[Rhodes22-list] Flat Tax Anyone? What is fair Dave(political rant)

Bill Effros bill at effros.com
Sun Jan 14 23:01:16 EST 2007


Brad,

I'm not a wage earner, and my company is a non-profit--just like Stan.  
We pay no taxes under this "flat-tax" system?

Bill Effros

Brad Haslett wrote:
> Bill,
>
> How is "income" defined here?
>
>
>
> If you are a wage earner, income would be the amount on your W-2 less 
> what
> you put in savings, (assuming the savings aspect survived Congress).  
> If you
> are self-employed, nothing would change; your net profit for the 
> year-end is
> your income.
>
> Does the "flat tax" replace all other taxes.
>
>
>
> No. 
>
> Is the gasoline tax gone?
>
>
>
> No.  My personal opinion is that we should be paying about $4 per 
> gallon for
> fuel, with a floating tax implemented over time to bridge the gap between
> the market price of gasoline and the $4 target.  I know this sounds 
> strange
> coming from a free market disciple but this is a matter of national
> security.
>
> Are tobacco and liquor taxes gone?
>
>
>
> No.  Those are local taxes and here in the Bible Belt a big fund raiser.
>
> Can cities and states tack on other taxes over and above the "flat tax"?
>
>
>
> Yes.  Each state is still responsible for their own spending and revenue
> raising schemes.
>
> Are property taxes gone?
>
>
>
> No.  Property taxes will still be used locally to fund schools and local
> government, as they should be.
>
> What about taxes on the sale of securities and real estate?
>
>
>
> Some flat tax advocates suggest eliminating capital gains.  I personally
> think we shouldn't tax the gain on assets held over two years.  This
> encourages long term investment and throttles real estate speculation.
>
> What about fees charged by the government?  Why should the government
> charge for entry to parks?  Or postage?  Or fees for passports?  Aren't
> these all just hidden taxes?
>
>
>
> These are user fees and they wouldn't change.  Airlines will still pay
> landing fees to support the airspace infrastructure, etc.
>
> Please fill in some more blanks on how the "flat tax" actually
> works--how everything becomes so simple and fair.
>
>
>
> The fair and simple is that the lowest income earners ($40K or less) 
> don't
> have to fool with federal income taxes at all.  The top 1% (read Bill 
> Gates)
> actually pays the same marginal rate as everyone else.  The 2% to 5%, 
> that's
> you and me kid, probably won't see much difference except that our 
> friends
> who borrowed a million dollars for a house may rethink their 
> decision.  For
> the 6% to 50%, life gets a lot simpler, and for the bottom 50% the tax
> burden decreases.
>
>
>
> Brad
>
>
>
>
> On 1/14/07, Bill Effros <bill at effros.com> wrote:
>>
>> Brad,
>>
>> How is "income" defined here?
>>
>> Does the "flat tax" replace all other taxes?
>>
>> Is the gasoline tax gone?
>>
>> Are tobacco and liquor taxes gone?
>>
>> Can cities and states tack on other taxes over and above the "flat tax"?
>>
>> Are property taxes gone?
>>
>> What about taxes on the sale of securities and real estate?
>>
>> What about fees charged by the government?  Why should the government
>> charge for entry to parks?  Or postage?  Or fees for passports?  Aren't
>> these all just hidden taxes?
>>
>> Please fill in some more blanks on how the "flat tax" actually
>> works--how everything becomes so simple and fair.
>>
>> Bill Effros
>>
>> Brad Haslett wrote:
>> > Bill,
>> >
>> > There are a gazillion different versions out there, including the ones
>> > currently being used in Eastern Bloc countries.  The one I like best
>> > is the
>> > one proposed by Steve Forbes.  Basically, the first $40,000 or so of
>> > household income would be tax free with adjustments for family size
>> > and type
>> > (single v married).  After the threshold, consumption, meaning income
>> > minus
>> > savings, would be taxed at a flat rate, 17% in Forbes proposal.
>> Corporate
>> > income would be taxed at the same 17%.  Going back to the old 80/20
>> rule,
>> > the 20% of taxpayers who pay 80% of the taxes still would.  Much of
>> > the 80%
>> > who pay little taxes anyway would be exempt, and what they did owe
>> > could be
>> > calculated on a postcard. Gone would be the deduction for home
>> > mortgage interest and other itemized deduction.  The idea is that a
>> > flat tax
>> > encourages savings while discouraging subsidized spending on oversized
>> > houses, etc. The original income tax in the US was a flat tax of 1%.
>> > We had
>> > a lot fewer accountants and tax attorneys back then.
>> >
>> > Brad
>> >
>> >
>> > On 1/14/07, Bill Effros <bill at effros.com> wrote:
>> >>
>> >> Same question, Brad:  How does the flat tax work?
>> >>
>> >> Bill Effros
>> >>
>> >> Brad Haslett wrote:
>> >> > Chris wrote:
>> >> >
>> >> > "If the system steals all their wealth then I guess those guys 
>> won't
>> >> > bother
>> >> > to earn their
>> >> > vast sums of money."
>> >> >
>> >> > Precisely!  That is exactly what happened when marginal tax rates
>> were
>> >> in
>> >> > the 70 to 90 per cent range.  That, and people got involved in
>> >> > sophisticated
>> >> > tax dodging schemes.  Our current code is far more complicated than
>> >> > necessary because of all the tinkering done over the years to 
>> achieve
>> >> > various social aims.  Under a flat tax, the top 20% of earners will
>> >> still
>> >> > pay over 80% of the total tax collected. Those 10,000 square foot
>> >> > McMansions
>> >> > won't be subsidized and driving a leased Hummer to work won't make
>> >> much
>> >> > sense either.  JFK said it best when he explained why he was 
>> cutting
>> >> > marginal rates, "a rising tide raises all boats."
>> >> >
>> >> > If the ultimate goal of a nations tax system is to achieve equal
>> >> > incomes for
>> >> > all,  you get Cuba, North Korea, and a few other third world
>> >> countries.
>> >> > Every other industrialized nation interested in growing their 
>> economy
>> >> has
>> >> > given-up on such foolishness.
>> >> >
>> >> > Brad
>> >> >
>> >> >
>> >> > On 1/14/07, Geankoplis <napoli68 at charter.net> wrote:
>> >> >>
>> >> >> Dave,
>> >> >>        There seems too much hand wringing about the unfair taxes,
>> the
>> >> >> crushing burden of those taxes on the wealthy.  I agree with you,
>> >> isn't
>> >> >> wealth the reward?  Didn't the system benefit those wealthy
>> >> people?  If
>> >> >> that
>> >> >> system exist to reward these people then why shouldn't they pay
>> >> more to
>> >> >> support it?  They have more to loose than the little guy.  If the
>> >> system
>> >> >> steals all their wealth then I guess those guys won't bother to 
>> earn
>> >> >> their
>> >> >> vast sums of money.  People can complain all they want but their
>> >> actions
>> >> >> speak louder than words.  If the amount of taxes someone pays is
>> more
>> >> >> important than what they make, let them work minimum wage, an
>> obvious
>> >> >> luxurious level of existence that should be suppressed as it is 
>> more
>> >> >> money
>> >> >> than someone really needs.
>> >> >>
>> >> >> Chris the tax payer
>> >> >>
>> >> >> -----Original Message-----
>> >> >> From: rhodes22-list-bounces at rhodes22.org
>> >> >> [mailto:rhodes22-list-bounces at rhodes22.org] On Behalf Of
>> >> >> DCLewis1 at aol.com
>> >> >> Sent: Friday, January 12, 2007 8:29 PM
>> >> >> To: rhodes22-list at rhodes22.org
>> >> >> Subject: Re: [Rhodes22-list] Flat Tax Anyone? Tossing ball back to
>> >> >> Slim(political rant)
>> >> >>
>> >> >>
>> >> >> Interesting that Ed thinks 36% tax is an oppressive tax rate (and
>> >> that's
>> >> >> the
>> >> >> max rate, not on your gross, its after deductions).  Look at the
>> >> >> roads  you
>> >> >> travel, the ATC, national security, public health, the commerce
>> >> >> infrastructure, etc - seems like a one time good deal to me.
>> >> >>
>> >> >> For those of you who worry that you're paying school taxes for 
>> other
>> >> >> peoples
>> >> >> kids, ask yourself who is going to be paying into the Social
>> >> >> Security  fund
>> >> >> on your behalf 10 years from now - it's those kids.  You better 
>> hope
>> >> >> they're
>> >> >> educated and have good jobs, their Soc Security deposits are
>> >> >> going  straight
>> >> >>
>> >> >> to you.
>> >> >>
>> >> >> Further, while Ed makes a good point regarding founders that begin
>> >> and
>> >> >> develop companies, I suggest they are likely a small fraction of
>> >> the 1%
>> >> >> under
>> >> >> discussion.  I would encourage you to consider the real 1% -
>> consider
>> >> >> the
>> >> >> Grasso'
>> >> >> s, who didn't start, found, begin or develop anything he just got
>> >> >> the  NYSE
>> >> >> to
>> >> >> give him an egregious pay package.  Or Nardelli of Home Depot,
>> >> >> or  Skilling
>> >> >> of Enron, or Conrad Black accused of looting the Tribune, or the
>> >> >> guys  that
>> >> >> looted Tyco, or McKinnel of Pfizer, or Immelt of GE, or  
>> Waggoner of
>> >> >> GM,
>> >> >> or
>> >> >> Ford
>> >> >> of Ford......  Lets cut out the mythology and deal with cases,  
>> and
>> >> >> there
>> >> >> are
>> >> >> a ton of cases, and in all those cases the MBAs that won the water
>> >> >> cooler
>> >> >> wars stepped up to run major corporations and made out like 
>> bandits
>> -
>> >> >> that's
>> >> >> the real story and that's the real 1%.  I can't think of a single
>> >> >> S&P 500
>> >> >> corporation that's run by it founder.  And I respectfully  suggest
>> >> that
>> >> >> the
>> >> >> MBAs
>> >> >> that win the water cooler wars are no more entitled to  special 
>> tax
>> >> >> consideration by society than anyone else - they are not
>> >> founders,  they
>> >> >> are
>> >> >> watch
>> >> >> standers, and there is a difference.
>> >> >>
>> >> >> Regarding founders: If you do found and develop a public company,
>> you
>> >> >> make
>> >> >> out like a bandit even with the current tax code - and I don't
>> >> begrudge
>> >> >> that
>> >> >>
>> >> >> one  bit.  But you reasonably make out so incredibly well that 
>> even
>> >> >> after
>> >> >> taxes
>> >> >> you are incredibly well off.  Consider Phil Knight, the guy who
>> >> founded
>> >> >> Nike
>> >> >> - I think he's the 48th richest guy in the US even after the 
>> current
>> >> >> taxes,
>> >> >>
>> >> >> and that's fine but he doesn't need a change in the tax code to 
>> help
>> >> him
>> >> >> out
>> >> >>
>> >> >> he's doing very well thank you.  Consider Bill Gates, I think the
>> >> >> richest
>> >> >> guy in the US, money up the gazoo - under the current tax
>> >> code.  Michael
>> >> >> Dell,
>> >> >> absolutely not suffering at all - under the present tax code.
>> >> None  of
>> >> >> the
>> >> >> founder types I've mentioned need special consideration from the
>> >> >> tax  code,
>> >> >> they
>> >> >> are all doing very very well by any standard - and I don't 
>> begrudge
>> >> >> their
>> >> >> doing well, but neither do I feel sympathy for the tax they pay.
>> >> >> They've
>> >> >> got
>> >> >> it made and some of the reasons they have it made is the
>> >> larger  society
>> >> >> respects and enforces their intellectual property rights - at a 
>> real
>> >> >> cost
>> >> >> to the
>> >> >> larger society - the larger society facilitates their production
>> >> >> efforts
>> >> >> with
>> >> >> roads, power, terminals and infrastructure and security of all
>> >> >> sorts, and
>> >> >> generally enables the commerce that they profit from so greatly -
>> >> >> so  maybe
>> >> >> they
>> >> >> should pay more for that increased support.  If that increased
>> >> support
>> >> >> weren't
>> >> >> there, they'd have nothing or very much less.  The
>> customs  inspector
>> >> >> standing on the dock looking for counterfeit Nikes is not paid by
>> >> Phil
>> >> >> Knight, but
>> >> >> Phil Knight benefits directly from that customs
>> >> inspector's  activities,
>> >> >> maybe
>> >> >> Phil Knight should pay more tax than the rest of us.   Maybe Bill
>> >> Gates
>> >> >> should
>> >> >> pay more taxes, the US Government is investing time and  manpower
>> >> trying
>> >> >> to
>> >> >> mitigate software pirating efforts in Asia and around the  
>> world, a
>> >> >> direct
>> >> >> significant beneficiary is - Bill Gates.  I don't begrudge  any of
>> >> these
>> >> >> guys
>> >> >> their wealth, but I also think they, more than some day worker  in
>> >> South
>> >> >> Carolina,
>> >> >> are constructively exploiting, using, and benefiting from the  
>> full
>> >> >> range
>> >> >> of
>> >> >>
>> >> >> government services and in consideration they should pay
>> more  taxes.
>> >> >>
>> >> >> Dave
>> >> >>
>> >> >> __________________________________________________
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>> >> >>
>> >> >>
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