A tax proposal

[SerriaFox]

I repeat myself:

What level would you recommended as a freebie?

Keep in mind that I said Social Security retirement and disability would continue If it was not clear I meant in addition to the BLS. What level of freebie would you offer able body Americans?

$1200 per year per household

It is $1200 per month for a couple

 

[Antilogic]

I repeat myself:

What level would you recommended as a freebie?

That's a question nobody can answer for you because it is highly dependent on urban rent prices, which vary from city-to-city, as well as the average cost of food, which also varies. Speaking from Boston, you could probably find a tiny apartment in a poor neighborhood to rent for $700-800/month, utilities might add another $100/month, assume the cost of food is around $100/month (which is not much, just over $3 a day will feed you two meals with limited meat and fruits/vegetables), and all other expenses, including clothing and mass transit, around $50 a month would add up to... $950/month. And that's pushing it for one person, never mind a single mother. Anybody know what New York, Chicago, or even Portland prices would be?

Something like this cannot be set at a federal level due to variation between the states.

 

[warpus]

A flat tax is the "idea of fairness. Every pays the same part of a dollar earned. It does not work at all for the very poor. And there are problems with it for the very rich.

So it's an interesting idea, and it sounds all nice and rosy, but how do you know it's going to work?

I mean, just because something is fair doesn't mean it's a good idea. You could make a law requiring everyone to walk to work on their hands. That's fair - it affects everyone equally, but it's a horrible idea.

So what other pros are there for this flat tax thing other than the fairness? Where's the research showing that it would work? Has this been done? What were the conclusions?

 

[JohnRM]

Why is the flat tax such a popular concept among Americans?

As far as I know no western country has ever tried this thing.. am I wrong about that? Where is the data that would lead one to conclude that a flat tax is a good idea?

The State of Pennsylvania has a flat tax and it works just fine.

 

[Antilogic]

The State of Pennsylvania has a flat tax and it works just fine.

Is it actually flat or just called flat?

 

[JohnRM]

One more Question I failed to answer the NIT.

The NIT as describe by Wikipedia is a bad idea. It uses the GMI. The vanishing benefits cause the welfare trap. That is one of the reason I tried to come up with a new name. The BLS functions as a negative income tax for anyone making less than $21,600 a year (assuming $600 a month and 33%). And a progressive tax code for anyone making more.

My best estimate is that I would get gutted in this tax scheme, and I'm not rich. The guys I work with would never support this or survive it. The ceiling should be raised from 21,600 to being tied to the GDP Per Capita or the flat tax would have to be lowered to roughly 20 percent.

 

[JohnRM]

Is it actually flat or just called flat?

7.xx percent on all income. I dont know by what criteria you would consider it truly flat. I also have no idea how the state defines "income", so don't ask.

 

[Antilogic]

7.xx percent on all income. I dont know by what criteria you would consider it truly flat.

Are there deductions for any reason? I am assuming when you say 7ish% on all income there is no exemption on the first so many thousand dollars?

If so, then it's actually flat. Usually, when people talk about flat taxes, there are all these little factors that make it a two-tiered progressive system and not actually a flat tax.

 

[MagisterCultuum]

I am unaware of any state that does its own calculations of income for tax purposes. (It is easier for them to rely on the Federal IRS than create a State equivalent.) Usually state tax forms just tell you to refer to some box in the federal tax form and take some percentage of that (although there are sometimes a few added exemptions). I am pretty sure that the number to which they refer is usually already adjusted for various exemptions and deductions. (Because of this, Federal tax cuts frequently reduce the tax revenue collected at the state level.)




Some states have no income tax, and rely instead of sales taxes and/or property taxes. Most have a mix of all three. The only states without sales taxes are Alaska, Delaware, Montana, New Hampshire and Oregon.

Pennsylvania excludes all pensions and social security benefits from their income taxes, while most states do not.

Pennsylvania has no estate tax but does have an inheritance tax paid by the recipient of the deceased's property.

Pennsylvania has property taxes, and is unique in that it allows counties to charge higher rates on Land Value than on the value of improvements.

 

[Tani Coyote]

Welfare is increasingly not a goodwill measure, but a necessity. As time goes on, more and more people will not be able to hold jobs, short of some insane protectionist measures.

As such, providing a citizen's income is no longer just a thought, but a need, unless you want riots.

I could go on about how automation will eventually pave the way to socialism but that's a long ways off so I won't.

===

The GMI would seem like a welfare trap, because you get taxed on the money you'll collect from your job. Unless you get taxed on the GMI anyway, in which case, there is no trap - you'll pay the same tax rate.

Most people will always choose work over a free lunch; many poor people refuse benefits entirely out of principle. The only real issue is where work income is lower than benefits you could get just by being unemployed. A negative income tax solves that issue.

Rather than complicate the system with progressive income taxes, instead, have progressive inheritance taxes. Even so, the allowance can be very generous, allowing quite a bit of money to be amassed over the generations. I could get by on 1,000,000 inherited dollars easily.

===

I've proposed an NIT before that gives 10,000 dollars annually per person. 312 million * 10,000 = 3.12 trillion doled out every year. Everything over that is taxed at a flat rate of 20%. So a three-person family brings home 30 K a year, tax free.

The US GDP is 14-16 trillion; let's go with the conservative estimate. 14 - 3 = 11. 11 * 0.20 = 2.2.

2.2 trillion to run the government on. Now, we ran on 3.5 trillion in 2010. Some cuts are necessary, of course. You can play with the rate a bit, though. I do know 25% will squeeze some middle incomes.

Assuming one's single:

Income - Current System - New System

10,000 - 1,075 - 0
20,000 - 2575 - 2000
25,000 - 3325 - 3000
30,000 - 4075 - 4000
35,000 - 4875 - 5000
40,000 - 6125 - 6000

Just about everyone's taxes go down under this system; the only ones who really would lose money are those making ~35K and single. But, rich and poor alike benefit otherwise, and for those in the middle, all they need to do is start a family.

 

[SerriaFox]

Welfare is increasingly not a goodwill measure, but a necessity. As time goes on, more and more people will not be able to hold jobs, short of some insane protectionist measures.

I could go on about how automation will eventually pave the way to socialism but that's a long ways off so I won't.

===

The GMI would seem like a welfare trap, because you get taxed on the money you'll collect from your job. Unless you get taxed on the GMI anyway, in which case, there is no trap - you'll pay the same tax rate.

Most people will always choose work over a free lunch; many poor people refuse benefits entirely out of principle. The only real issue is where work income is lower than benefits you could get just by being unemployed. A negative income tax solves that issue.

Rather than complicate the system with progressive income taxes, instead, have progressive inheritance taxes. Even so, the allowance can be very generous, allowing quite a bit of money to be amassed over the generations. I could get by on 1,000,000 inherited dollars easily.

===

I've proposed an NIT before that gives 10,000 dollars annually per person. 312 million * 10,000 = 3.12 trillion doled out every year. Everything over that is taxed at a flat rate of 20%. So a three-person family brings home 30 K a year, tax free.

The US GDP is 14-16 trillion; let's go with the conservative estimate. 14 - 3 = 11. 11 * 0.20 = 2.2.

2.2 trillion to run the government on. Now, we ran on 3.5 trillion in 2010. Some cuts are necessary, of course. You can play with the rate a bit, though. I do know 25% will squeeze some middle incomes.

Assuming one's single:

Income - Current System - New System

10,000 - 1,075 - 0
20,000 - 2575 - 2000
25,000 - 3325 - 3000
30,000 - 4075 - 4000
35,000 - 4875 - 5000
40,000 - 6125 - 6000

Just about everyone's taxes go down under this system; the only ones who really would lose money are those making ~35K and single. But, rich and poor alike benefit otherwise, and for those in the middle, all they need to do is start a family.

So your idea is a BLS of 833 a month. I think paying monthly is better than annually. Too many people seem to be budget challenged. The problem is your tax rate is too low. Since a Flat tax must be 25% to collect the same money (which is already less than the government spends) any progressive system must have a higher rate at the top end to work. Secondly I don't agree with paying people to be baby factories. Although giving some extra might be in order I believe it should be a net loss to have another kid on welfare. And I agree with you that automation is continuing to erode the available jobs, making some from of Welfare more important.

The biggest problem I have is the way the working poor lose. If the BLS is not quite enough all the better to encourage finding work. But I don't want is the working poor to lose.

The solution to Boston being to expenses is simple, but one certain states will not like, let Boston or Massachusetts subsidize the BLS for their residents.

The fact that this could not be passed without being gutted is valid. The fact is, anything cannot pass without being gutted. Which is a much bigger problem with our government. And part of the reason, I believe, the Tea-party movement and the occupy movement found such traction so easily.

 

[Cutlass]

I think Social Security disability is something in the neighborhood of $1200/month. Many places in the US that would be difficult to live on. Some rural areas it wouldn't be too bad. But only a small minority of people live in those areas. In some cities that just would get the job done.

Many states have an income tax. And it is often "flat". But that doesn't tell the story, because those states have other taxes as well. Particularly sales taxes.

 

[Mise]

The Conservatives in the UK are trying to get rid of vast swathes of the welfare system and replace it with a Universal Credit. I think the idea has merit, and I'm intellectually curious about how a basic taxable benefit given to every single adult in the country at exactly the same value irrespective of circumstances would affect society. But I have to many misgivings to actually try it; I'm scared it could have consequences that are pretty devastating.

Oh, and there's absolutely no reason that you can't have your "Basic Living Stipend" and ALSO have progressive taxes! I'm not sure why these things are always tied to a flat tax... You can have a basic allowance that is added to your taxable income and taxed progressively, just as it can be taxed at a flat rate, or not taxed at all. Indeed, by not taxing it at all, you're basically creating a two-tier progressive tax system...

 

[warpus]

7.xx percent on all income. I dont know by what criteria you would consider it truly flat. I also have no idea how the state defines "income", so don't ask.

That's interesting.

And see, that's what the discussion should be about. "Look, a state tried this flat tax thing. Here's some data, let's analyze it!"

instead of

"Let's do it cause it would make me feel good"

 

[Scratch]

Just to clear things up, Pennsylvania's income tax is 3.07% and has a sales tax rate of 6%. Some localities add onto the sales tax rate as well. Food, clothing and medications are not subject to sales tax.

 

[SerriaFox]

The Conservatives in the UK are trying to get rid of vast swathes of the welfare system and replace it with a Universal Credit. I think the idea has merit, and I'm intellectually curious about how a basic taxable benefit given to every single adult in the country at exactly the same value irrespective of circumstances would affect society. But I have to many misgivings to actually try it; I'm scared it could have consequences that are pretty devastating.

Oh, and there's absolutely no reason that you can't have your "Basic Living Stipend" and ALSO have progressive taxes! I'm not sure why these things are always tied to a flat tax... You can have a basic allowance that is added to your taxable income and taxed progressively, just as it can be taxed at a flat rate, or not taxed at all. Indeed, by not taxing it at all, you're basically creating a two-tier progressive tax system...

Your absolutely right the BLS does not need to be paired with a flat tax. I choose a flat tax because of the desire for fairness. The BLS removes the problems a flax tax places on the poor. Although there is some merit to charging the rich a higher percentage than the middle-class.

You could use Use a BLS with a low rate, for example 25% tax on earnings up 50 or 75k and 35% above that. That would move the break even point, again assuming $600 a month which seems to be too low for y'all's tastes, to $28,800 a year.

Or you could use a 33% till break even of 21600, then drop it to 25% or lower till 50 or 75k then raise the rate again.

 

[warpus]

Hey SerriaFox, you still haven't answered one of my questions.

I was wondering why this flat tax thing is a good idea, ignoring for a second the "fairness" argument.

 

[dIZZyBlIZZy]

Hey SerriaFox, you still haven't answered one of my questions.

I was wondering why this flat tax thing is a good idea, ignoring for a second the "fairness" argument.

Depends on the exact "flat tax" presented. Most I hear about is a complete simplification of the tax code to where humanity is capable of understanding it. It's a good thing if true and has little if any to do with the fairness thing.

 

[warpus]

Depends on the exact "flat tax" presented. Most I hear about is a complete simplification of the tax code to where humanity is capable of understanding it. It's a good thing if true and has little if any to do with the fairness thing.

Yeah, but that's not a reason why a flat tax is good, but why simplification of the tax code is good.

 

[Antilogic]

I am unaware of any state that does its own calculations of income for tax purposes. (It is easier for them to rely on the Federal IRS than create a State equivalent.) Usually state tax forms just tell you to refer to some box in the federal tax form and take some percentage of that (although there are sometimes a few added exemptions). I am pretty sure that the number to which they refer is usually already adjusted for various exemptions and deductions. (Because of this, Federal tax cuts frequently reduce the tax revenue collected at the state level.)

Many states have an income tax. And it is often "flat". But that doesn't tell the story, because those states have other taxes as well. Particularly sales taxes.

This is why I was asking.

I don't think any state has a truly "flat" tax. That means all income, no deduction or exemption at low income, for any reason, is taxed at a single rate.

The solution to Boston being to expenses is simple, but one certain states will not like, let Boston or Massachusetts subsidize the BLS for their residents.

You are trying to provide a basic living stipend that isn't, and now you are pushing the responsibility onto the state governments, which are having enough trouble balancing their budgets? Never mind you are replacing one BLS with essentially 50+, one combo of federal and state for each state. That's not simple at all. What is the point of this, then?

Your absolutely right the BLS does not need to be paired with a flat tax. I choose a flat tax because of the desire for fairness. The BLS removes the problems a flax tax places on the poor. Although there is some merit to charging the rich a higher percentage than the middle-class.

Fair is such a charged word. For example, I can say I think a progressive tax on all income is fair, and flat or heaven-forbid regressive taxes are inherently unfair.

What specifically do you mean by fair? Just charged an equal percent for each dollar earned?

Yeah, but that's not a reason why a flat tax is good, but why simplification of the tax code is good.

Yup. People get this confused all the time.