Happy Tax Day!!! Aren't you happy?

[RAMd®d]

I see your math, but still have a couple of questions.

I'm pulling down a solid $15,000 a year, and the exec is getting $250,000. Are we actually in the same tax bracket?

In addition, wouldn't he have access to exemptions that I wouldn't?

Why is the new flat tax now 15% instead of the original 9%? Would it be necessary to raise the percentage almost 100% if people who previously made hundreds of thousands or more a year were now paying 9% when they were paying nothing?

Is the presumption then a flat tax rate without exemptions would not equal the current tax revenue unless that rate were significantly higher than the lowest rate now in force?

I'm all for paying as little tax as possible while paying My Fair Share. It's just that I have never been able to wrap my head around the "you make more so you should pay more" tax model.

I'm having an Excedrin moment.

Time to Option-Cmd-Eject.

[Filliam H. Muffman]

I will attempt to answer.

RAMd®d wrote: Are we actually in the same tax bracket?

Supposedly. That is why it sounds so appealing for everybody who pays more now (or thinks they pay more, or would like to make more and pay less tax).

In addition, wouldn't he have access to exemptions that I wouldn't?

That is why it might appeal to some lower income people, 'Stick it to the man by eliminating exemptions.' It might increase taxes for a few people that are rich enough to game the system that they pay less than average now.

Why is the new flat tax now 15% instead of the original 9%?

That was an attempt to show that the flat tax is regressive and affects low income people disproportionally.

Would it be necessary to raise the percentage almost 100% if people who previously made hundreds of thousands or more a year were now paying 9% when they were paying nothing?

Not quite sure what you are getting at.

Is the presumption then a flat tax rate without exemptions would not equal the current tax revenue unless that rate were significantly higher than the lowest rate now in force?

It all depends on how the new tax code is written. The current system heavily favors people with discretionary income to invest. They don't pay Social Security, Disability, etc. on non-salary income.

I'm all for paying as little tax as possible while paying My Fair Share. It's just that I have never been able to wrap my head around the "you make more so you should pay more" tax model.

It is a way to try to balance out taxes so that low income people might have a little more even amount of tax compared to discretionary income.

[freeradical]

It's interesting that in the 1900's, prior to our entry into WWI, that the top marginal tax rate was 7%. It went up during the war, but after the war, it dropped down to 25%. Then Roosevelt happened...


http://taxfoundation.org/sites/taxfounda...ominal.pdf

[Speedy]

RAMd®d wrote: It's just that I have never been able to wrap my head around the "you make more so you should pay more" tax model.

I'm having an Excedrin moment.

Time to Option-Cmd-Eject.

Perhaps a better way to look at things is not how much you pay in taxes, either as a percentage or in dollars, but how much you have left over after all taxes have been paid. The top marginal rate was once 91%+ but it was a rare person that paid the full amount and that person still had more money from income after taxes than anyone else.

We do have regressive flat taxes in many states via the sales tax. The struggling young couple with four kids buys a lot of groceries and pays a lot in sales tax on those groceries. The older wealthy couple can afford a much better, more expensive cut of beef than the young couple but in the end probably pays less total sales tax than the young couple when they go through the checkout. Same for clothing, nicer duds for the wealthy couple but they pay less sales tax overall than the young couple clothing four kids, even with hand me downs. So, what is fairer, the flat sales tax or a progressive income tax? Your call.

In the end, the rich will do just fine no matter the tax rate.

[Speedy]

freeradical wrote:
It's interesting that in the 1900's, prior to our entry into WWI, that the top marginal tax rate was 7%. It went up during the war, but after the war, it dropped down to 25%. Then Roosevelt happened...


http://taxfoundation.org/sites/taxfounda...ominal.pdf

Also interesting is that the federal government was primarily supported by tariffs in the early 1800's. Things change. And it wasn't Roosevelt that happened, it was the Great Depression...

[Lew Zealand]

Filliam H. Muffman wrote:
You, minimum wage earner, make $15,000 a year, pay 9% tax, you have $13,650 left. Housing, food, transportation, medical cost $13,000. Net savings is $650. Your tax bill is 207% of your savings.

You, as an executive, make $250,000 a year, pay 9% tax, you have 227,500 left. Housing, food, transportation, medical cost $80,000. Net savings is $147,500. Your tax bill is 15% of your savings.

If the flat tax was 15%, the minimum wage person wouldn't be able to save anything but the executive would still be able to save $132,500. Progressive/Indexed with no loopholes is the fairest to people making less. The flat tax sounds good to 'middle class' or those who aspire to that because they will pay a little less. That's why billionaires keep pushing the flawed idea. Six Waltons have more wealth than the bottom 30% of Americans.

Thanks Fil, that was concise enough that I may actually remember it!