One of the few times I've been flamed on KOS was when I raised what I thought was a legitimate question about tax policy. It is apparently an article of unquestionable faith among some that a progressive tax policy that escalates the share payable by wealthier people is the only fair, reasonable, acceptable, rational, and compassionate choice.
I don't see it that way. I'm open to being educated otherwise. Below the jump, I offer rationale for a flat tax. Agreement, rational criticism, and efforts to better educate me are welcome.
I don't understand why so many take a progressive tax system as dogma.
A flat tax system on all income (including capital gains, interest, and payroll) with few exemptions is easy to understand and seems fundamentally fair in your mother's "You break the cookie and your sister gets to choose the piece she wants" kind of way. It is fair horizontally: two people in the roughly the same circumstances pay similar taxes; and fair vertically: two people with different incomes pay proportionally comparable rates.
If you wish to argue an exclusion for some/all income below the poverty line I think a case can be made, although I personally would prefer not (we all consume government services and I think people would better appreciate what they consume and reasonable limits on that consumption if they realized "they" are us).
I think a progressive tax system is a Pandora's box that we should close, rather than open wider. I prefer flat tax to a progressive tax because:
1. Progressive taxation is taxation without representation - The many set the tax policy for the few. In California we have seen several programs sold to the people because "you don't have to pay for it, it is a tax on millionaires".
2. Progressive taxation does not encourage fiscal restraint - when people argue "something should be done" and that something involves expenditure of taxes, they should realize that it is THEIR tax money that will be spent. People are always full of great ways to spend OTHER PEOPLE'S MONEY. Example: Bridge to nowhere in Alaska.
3. Progressive taxation provides too many complex knobs and dials for representatives to tinker with - contrast with a flat tax system with only one knob: the tax rate. Anyone proposing touching that knob is required to explain why and have a good reason.
4. It discourages accumulation of wealth - Wealth is not evil.
5. It encourages the flight of wealth - The super rich (those who are held up as models of why progressive taxation doesn't harm "real people") and corporations can easily flee our shores to escape an oppressive tax system, leaving the rest of us to pay the bills.
6. It encourages class warfare - Shouldn't congress represent EVERYONE? Rich and poor?
The tax system should be simple, visible, fair, and difficult to tinker with. Imagine a tax rate of 20 percent with few/no deductions. The teacher making $50K pays $10K. The small business owner making $500K pays $100K. The actress making $5M pays $1M. Each of these people consumes roughly the same amount of government resource (roads, administration, defense) and each pays a fair proportion commensurate with their ability.
What is left after you pay your taxes is that part of your property the government ALLOWS YOU TO KEEP... It seems we should be cautious about making the decision about what portion of your property you may keep seem capricious or arbitrary.
I don't understand how anyone can propose progressive taxation with a straight face and assert that their goal is not socialism. Socialism might not be a bad thing, but that is a different discussion and should be had as such, not implemented through arcane tax and policy methods (this is how we got the emerging fascism some see around us today).
Not trying to rave... would like to spawn a discussion. I really don't understand why "progressive" taxation is considered the gold standard.
For the record: I'm an upper middle class business owner and my wife and I have together earned between 80K and 250K a year during the past ten years. That's between $40K and $125K each per year for two college educated professionals who have invested everything they own in a business for over 15 years (and spent time in corporate life before that). We have been successful through a combination of hard work and good fortune. We have bumped our head on the AMT a few times in good years. We don't participate in tax shelters or creative accounting.
I'm not looking for personal tax relief, I'm looking for a system that is fair and easy to administer. I don't mind if my taxes go up a bit, particularly if the time I have to spend with tax compliance goes down.
Educate me: Polls suggest most Americans seem to favor a flat tax that eliminates the economic friction and record keeping associated with our current system. Why not a flat tax?