Friday, February 18, 2005

New taxation schemes

This post is in response to this post.

I was a very strong proponent of the national sales tax with only an exemption for food. I still think that would be fairer, but it would open up the chance for the government to decide which foods were taxed and how much they were taxed. The bastards could in effect enact fat taxes easier. I am afraid that the sales tax would be come more and more complicated as time when on, with it taking on sin tax functions in some cases.

The flat tax seems the easiest to implement (saving time and money), though a very large amount of money is going to be lost from the rich. That money will have to be made up some how. In other words, this will in effect be raising the taxes on a very large percent of the population (which actually is 100 percent fair, but I doubt the democrats will let bush play it off that way).

I doubt that a flat tax would have the intended effect of lowing government spending that some say it would, because people would just expect the rich to pay more, just like they are now. I also doubt with these problems the flat tax would last very long.

I see serious problems (not in theory) but in application with both of these ideas. I am know leaning toward the flat tax because it would actually give the federal government less power, spread the burden of paying for all the social programs around, and I think it has a better chance of staying pure for longer than a national sales tax does.

update: Just a little more information on the who-pays-taxes-gap.

"And never mind the fact the top 1 percent in this country pay a third of the taxes in this country. Or that the top 5 percent pay more than half."

This is an extreme gap to be made up if a flat tax were to be put into place. If a flat tax raises the taxes of an average person, you can expect this to be politically painful.



Dave Justus said...

I think a flat tax might be less of a break for the rich than many people think it would be.

While the rich do pay the highest percentage in taxes, they also have more access to tax breaks as well as a better chance (good accountants) of getting the tax breaks they are entitled too.

A flat tax with no exceptions (although most likely with a floor value, i.e. no taxes on the first 15k) would probably be more similar to are current scheme in dollors collected at each income level than many people expect.

Of course individually their would be winners and losers of such a change.

Cubicle said...

Yea i forgot about that. It would be less of a break than i think, but i still think that the the taxes for the regular joe will go up (which that would only mean that evreryone is carring their share a little more equally, and i would be ok with that) .........Unless this is a national flat tax for corparations ALSO. Which in that case, the corparations will probably end up paying more than they would with all the exemptions that they can find.