What really needs to be fixed in the tax code?

[Anonymous]

Rates are unrealistically low. They need to be graduated up greatly. If you're making under 50K, your rate should be 5%. But it should scale upwards quickly from there. After 75K, it should be 90-95%. At 250K, it should be 99%. Likewise for unearned income, which should also be 99%. And I'd also do away with probate completely, with all of an estate up as taxes unless survivors can show cause as to why they should get those assets.

That will even things out and get rid of the huge disparity of wealth in this country, which is really what is driving all the problems in this country.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Eliminate ALL deductions and exemptions. Institute a flat % tax.

No, this would be patently unfair.

If everyone is paying the exact same %, how is that unfair? Seems to me it's the very definition of 'fair'.

No, it's "equal." You're conflating the two. "Equal" and "fair" are not synonyms. Our tax code is progressive for a reason.

If I earn $50,000 and the flat tax is, say, 15%, I have to pay $7,500 (plus payroll taxes, but I'll leave that out for now), so I'm left with $42,500. But if someone earns $1 billion, he pays $150 million and is left with $850 million.

I know, I know, you think that's fair. The problem is -- the rate cannot be 15% in order to be revenue neutral. It has to be closer to 30%. So, now I'm left with $35,000 (plus payroll taxes). The billionaire is still left with $700 million.

I don't think that is fair. He has a greater ability to pay than I do without affecting quality of life. That's the issue.

OK, you simply want the rich to pay their "fair share". Got it.

Life isn't fair. But our forefathers stated "all men are created equal". We should be taxed as such.

DP. Well then, you’d have to create A LOT more taxpayers. Too many people don’t work - because they don’t have to or they can’t, and too many get their wages under the table.

Ironically, if you fixed immigration you’d have a lot more of the American workforce paying into the till. Ditto with subsidized childcare - more wages, more taxes paid. Childcare workforce would also create more jobs and more taxes paid.

But, oh well.

[Anonymous]

Anonymous wrote:What is income?

The House proposal wants to tax grad school tuition waivers. If you are getting your PhD “for free”, you would actually have to pay tax on it as if they paid you in cash the value of the tuition.

The House proposal wants to eliminate the estate tax. My mother inherited a thousand shares of Exxon at about $20 a share. It’s at $100 now. When she dies, I would inherit those at the $100 value—if I sold them at $105, the only tax would be on the $5 gain, not the $85.

So I ask again—before we get to rates and deductions and what not—what is the income we are even taxing?

This. If you assume that everyone works for a living and everyone gets all of their income from wages, coming up with a tax system is easy. Just turn the dial to how progressive you think it should be, and add in what behaviors you feel the government is supposed to encourage and you have it.

The problem is real life is a lot messier. For businesses and individuals with a lot of wealth, the simple question of what their annual income is doesn't have a simple answer. There is a whole profession dedicated to answering that question -- accountants -- and they don't always agree with one another. Then add in the fact that people often don't want their income known. Then add in that wealthy people have a disproportionate influence in how the law is written. Taxing the rich -- really taxing the rich -- is a hard problem.

[Anonymous]

Anonymous wrote:Rates are unrealistically low. They need to be graduated up greatly. If you're making under 50K, your rate should be 5%. But it should scale upwards quickly from there. After 75K, it should be 90-95%. At 250K, it should be 99%. Likewise for unearned income, which should also be 99%. And I'd also do away with probate completely, with all of an estate up as taxes unless survivors can show cause as to why they should get those assets.

That will even things out and get rid of the huge disparity of wealth in this country, which is really what is driving all the problems in this country.

So why work hard? What do you want? The USSR and soviet block apt buildings?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Eliminate ALL deductions and exemptions. Institute a flat % tax.

Flat tax should have the first 25k or whatever exempted to allow the working poor to have a chance.

Flat tax would need to cover all current taxes: estate, dividends, etc.

No. Flat tax needs to be flat and apply to everyone equally. Don't like that the poor are taxed the same as the rich, percentagewise on ALL income? Then cut spending.


Equal protection under the law.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Rates are unrealistically low. They need to be graduated up greatly. If you're making under 50K, your rate should be 5%. But it should scale upwards quickly from there. After 75K, it should be 90-95%. At 250K, it should be 99%. Likewise for unearned income, which should also be 99%. And I'd also do away with probate completely, with all of an estate up as taxes unless survivors can show cause as to why they should get those assets.

That will even things out and get rid of the huge disparity of wealth in this country, which is really what is driving all the problems in this country.

So why work hard? What do you want? The USSR and soviet block apt buildings?

Agree. The first poster, who wants to tax $75k incomes at 90%+, is a pure socialist. Take virtually all income from middle-class earners (leaving them crumbs) to give to lower-class people who earn nothing or very little. Pretty soon, everyone is living an equally low-level lifestyle.

[Anonymous]

Eliminate all deductions and exemptions.
0% tax rate for incomes below $50,000
10% for incomes between $50-$150,000 with no tax on first $50
20% tax on all income above $150,000
30% tax on all income above $1,000,000

20% corporate tax rate
No deduction for interest on debt

[Anonymous]

Anonymous wrote:Eliminate all deductions and exemptions.
0% tax rate for incomes below $50,000
10% for incomes between $50-$150,000 with no tax on first $50
20% tax on all income above $150,000
30% tax on all income above $1,000,000

20% corporate tax rate
No deduction for interest on debt

What income do you think should be taxed in your scheme?

Wages from a job
Interest
Profit from sale of real estate
Profit from the sale of stocks or bonds
Profits made from a business
Gambling winnings
Gifts
Inheritance
Alimony
Child support
Unemployment
A non-cash gift of value that someone gives you (e.g., you win a car on a game show, you get a 'tuition waiver" scholarship from your school)


For all of the "profit" ones, how do you calculate profit?

[Anonymous]

Anonymous wrote:Eliminate all deductions and exemptions.
0% tax rate for incomes below $50,000
10% for incomes between $50-$150,000 with no tax on first $50
20% tax on all income above $150,000
30% tax on all income above $1,000,000

20% corporate tax rate
No deduction for interest on debt

Love it, but it won't bring in enough revenue. The 30% would need to kick in lower. I'd say 25% between $150,000 and $500,000, and 30% kicks in at 500k.

One deduction: Medical expenses above 20% of income. People are going broke paying for nursing homes. Rather than have them run through their money faster and being moved to Medicaid, let them deduct the $120,000/year for the cost and delay or avoid the need for Medicaid.

[Anonymous]

Anonymous wrote:Rates are unrealistically low. They need to be graduated up greatly. If you're making under 50K, your rate should be 5%. But it should scale upwards quickly from there. After 75K, it should be 90-95%. At 250K, it should be 99%. Likewise for unearned income, which should also be 99%. And I'd also do away with probate completely, with all of an estate up as taxes unless survivors can show cause as to why they should get those assets.

That will even things out and get rid of the huge disparity of wealth in this country, which is really what is driving all the problems in this country.

So, your tax policy is confiscatory. Got it.

[Anonymous]

Progressive flat tax. ALL income - salary, interest, inheritance, dividends, whatever - is taxed at the same rate.

Philosophically, you can think about it as everyone is taxed the same on any given dollar. The first 50K or so that someone makes is really needed just to live. So with that first 50K, we shouldn't expect them to contribute further. The next 100K or so that someone makes is still needed for a lot of basics of modern life, but it's time to start contributing. After the following 250K or so, time to contribute even more, and so on.

First $50,000 you make, is 0%
Next $100,000 is taxed at 15%
Next 250,000 is taxed at 30%
Next 1 million is taxed at 35%
Next 10 million is taxed at 40%

Of course, you can easily do the math and come up with a tax table that is just one % at a given income level, but the underlying philosophy is to treat everyone the same with each specific dollar that earn. So Mr. McMansion is still paying 0% on the first 50K he earns.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Eliminate ALL deductions and exemptions. Institute a flat % tax.

Flat tax should have the first 25k or whatever exempted to allow the working poor to have a chance.

Flat tax would need to cover all current taxes: estate, dividends, etc.

No. Flat tax needs to be flat and apply to everyone equally. Don't like that the poor are taxed the same as the rich, percentagewise on ALL income? Then cut spending.


Equal protection under the law.

I disagree completely. What's "equal" is not always "fair." You sound like a child who wants a cookie because his brother came home from school with a cookie.

[Anonymous]

Anonymous wrote:Progressive flat tax. ALL income - salary, interest, inheritance, dividends, whatever - is taxed at the same rate.

Philosophically, you can think about it as everyone is taxed the same on any given dollar. The first 50K or so that someone makes is really needed just to live. So with that first 50K, we shouldn't expect them to contribute further. The next 100K or so that someone makes is still needed for a lot of basics of modern life, but it's time to start contributing. After the following 250K or so, time to contribute even more, and so on.

First $50,000 you make, is 0%
Next $100,000 is taxed at 15%
Next 250,000 is taxed at 30%
Next 1 million is taxed at 35%
Next 10 million is taxed at 40%

Of course, you can easily do the math and come up with a tax table that is just one % at a given income level, but the underlying philosophy is to treat everyone the same with each specific dollar that earn. So Mr. McMansion is still paying 0% on the first 50K he earns.

You people don't seem to understand what a flat tax is... Flat taxes, by definition, exempt passive income from tax. It is a CONSUMPTION tax. The reason being the double-taxation argument.

See Hall-Rabushka. https://en.wikipedia.org/wiki/Hall%E2%80%93Rabushka_flat_tax

This is the original flat tax. It basically functions as a wage tax on the individual side and a VAT on the business side.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Eliminate ALL deductions and exemptions. Institute a flat % tax.

No, this would be patently unfair.

If everyone is paying the exact same %, how is that unfair? Seems to me it's the very definition of 'fair'.

No, it's "equal." You're conflating the two. "Equal" and "fair" are not synonyms. Our tax code is progressive for a reason.

If I earn $50,000 and the flat tax is, say, 15%, I have to pay $7,500 (plus payroll taxes, but I'll leave that out for now), so I'm left with $42,500. But if someone earns $1 billion, he pays $150 million and is left with $850 million.

I know, I know, you think that's fair. The problem is -- the rate cannot be 15% in order to be revenue neutral. It has to be closer to 30%. So, now I'm left with $35,000 (plus payroll taxes). The billionaire is still left with $700 million.

I don't think that is fair. He has a greater ability to pay than I do without affecting quality of life. That's the issue.

OK, you simply want the rich to pay their "fair share". Got it.

Life isn't fair. But our forefathers stated "all men are created equal". We should be taxed as such.

If everyone started with the same footing, I would buy your argument. But everyone doesn't start with the same footing. How about we play Monopoly, and you get Baltic Ave and $3 and I get the rest of the properties with hotels where possible and $5000. You can go first.

Who wins that game?

[Anonymous]

Anonymous wrote:Rates are unrealistically low. They need to be graduated up greatly. If you're making under 50K, your rate should be 5%. But it should scale upwards quickly from there. After 75K, it should be 90-95%. At 250K, it should be 99%. Likewise for unearned income, which should also be 99%. And I'd also do away with probate completely, with all of an estate up as taxes unless survivors can show cause as to why they should get those assets.

That will even things out and get rid of the huge disparity of wealth in this country, which is really what is driving all the problems in this country.

The problem with this, is that it dis-incentivizes saving and preparing for old age and passing on to heirs. I have no issue with people who prefer to plan and save - we should be rewarding that. $5M or $10M to pass on to heirs if one has saved and dies without using it all is more than enough to pass on without taxation. Then kick it in to whatever and that can be scaled too 20% on the next 10M, 40% on the next %50M or whatever.