  After all, living in California is more expensive than many other States - surely consumers in California will pay more to consume whatever California has to offer...hence, giving California more income to distribute (to those who can't/are less able).

Anyone have any ideas on how we can get government to stop making land owners pay for something they already own (through some local/State/National tax scheme).

--hebfour

Why Democrats like the current tax code

It's interesting to note that a significant portion of each tax dollar collected is spent in the auditing and collection process.  A simplified tax code would free-up precious resources and give a much-needed boost to our flaccid economy.

The problem is that Democrats like the tax code just the way it is.  The only changes they ever seem to propose are increasing rates on high-income earners and providing bribes (tax incentives) to buy crappy electric cars and solar panels that nobody would otherwise purchase.

It ain't gonna happen.

--GregMaragos

Why flat taxes would make things worse

Why are we even discussing this? Flat taxes is just another con by conservative to award a boon to the wealthy and powerful at everyone else expense to insure massive political donors checks. The nation is paying it for now by the tax breaks for the wealthy and deregulation of the corporations well as under-taxes of them both for decades cause by GOP corrupt mismanagement. Why does anybody think things will get better by massively enacting action proven to make things worse?

--neoblueleo

*Spelling errors in the above comments have been corrected.

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Photo: Texas Gov. Rick Perry holds up the tax form he says Americans would use as he outlined a  flat 20% income tax rate during a news conference Tuesday in South Carolina. Credit: Mary Ann Chastain / AP Photo

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