Taxation Method

**JayGatz** · 22nd July 2010 06:30 PM

I'm curious which system of taxation you prefer; I'll find articles in favor of each system to describe them; if needed. For the sake of ideology, assume all systems:

are legislated to generate the same revenue
can have their rates lower/raised over time
take the place of all federal income and corporate taxes

So which do you prefer and why?

**Morgan** · 22nd July 2010 08:21 PM

The FairTax as presented in the House bill sponsored by John Linder. By removing embedded taxes from the production path, prices will change little, and the taxes will be inclusive, so what you see on the tag is what you pay. Prices generally stay the same, and you keep all of your paycheck. Instead of only 160 million career workers paying into the system, all 300 million citizens will pay in, as well as an estimated 50 million foreign visitors a year.

The prebate system is essential though if we are to ensure its progressiveness. Each household will receive a montly prebate equal to the amount that would be needed to pay for the tax on essentials, up to the poverty level, depending on your marital status and number of children. Read more about it in The FairTax Book by John Linder & Neal Boortz.

**Feetie** · 24th July 2010 03:26 PM

I voted consumption tax. When we buy boats, tvs, big cars, second homes, jetskies, $1000 suits, $500 shoes etc. That is my opinion.

**GrumpyOM** · 24th July 2010 03:36 PM

I'd prefer a graduated flat tax (not exactly flat, I guess). At any rate, every one making over a certain amount would pay exactly the same percentage of their income. Those under a certain level would pay no taxes. The percentage and the kick-in level could easily change.

The IRS needs to be cut back to a reasonable size, and everyone should be able to file their own returns...keep it simple.

**Feetie** · 24th July 2010 03:38 PM

Originally Posted by GrumpyOM

I'd prefer a graduated flat tax (not exactly flat, I guess). At any rate, every one making over a certain amount would pay exactly the same percentage of their income. Those under a certain level would pay no taxes. The percentage and the kick-in level could easily change.

The IRS needs to be cut back to a reasonable size, and everyone should be able to file their own returns...keep it simple.

The problem with this is we need to make it fair. If you make $1,000,000 losing 30% or $300,000 is less a burden then when you make $10,000 and lose $3,000.

**GrumpyOM** · 24th July 2010 03:44 PM

Originally Posted by Feetie

The problem with this is we need to make it fair. If you make $1,000,000 losing 30% or $300,000 is less a burden then when you make $10,000 and lose $3,000.

I wouldn't tax anyone making only 10K. Face, though, there should be some incentive to get ahead, taxes should be less of a "burden" if you work hard.

**Feetie** · 24th July 2010 03:48 PM

Originally Posted by GrumpyOM

I wouldn't tax anyone making only 10K. Face, though, there should be some incentive to get ahead, taxes should be less of a "burden" if you work hard.

Excellent point. And I agree I used 10,000 as an example to show that just because the percentage was the same doesnt always mean its fair. Remember the parable of the rich tax man giving to the church and the poor lady? She gave a small about but it was a greater portion of her income and hurt her more than him. The only thing I see is that it could keep the middle class forever in the middle. and the wealthy in the wealthy. But if we have the right incentives as you mentioned we could by pass this.

**GrumpyOM** · 24th July 2010 03:53 PM

Originally Posted by Feetie

Excellent point. And I agree I used 10,000 as an example to show that just because the percentage was the same doesnt always mean its fair. Remember the parable of the rich tax man giving to the church and the poor lady? She gave a small about but it was a greater portion of her income and hurt her more than him. The only thing I see is that it could keep the middle class forever in the middle. and the wealthy in the wealthy. But if we have the right incentives as you mentioned we could by pass this.

Yeah, there's no question but that some are hurt a lot more than others. Basic survival and a good quality of life at least, should not be denied by taxes. I realize "good quality of life" is pretty relative but you get the idea. LOL. Yeah the actual numbers would take some work, my main desire is to get some thing more fair and far simpler than what we have now.

**NiteGuy** · 24th July 2010 04:35 PM

Originally Posted by GrumpyOM

I wouldn't tax anyone making only 10K. Face, though, there should be some incentive to get ahead, taxes should be less of a "burden" if you work hard.

But a graduated income tax is pretty much what we already have. Except of course, for all of the incentives/disincentives we have thrown in - tax credits, tax exemptions, tax penalties, etc., etc.

And doing away with those incentives would harm lower income people more than wealthy people, as well. As in Feetie's example of being taxed at 30% whether you make $10,000 or $1,000,000, who needs a tax credit for buying a first home, or for college tuition for their kids more? The $10K guy, or the $1M guy?

Now, I could go along with a graduated system with maybe nothing in terms of incentives or disincentives except for home buying and higher education tuition. But we certainly don't need all of the other crap thrown in there - the deductions for charity, the credits for fuel efficient cars, the exemptions for this and the exemptions for that.

Set a rate for each $10,000 of income, and that's what everyone pays, with the two exceptions noted, with a slightly higher percentage up to say, $250,000, where it stays as the marginal top rate. Start the rate at say, 2% for that guy making 10K, with a ceiling of 35% for the $250K guy. Everyone employed fills out their own tax form, based on their income. In other words, no better rates for Married Filing Jointly - If the husband makes $50K, he pays on that amount. If the wife works, and makes $30K, she pays on her salary.

I think that would be fairly simple to impliment. Of course, we'd be putting a lot of accounting firms, tax lawyers, and H&R Block out of business...

**GrumpyOM** · 24th July 2010 06:03 PM

Originally Posted by NiteGuy

But a graduated income tax is pretty much what we already have. Except of course, for all of the incentives/disincentives we have thrown in - tax credits, tax exemptions, tax penalties, etc., etc.

And doing away with those incentives would harm lower income people more than wealthy people, as well. As in Feetie's example of being taxed at 30% whether you make $10,000 or $1,000,000, who needs a tax credit for buying a first home, or for college tuition for their kids more? The $10K guy, or the $1M guy?

Now, I could go along with a graduated system with maybe nothing in terms of incentives or disincentives except for home buying and higher education tuition. But we certainly don't need all of the other crap thrown in there - the deductions for charity, the credits for fuel efficient cars, the exemptions for this and the exemptions for that.

Set a rate for each $10,000 of income, and that's what everyone pays, with the two exceptions noted, with a slightly higher percentage up to say, $250,000, where it stays as the marginal top rate. Start the rate at say, 2% for that guy making 10K, with a ceiling of 35% for the $250K guy. Everyone employed fills out their own tax form, based on their income. In other words, no better rates for Married Filing Jointly - If the husband makes $50K, he pays on that amount. If the wife works, and makes $30K, she pays on her salary.

I think that would be fairly simple to impliment. Of course, we'd be putting a lot of accounting firms, tax lawyers, and H&R Block out of business...

Got to disagree. You're making it far too complicated. I think that's how our present system started out, and then Congress got hold of it on a yearly basis trying to pay off their pals. LOL. I do think some of your points might ought to be considered though.

We could also cut the size of the IRS considerably, if not do away with it.