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Originally Posted by chadrcr
Warren Buffet's income is predominately taxed as 'capital gains'...investment income on multibillions invested, as you said.. he has almost no 'salary'.
The tax rate issue (that he brought up) is: he pays 15% capital gains tax on billions, she pays 25% income tax on her 60-100 k salary.
I like the idea of a fair tax, the one presented by Mike Huckelberry  !
It does tax on spending, and 'rich' people spend more $$$.
However, Poor people spend ALL their income 100% would be taxed, billionaires do not spend anywhere near 100% of their income, therefore they 'might' only be taxed on 2% of their income. That is an extreme example of a REGRESSIVE tax rate, which puts a disproportionate burden on the low income people.
Of course there are tax breaks for poverty level folks, but it did seem to hit
lower to middle enlisted military pretty hard; Their calculator said that I would GAIN -$3000 approximately (that is minus). I did not spend a lot of time researching it, just enuff to know that the calculator said I was hosed if it worked the way it was then....before Huckleberry dropped out of primary race. How many people here believe that someone like Terrel Owens (new 27 million contract) deserves a lower tax rate than the soldier who just posthumously received the Congressional Medal of Honor, for saving the lives of the crew in his tank? Of course he does not pay taxes now....but there are many like him in Iraq etc. No offense to T.O. I love the NFL, but I do not believe the football players are ' worth' more than Soldiers, Marines, Airmen and Sailors.....I need a ladder so I can get off my soap box...sorry. |
If we pay flat taxes, then either the government is broke or the poverty line increases. It will be impossible to reconcile this problem. The current bracket system isn't anywhere near perfection, but the problem with a flat tax is the proportional cost of paying those taxes. If a millionaire spends 1% of paid income on food goods and a person spending the exact same amount of money on food is paid under $30k per year, the proportions are different. In both cases, they can survive, but the millionaire gets to spend remaining money on everything else. Since food prices are constant and market-based, there's no justification for changing food prices, but taxes are different.
People spend proportions of their income on food, transportation, and themselves. For people with large incomes, their proportions are more favored toward the latter category, but people who have little wealth and income have to spend the vast majority of their income on the former two categories, leaving little for them to spend on themselves. A proportional tax system that goes up with income performs two tasks in this system. The first task is to reconcile the ability to pay. In other words, people who can contribute more to this great country of ours do. A capitalistic system like the United States is successful due to the elites who come from the bottom with great ideas and build their success. Anyone can do that in America. All our country asks of us is that those who are allowed to succeed in our system pay more so that others have the opportunity to do the same. In a flat rate tax system, everyone pays the same amount. That amount would be a middle-class average that working class people could not afford and wealthy people could easily afford. The wealthy would be able to invest their remaining balance to become infinitely wealthier while the poor would fall into an irreversible debt. The system would turn to a neo-feudalism in which the wealthy would dominate society much like the favored families of Spain did until the state redistributed their lands in the 20th century. The second task of proportional taxes is providing predictable stability. If citizens already know approximately how much their taxes are going to be in the following fiscal year, then they can save accordingly. With a flat tax system, taxes are based upon the need for funds. Those in government tend to spend excessively these days, leading to an unbalanced system of spending on programs and policies that the government cannot afford, as evidenced by America's ever-increasing debt.
Overall, flat taxes are great for wealthy people because the likely cost of taxes would be significantly less that their current expense. At the same time, it takes capitalism too far by charging everyone indiscriminately, breaking the wallets of the poor and middle. It's really simplistic to think that it will work. Simple things just don't tend to work in practice the same way their supporters advertise in theory. I'd hate to see what would happen to this country if flat taxes were ever to be implemented.