Why is this such a difficult thing for them? What's the matter with a flat tax rate, across the board, for everyone? Figure out how much tax revenue is needed, and then set a rate. Make it 15% or 20%, whatever. Then, if you make a billion dollars per year, you pay your fair share. If you make twelve thousand and are struggling, you still pay your fair share. Your fair share is obviously a lot less if you make less money but that's what makes it fair for everyone. This seems like such an easy solution but no one ever proposes it.
This is what they tried to accomplish with the consumption tax, or national sales tax. Impose a 23% tax on everything you buy. Ok, at first it sounds bad, like 'so I buy a 10,000.00 car, now I have to pay 12,300.00 for it. Yea, but also when you get your paycheck instead of there being 30+ % deducted from it, you get the whole check. Taken from Paycheckcity.com If you make 15.00 an hour and work 40 hrs a week in the state of Georgia and you file single and 1 on both federal and state taxes your check is 462.62 under the consumption tax, your check is 600.00 It's pretty much a wash any way you look at it (600-462.62 = 23%) however the tax revenue you gain is the money that isnt taxed. Illegal immigrants, drug dealers, etc. When those celebrities and billionares by their new G5 they are going to pay 23%. It will up the tax base without placing a tax burden on the working middle class (in theory). It was proposed in legislation of the state of Georgia that all residents would not pay federal taxes, only state ones (at a higher rate) and the state would give what they see fit to the federal government. I thought it was a brilliant idea. Instead of states with high employment rates paying for homeless shelters in California the money could be used to improve the state it came from (less federal government - yep the south is still at it).
The problem with a flat tax is this. Many people have outlandish expenses that go with their job. For example, the trucking industry. Every year I have about 20,000 in expenses. If I make 50,000, really I only make 30,000 after my expenses for my job are paid. If I pay a flat tax rate on 50,000 at say 20%... i owe 10,000 in taxes. that gives me 20,000 a year net pay. If I work at a factory sweeping floors, I can make 30,000 a year with 0 expenses AND I get to be home everynight AND I only have to work 45 hours a week. 20% of that is 6,000. That makes my net pay 24,000. So I'd be better off as a janitor than in my trained profession. Not so good huh? What Phat is taling about is called a "Fair Tax". It eliminates income tax altogether and just charges sales tax. The only problem with that one is this. The guy who buys all his stuff from ads in the newspaper, doesn't pay any taxes. If someone sells him a used set of golf clubs for $400, the seller isn't going to charge him 80 dollars for taxes. In fact, he probally wont make the guy pay taxes at all on the clubs. The other problem is this, when Wal-Mart buys a TV from a manufacturer, they are going to pay the 20% tax to the manufacturer. Then they are gonna ad that to the retail price. Then... the customer gets to pay 20% on whatever that retail is. Pay tax on something twice?!? WHAT A BUTTFUCK!
nah, the way the tax works you only pay it once. Wal-Mart doesnt pay tax to the manufacturer. It is known that when the item is purchased the tax goes to 'the man'. Thats why they have to pay all those taxes and stuff, they just take what you pay and pass it on up. The used golf clubs have already had taxes paid on them, by the original purchaser, and he would probably take that into consideration when he sells them 'tax free'. The main goal of the consumption tax is to get the guy selling drugs, or working 'under the table' to pay his fair share. The illegal immigrant burden on the system (education/healthcare for example) is huge. And the majority of them pay no taxes. Now when they buy those 'triple wings' for their 94 ford probe they are going to pay taxes on it, that moves the burden. If you have 20k in expenses you need to get a better accountant. If you make less than 80k a year your tax burden (federal) should only be about 15.3% add your state tax and you shouldnt be much higher than 18-19% Your expenses come right off the top, and you should be getting a healthy return, unless you are getting self employed and have to pay all of your social security requirements
20k is really not that much when you consider how much a meal costs on the road. I'm allowed to deduct 40 dollars a day right now for "meal and entertainment" expenses. I run close to 300 days a year, so thats 12,000 right there. You didnt wanna see my expenses when i owned my own truck... considering one tire can cost 350 dollars minimum. Thats one nail away from losing 350 dollars.
I got really pissed off last night because I typed up a long response to this post, and somehow closed it without hitting 'post' - I think I was looking at the 'preview' window, and forgot that I didn't post it. Essentially, what it said was, that under the current tax system, there are 'tax exemptions' for both items purchased for resale, and also items purchased for 'store use' (in the case of a retailer.) In theory, that tax exemption should carry over to someone's operating expenses, in a 'flat-tax' system. Also, as Phat pointed out, Wal-Mart doesn't pay sales tax on items they purchase to sell. One thing I disagree with on our current tax system, is that when someone purchases a new car, they spend say, 8% of the sale price in sales tax. When that person sells the car a few years down, and it's value has depreciated, you would think that it wouldn't be subject to sales tax (seeing as how it's already been taxed once.) Not the case. Even the second-hand purchaser has to pay a sales tax. I consider it double-jeopardy.
