Greece to offer flat tax

[jmjj215]

Re: Greece to offer flat tax

Not to mention that a Flat Tax would not be revenue neutral. The '17% Flat Tax' that was proposed years ago by then Congressman Dick Armey was scored by the U.S. Treasury as coming up hundreds of billions of dollars short annually. In order to be revenue neutral, the rate of a Flat Tax would need to be 35% - 40%, which would devastate the Middle-class, as almost 80% of taxpayers currently only pay about 5% of their income in federal personal income taxes.

What are the other 20% paying, as an effective tax rate?

[VJW]

Re: Greece to offer flat tax

You're assuming that the more a government spends the better this is for society.

Where did I write that ?

I would say that flat rate advocates are suggesting that a flat rate will boost revenue for society as a whole (GDP)

That’s what they ALWAYS claim, but it has never happened. Cutting taxes on the wealthy has produced lower revenues, higher deficits, and less GDP, EVERY TIME it’s been tried.

So called “supply-side” economics is a dismal failure, and it’s time to recognize it not as an economic ideology, but a greed ideology.

Many people have suggested that governments should provide law and order, ie police/judiciary and armed forces, and nothing else.

A concept which is WILDLY unpopular with the populous.

Health, education etc. would all be opened up to market forces.

All which have failed miserably every time they were tried.

This merely emphasises how low taxation is for middle class people in America at the moment.

The trouble is, the MASSIVE tax cuts for the Rich & Corporate have caused federal income tax revenues to drop to 1959 levels, thus producing MASSIVE federal deficits. How do you operate a modern 2005 federal government on 1959 revenues ?

I only wish Mr Blair would adopt similar policies in Britain.

Ok, the median wage in Britain is higher still at 21,944. Of this they will lose £5434.70 in income tax, or 24.77% of their annual salary. Of course this doesn't include the many other forms of taxation in Britain but it gives you an idea of what each person loses direct from their salary on average.

An apples and alligators comparison. A lot of what is included in British taxation is paid out-of-pocket by Americans.

#

[VJW]

Re: Greece to offer flat tax

What are the other 20% paying, as an effective tax rate?

Jesse,

I already posted that in the ‘HOW MUCH TAX’ thread, about 1/3 of the way down post #12:

THREAD

#

[CRFSaver]

Re: Greece to offer flat tax

There’s no reason we could not have a flat, multi-rate, progressive income tax (other than the Rich & Corporate would object to it).

#

I am curious as to this idea. Can you explain it in more details VJW? Does this mean no deduction for home interest or just targeted deductions?

[jmjj215]

Re: Greece to offer flat tax

VJW, if 80% are paying 5% and 20% are paying 16%, why would the flat tax need to be at 35-40% to be revenue neutral? Given the current effective tax rates, I would think a revenue neutral flat tax rate would at least be somewhere in that neighborhood.

[Bruce Wayne]

Re: Greece to offer flat tax

That’s what they ALWAYS claim, but it has never happened. Cutting taxes on the wealthy has produced lower revenues, higher deficits, and less GDP, EVERY TIME it’s been tried.

I kind of feel like I'm banging my head against a brick wall here but I'll say it again. To qualify for the top rate of tax in Britain you have to earn just £35,000 (roughly). This isn't cutting taxes for the wealthy, this is cutting taxes for everyone.

Even so I'll give you your head and would love to see some examples and evidence to support your claim that cutting taxes has lowered GDP.

A concept which is WILDLY unpopular with the populous.

Again you're making statements without backing them up with facts. I'll give you a fact. In the last British elections voter turnout was less than 50%, which to me suggests that the current taxation/political system is wildly unpopular with the populous, wouldn't you say?

All which have failed miserably every time they were tried.

Once again a swinging statement backed up with no facts. Do you have case studies? Here in the UK private schools outperform 95% of state funded schools in exams. Is that a failure? Private schools get more students into the 'ivy league' universities than state schools. Is that a failure?

The trouble is, the MASSIVE tax cuts for the Rich & Corporate have caused federal income tax revenues to drop to 1959 levels, thus producing MASSIVE federal deficits. How do you operate a modern 2005 federal government on 1959 revenues ?

I'm not American so don't really have any experience of this but you said yourself that 80% of Americans are in the lower tax bracket. How much more do you want to cut taxes for those 80%? It sounds to me like its those 80% that have had the big tax cuts.

An apples and alligators comparison. A lot of what is included in British taxation is paid out-of-pocket by Americans.

I only provided the figures that you asked for yourself. Because they don't support your view they're now irrelevant? Not sure quite what you mean by your last comment.

[VJW]

Re: Greece to offer flat tax

I am curious as to this idea. Can you explain it in more details VJW? Does this mean no deduction for home interest or just targeted deductions?

Yeah, theoretically, a “Flat” tax would mean no deductions, but I assume in the U.S. it would mean no deductions outside of a home deduction, although it would likely be phased out as the rates rose.

So even with four or five brackets, everyone could do their taxes on one side of a 5 X 7 card.

#

[VJW]

Re: Greece to offer flat tax

VJW, if 80% are paying 5% and 20% are paying 16%, why would the flat tax need to be at 35-40% to be revenue neutral? Given the current effective tax rates, I would think a revenue neutral flat tax rate would at least be somewhere in that neighborhood.

AH, you’re forgetting about the other aspect of every proposed ‘Flat Tax’, that they allow for what they refer to as a generous exemption before one is subject to the tax, ranging from $15,000 to $25,000, in an attempt to blunt the horrible regressivity (that nevertheless comes up short). The more income that is exempted, the more everyone else who does pay the tax must pay a higher rate.

Got it ?

#

[VJW]

Re: Greece to offer flat tax

I kind of feel like I'm banging my head against a brick wall here but I'll say it again. To qualify for the top rate of tax in Britain you have to earn just £35,000 (roughly). This isn't cutting taxes for the wealthy, this is cutting taxes for everyone.

But you keep conflating America with Britain.

Even so I'll give you your head and would love to see some examples and evidence to support your claim that cutting taxes has lowered GDP.

Sure,

* The first often mentioned time large tax rate cuts were attempted in America’s modern history, the so-called ‘JFK Tax Cuts’ (even though they passed Congress in 1964 and JFK had been shot DEAD the year earlier), the national economy experienced a subsequent dramatic slow-down in 1966, less than 18 months after the tax reduction was enacted into law.

* The second time would be in 1981 under Reagan. and the GDP dropped a net 8.8% over the next six subsequent quarters.

* Then we have our current fiasco, with the first round of tax cuts producing more negative growth subsequent to the tax cuts.

Again you're making statements without backing them up with facts.

I can always substantiate my points.

I'll give you a fact. In the last British elections voter turnout was less than 50%, which to me suggests that the current taxation/political system is wildly unpopular with the populous, wouldn't you say?

No. I’d say it had a lot more to do with your PM taking the country into a war under false pretences. Here, it’s taken Dear Leader to the lowest poll numbers in history at this point in a term.

Once again a swinging statement backed up with no facts. Do you have case studies?

Well, yes. School vouchers have failed wherever they have been tried. Scotland tried vouchers nationally, they failed miserably, and were repealed. The Netherlands tried vouchers nationally, they flopped, and were scrapped. Vouchers have failed everywhere they have been tried in America.

The privatization of public schools has failed everywhere it has been tried in America. The corporatization of healthcare with HMOs in America has been a dismal failure.

Here in the UK private schools outperform 95% of state funded schools in exams. Is that a failure? Private schools get more students into the 'ivy league' universities than state schools. Is that a failure?

The state of Connecticut has a higher percentage of students who go on to be graduated from Ivy League Universities than any of the other fifty states, and Connecticut spends the most money per student per year on public education than any of the other fifty states.

I'm not American so don't really have any experience of this but you said yourself that 80% of Americans are in the lower tax bracket. How much more do you want to cut taxes for those 80%? It sounds to me like its those 80% that have had the big tax cuts.

To the contrary, it’s been well documented that the overwhelming majority of the last four rounds of tax cuts went to the Rich & Corporate.

I only provided the figures that you asked for yourself. Because they don't support your view they're now irrelevant? Not sure quite what you mean by your last comment.

I merely pointed out that your initial presentation of an “average” wage was meaningless, as it’s not really a measure of anything.

However, a widespread comparison between the two societies would involve a much more lengthy and detailed forum, but quite obviously, a number of areas where Britains pay taxes, Americans pay the private-sector. Six of one, a half a dozen of the other.

#

[Bruce Wayne]

Re: Greece to offer flat tax

But you keep conflating America with Britain.

For my sins, I am British

* The first often mentioned time large tax rate cuts were attempted in America’s modern history, the so-called ‘JFK Tax Cuts’ (even though they passed Congress in 1964 and JFK had been shot DEAD the year earlier), the national economy experienced a subsequent dramatic slow-down in 1966, less than 18 months after the tax reduction was enacted into law.

Thank you for the examples. I don't know enough about the US economy to give an accurate response but let me just say one thing. Tax cuts are usually done to stimulate an under performing economy (I'm afraid its a fact that the more of their own money they get to keep the harder people work). It's really not possible, especially in a country the size of America, to expect such measures to work immediately. It's more like a ripple effect. Personally I'm not in favour of governments trying to control anything as society is far too complex to be 'controlled' by one organisation, but with these economic steps you have to give them some time to take effect.

No. I’d say it had a lot more to do with your PM taking the country into a war under false pretences. Here, it’s taken Dear Leader to the lowest poll numbers in history at this point in a term.

You're right that Iraq was a factor but I think rather than driving people away from the ballot boxes it pursuaded them to vote for anyone but Blair. The government even allowed you to vote from home and still turnout was very poor. It suggests to me two things:

a) People don't really trust politicians, especially around election time when they make alot of promises that almost inevitably get broken.

b) People don't have the time to make choices that are so long lasting. Think if you went for a job interview (assuming politicians still work for the people). How much would your interviewer know about you. Then ask how much the average voter knows about their local politicians.

Now I know that consumers know as little about the CEO of companies, the point is that people don't really want to know (I don't think). All they care about is the service they receive and if they're not happy with that service to go with someone else who can provide a better one. In the private sector I can do that. In government I have to wait 4 years to make any changes. Not really very democratic is it?

Well, yes. School vouchers have failed wherever they have been tried. Scotland tried vouchers nationally, they failed miserably, and were repealed. The Netherlands tried vouchers nationally, they flopped, and were scrapped. Vouchers have failed everywhere they have been tried in America.

I presume by vouchers you mean that each child gets $x to spend on their schooling and can spend it wherever they like? I wasn't aware that any such system had been tried in Scotland. Could you elaborate a bit more on the failures and why they failed?

To the contrary, it’s been well documented that the overwhelming majority of the last four rounds of tax cuts went to the Rich & Corporate.

I don't really doubt that but my point was that if 80% of the country are in the lowest tax bracket you can't complain that these people are being over taxed. It seems totally unethical to me to have a country whose entire ethos is 'The American Dream', that you can succeed in any circumstances if you try as hard as you can, and then when you become successful along comes Uncle Sam and takes a vast chunk of your money away from you.

The whole felfare system rests on the ethos of "give according to your ability to those according to their need". I'd say a more democratic ethos would be "give according to your choice to those that are chosen"

I know one thing. For all the flaws of capitalism, I'm not forced to buy from a chosen provider regardless of quality or need with the threat of jail if I don't pay my tab.

[CRFSaver]

Re: Greece to offer flat tax

What I have always been curious about in schooling, is how much a difference parent involvement makes a difference versus how much money you throw at a school. I went to private schools most of my life because the public schools were atrocious where I grew up, and not because of a lack of money.

My success comes from the time my parents put into supporting and pushing me to do well. It makes me wonder if the voucher system fails because parents that werent involved at the public school level are still not involved when they send their kids to "better" schools through vouchers.

No as for Ivy League schools... I work with a ton of Ivy leaguers and let me say... Not impressed. I know people arent making this assumption but I will say it anyways, please dont assume someone is successful because they went to an Ivy League school. I just saw an article a few months ago that showed more fortune 500 CEO's came from University of Wisconsin at Madison then any other school.

[Bruce Wayne]

Re: Greece to offer flat tax

I'm fairly certain it makes a big difference as education sure doesn't start and finish when you go through the school gates.

I posted earlier about the four types of spending outlined by Milton Friedman and it seems likely to me that spending your own money on your childs education is likely to motivate you and your child alot more than getting a 'free' education.

Eudcation and learning is perhaps the most exciting thing possible as there is so much to learn in the world. I can't help but feel that many people in the developed world take an education for granted and thus don't try as hard as they could/should.

[VJW]

Re: Greece to offer flat tax

I don't know enough about the US economy to give an accurate response but let me just say one thing. Tax cuts are usually done to stimulate an under performing economy

A curious custom, as cutting tax rates has never stimulated the American economy.

It's really not possible, especially in a country the size of America, to expect such measures to work immediately. It's more like a ripple effect.

The problem with this ‘theory’, is that it doesn’t hold up to history. The two fastest growing economies occurred in the American 20th Century when taxes on the wealthy were at their highest. Yet, after the three times in the 20th Century that large tax rate cuts were enacted, the national economy subsequently either slowed dramatically or completely tanked.

You're right that Iraq was a factor but I think rather than driving people away from the ballot boxes it pursuaded them to vote for anyone but Blair.

If that were true, then Blair would have lost his majority and would no longer be PM, eh ?

No, I’d say it showed a lack of support for Blair's support for the war, but an even larger lack of support for the Tories, hence people staying home.

I presume by vouchers you mean that each child gets $x to spend on their schooling and can spend it wherever they like? I wasn't aware that any such system had been tried in Scotland. Could you elaborate a bit more on the failures and why they failed?

Outside of America, other than the basic underlying fact that vouchers don’t work, no. Here, vouchers don’t work because they’re a joke. The real intention of inserting vouchers into the systems was to destroy the public school system.

I don't really doubt that but my point was that if 80% of the country are in the lowest tax bracket you can't complain that these people are being over taxed.

The earlier stats were from 1999 and 2000. At this point it’s not that the lowest brackets are over-taxed, but that the wealthy are so under-taxed.

It seems totally unethical to me to have a country whose entire ethos is 'The American Dream', that you can succeed in any circumstances if you try as hard as you can, and then when you become successful along comes Uncle Sam and takes a vast chunk of your money away from you.

But it doesn’t.

The wealthiest 20 percent of households paid only 16% of their income in federal taxes in 1999. Then there have been four rounds of MASSIVE tax cuts that overwhelmingly benefited the wealthy since 2001.

There is no "vast chunk" being taken away.

The whole felfare system rests on the ethos of "give according to your ability to those according to their need".

Sounds more like Corporate Welfare.

#

[pennywise]

Re: Greece to offer flat tax

I think parental involvement in education is not properly defined, so people do not know what it means. I am very involved in my daughters education. In fact in one hour we are going to the local library for a reserved room where I tutor math, vocabulary, and test taking skills. My dtr is 9 going in 5th grade and has been in private school since age 2.5. However, I discovered that private school is not better. To determine where my daughter was I tested her on standardized tests I paid for, she did poorly. I then gave her tests to diagnose what was wrong and I determined she was in a hurry, could not comprehend, and she becomes frustrated with new material. With my experience I say: the class rooms are too large (no individualized service), tend to the mediocraty (if my dtr knows it she gets to sit while the rest "catch up"), food and drinks in the school are inappropriate since high sugar is hyper and the crunching of food and cellophane is distracting, the children are out of control (most) and the parents do not discipline their children. I believe strongly in a good education and that is why I am helping my daughter. I will meet with her new teachers in 2 weeks to let them know where I stand (I expect them to find material for her to work on). Why - she is doing geometry that I have taught her and we are starting to work on story problems:

Here is an example we just worked on: An apartment bldg enclosed a square area for recyling containers. The length of each side of the square was 6 ft. Next year the sq area will be enlarged by increasing the length of each side to 12 feet. How many times greater will the enclosed area be?

She has the knowledge to do each step. Now I have to teach her to critically think each level to do the whole. She jumps to answer the question not realizing to take it sentence by sentence. I am having problem with her wanting to do ALL math in her head. I want her to use paper and draw pictures. First she has to write "I am dealing with a square - what is the formula for the area of a square - write the formula and draw a square. Next label the square with 6 ft on the sides, calculate the area. Next each side is 12 feet - what shape am I dealing with? Oh, a square has equal sides. Draw another square and label 12 ft. Perform the area. Now figure out how much bigger the area of the second is to the first. I demonstrated this on Tue. We will revisit in 1 hour. What do you all think?

[jmjj215]

Re: Greece to offer flat tax

I think that is very admirable Pennywise. If more parents had the same dedication it would do absolute wonders for this country.