REGULATION is the key! Five million government workers chasing five hundred rich guys through loop holes and around tax shelters is great entertainment....

pdf, are you one of the billionares for Bush?
"Instead of actually collecting a percentage of taxes from everyone, we're actually punishing those on the far end of the income scale for their audacity in actually achieving a high income, therefore providing a dis-incentive for average folks to work hard, risk their capital, and spank them if they make too much."

The rich pay most of the taxes because THEY HAVE AND CONTROL MOST OF THE WEALTH in this country. If somebody makes a billion dollars a year, and they are taxed at 90%, that still leaves them with 100 million dollars a year. Does anyone need that much money? And the truth is, right now the wealthiest people get most of their money from investment income, and that is only taxed at a rate of 15% right now. That is a much lower percentage than people at the lower end pay. Trickle-down economics, supply-side economics, voodoo economics, AKA tax breaks for the wealthy don't work for anyone but them. Period.

Now that I have unloaded that previous post about the "unFair Tax", let's talk about the real culprit that is causing most, if not all of our problems today. George Wanker Bush!
No, not really, but he is the current leader, along with the rest of the corporate Neo-Fascists in congress, leading us down the road to ruin under the banner of deregulation. Deregulation or the lack of regulation is at the root of all of our problems. The only check on greed is enforced regulation. Regulation levels the playing field for everybody, and should be the main priority of government.
It doesn't matter if your talking about the problems with the environment, banking and mortgage institutions, Wall Street coruption or anything else, the common element is lack of well-defined, enforced regulations. We actually have a lot of good laws on the books regulating the areas of mining, manufacturing, banking, medical, pharma, agriculture and many others. The problems come when Bush can staff the SEC, EPA, FDA, USDA and ALL the other regulatory branches with corporate cronies, cut the budgets for enforcement, generate false reports and so on, well, you can see the problem.
The right has sold Americans on the idea that all government and all regulations are bad, and if left alone, the market will solve all problems. How many times does that have to be shown WRONG before we wise up? If the government actually worked "For The People", and did its job, we wouldn't have nearly the problem that we have today with poverty for instance. We would put in place a living wage with benefits. Instead, we have a half-assed minimum wage with no benefits raised once in ten years, that is nothing less than corporate welfare, as the businesses pass the costs associated with low wages on to YOU, the taxpayer. You pay for it when your taxes pay for food, shelter, medical care and all the rest, for those who are unable to pay because of low wages.
Deregulation is a shell game run by the big boys, and no matter which one you turn over, you get stuck with the bill! It is long past time to stop Deregulating and start REREGULATING!!!

Let's try out the flat tax on business. Get rid of corporate income tax. Exempt the first $50-$100 million (this is not a lot in manufacturing) Put in a bracket at $1 billion, $10 Billion and over $10 billion. That's it. They could add the tax to the cost if they wanted but not as a tax.

Small business would get a big break.
The government would be out of the tax subsidy business
All sorts of tax lobbyists and accountants would have to earn an honest living.

No one ever talks about the savings and retirement $ side of the "fair" tax

The "Fair Tax" is a load of horsecrap. It is well crafted legislation that, if passed, will insure that rich people never pay taxes again. It was dreamed up and hyped primarily by two people, Congressman Linder of Georgia, and Neal Boortz, Fascist right-wing radio talk show host. Boortz wrote the book (The Fair Tax) and hypes it constantly on his nationaly syndicated radio show, that panders to knuckle-dragging flying-monkey-right idiots, like himself. Boortz never met a rich man that he didn't think could use a lot more money, and has openly stated on his show that the poor should just be paved over.
For right now, we should return to the progressive tax rates of the post WWII era, at which time the highest rates were over 90%. This is the only way the country will ever get out of debt, or at least start paying it down.
By the way, the fair tax would not apply to stock purchases, and to answer the question about cars and houses, their plan calls for no tax to be collected on anything used (not new). That is supposed to allow you to sell your car or house to the next buyer with no additional tax due. Therefore, if you buy a house for $150,000 and finance it all, you can sell it later for say $160,000 with no tax due or collected on that sale.
An important thing to remember about all this, is that this only applies to federal taxes, you would still have your state and local taxes and property taxes to deal with.
The so-called fair tax would shift much more of the tax burden from the rich to the rest of us. Look at it this way, it doesn't matter if you are Joe Six Pack or Warren Buffett, you can only drink 30 or 40 beers per day.

ccjpop and WJM___You guys have it right, go back to the progressive system that was in force before Reagan and let the rich greedy selfish pigs help pay off some of the mess they have gotten us into. At the rate we are going, it will take the entire income of the government just to pay the interest on the trillions of dollars of debt, let alone the principle. The health system will need vast sums to give any kind of service to everyone, so we will have no choice but to let our billionaires help out on taxes or our country will default on our own needs as well as our national debt. This flat tax is a bunch of garbage just like our wonderful war that was going to pay for itsself.

Income tax is an illegal tax. The most truly progressive thing we can do is get rid of the Federal Reserve! Surprised no one has yet to state this.

http://tinyurl.com/2yafyw

By the way I'm not against taxation as taxes we pay on goods at purchase do go to government programs just against income tax.

An income tax as a means of leveling of the playing field is what is required if we wish to even out our society, avoid another even shorter-lived guilded age followed by a subsequent (and worse) great depression -- or continue building the new caste of royalty that doesn't really give a rat's ass about the remainder, the majority.

They have laws heaped on laws to ensure that ordinary propertyless people can't freely access natural resources, can't easily start their own businesses, can be evicted anywhere anytime (for being poor), they protect their monopolies with patent law and IP, etc.

With a social/legal backdrop like this, it's simply not enough to ignore privilege.

Re-read the comments of WJM. RIGHT ON!! Revert back to when the bleeding started.

One thing I'd add to that assertion is the fact that the other burden placed upon us at that time (and continuing today) was the massive debt that we're also paying for. Same beneficiaries as WJM mentions also benefit from this "fiscally responsible" approach.

Best tax system I've been able to concieve of would work like this:

1) No income tax unless you are a median wage earner or above, adjusted for your region.
2) A simple curve function in math. Something like this: http://en.wikipedia.org/wiki/Generalised_logistic_curve Adjust the formula to produce the desired curve.
3) Perhaps cap it out (flatten it) at 50% for people making hundreds of millions and more.

My 5:23 pm post was initially pulled. I wrote CD and asked whether as a matter of policy they're opposed to the thought of Henry George. No reply, but they did restore the post, links intact. Tech glitch? or stance on political economy?

Unfortunately, in our time Henry George has suffered a far worse fate than being opposed. Who has even heard of him?

I admit I do not know the details of the Huckabee plan. But the concept of switching from an income tax to a consumption tax is incredibly wonderful!

Think about it. The woes of our planet are not caused by income, they are caused by consumption. So let those who do the consuming pay more. Hopefully, some of those taxes go into ameliorating the side-effects of consumption, such as pollution, climate change, etc.

In my flat tax proposal, I would include as consumption the purchase of financial products. You want to gamble on the next trendy thing in the stock market? Fine, fork over 30% on top first. Since investing in production is a sort of consumption, this seems fair to me.

On the other hand, putting money in federally insured savings accounts is only deferred consumption, and so should not be taxed. There would have to be strict rules about what is "savings" (non-consumptive) and what is "investment" (consumptive), perhaps based on a rate of return cap.

If you truly tax consumption, a flat tax is progressive, since people with more money spend (consume) more. Those who voluntarily "live lightly" on the planet would be taxed less.

And what's with this home mortgage holy cow? Kill it! First, apply the consumption tax to the initial home purchase, then get rid of the home mortgage deduction. This will put an end to speculative real estate purchases. People will buy "right-sized" homes, instead of buying the biggest house they can possibly afford (with the help of the mortgage deduction, which is simply a banking industry subsidy). I don't think the current "sub-prime" crisis would have happened under this scenario. The argument of tax subsidies encouraging home ownership is a red herring: Canada has similar home ownership stats to the US, but Canada has no mortgage interest tax subsidy.

Again, I don't know the details of the Huckabee plan. But on a conceptual level, a consumption tax is certainly better for the planet, and I suspect a lot better for the poor, the voluntary simplicity crowd, and probably for a good portion of the middle class.

But it will never happen, because under such a scheme, the rich would pay more because they consume more, and the rich call the shots.

Jan Steinman: I think it's a WONDERFUL idea, BUT on top of that I would recommend a pure and simple "progressive" income tax with anyone under the acknowledged poverty level being EXEMPT.

It is CRIMINAL to force people below a sustainable income to pay taxes when Rupert Murdoch pays NOTHING!!!

EVERYONE, or a married couple who has an income of between $38 and $40,000 or more, should pay a flat 10% income tax. Any who earn more than two million a year pay 20% all who earn a bilion or more pay 30%. That's it. No deductions. Incomes of less than $38,000 a year, a tax rate of from 1% up to 9%, depending upon the income. Eleminate the expensive IRS, the tax forms for everyone would be a simple post card with all of the rules listed.

It that isn't enough to cover the federal governments expenses, ___ stop spending. Tax money should be used for infacstructes, security, education, science and essentials only. Close most of those 700 foreign military bases, stop starting unjust wars, eleminate departments such as the phoney 'enviromental protection agency' and instead join the rest of the world and work on the global warming problem. __ Right away too.

Any who earn a decent wage and pay a flat 10% income tax wouldn't need deductions. Those deductions only help the very wealthy to end up paying little or nothing.

Jan Steinman, I think you are mistaken in with regard to these national sales tax proposals.

It works like this:

A consumption tax (sales tax) is ALWAYS deeply regressive - particularly the "fair tax" proposal, which would be a huge national sales tax, including food and clothing.

A rich person puts most of his into investments or savings, therefore only a small amount of his income gets taxed by a sales tax.

A poor or moderate income person must spend all or nearly all of his income buying necessities - clothing, food, heat, fuel. So nearly 100% of his income is taxed - at up to 30-40%.

Yes, I know that the the lowest incomes would get rebates, but the net effect would be a stupendous shift of the tax burden off the rich and onto the working class.

This isn't speculation, the organization ITEP has produced a comparative study of the tax policies of the various states: http://www.itepnet.org/whopays.htm

The study found that most state's taxes are deeply regressive - the poor pay a greater _percentage_ of their income in taxes than the rich. The greatest regressivity being states like Tennessee which have no income tax but a high sales tax that includes food and clothing.

As far as the mortgage interest deduction, your argument is a red herring. For every case of it encouraging buying too large a house, there are probably thousands of people whom the tax deduction allows them to own a home at all. I myself would still be renting rather than living in our 1150 sq ft house if it weren't for the interest deduction - and the deduction of the RE taxes.

I hope I'm not offending anyone here, but the CD readership seems to be awfully out of touch with the concerns of the working class.

Jan Steinman wrote:
"If you truly tax consumption, a flat tax is progressive, since people with more money spend (consume) more. Those who voluntarily "live lightly" on the planet would be taxed less."

Ignoring the glaring example consequences the author gives for such situations as the single mother making $20,000, I think you're only seeing part of the picture. People who make more money also *accumulate* more money (wealth), and a main thrust of a progressive tax system is to help level the wealth in a society. Lopsided wealth is inimical to just society. It's not only the money that's being spent right now that gauges economic security and social power; it's also the wealth being concentrated and hoarded.

You also wrote:
"The woes of our planet are not caused by income, they are caused by consumption."

Guess what - one entity's income is often, or usually, created by another entity's consumption, so the two are inextricably tied.

And, once again, why the HELL are we having to read analysis of a US domestic issue of vital importance from a London, UK newspaper????

Because our newspapers won't print it. News is Paris Hilton failing to pay a parking ticket.

Galifray,

A bit off topic, but a $20,000 car is "an inexpensive one"?
I haven't checked around for a while but there are quite a few car models still available in the 9K to 15K range.

Like I wrote, most of the CD readership seems to be a bit up there

The very fact that bush's advisory board rejected a similar proposal must mean there is something to it and that his elite buddies will suffer. Food and living NECESSITIES should not be taxed. Of course, this will present a few problems working out what is necessary and what is frivolous, but still many fewer than the incredibly complicated system under which we presently toil. Savings? Just do not tax savings up to a certain amnount. I agree with Jan Steinman on her mortgage solution. I would add that if it is your prime residence and you have lived there for a given length of time, that it not be taxed or be given an exemption as in the Homestead exemption. If you choose to live in several homes, that should be considered "over consumption" and be justly taxed.
Let's not forget, that the present income tax is not going anywhere other than to pay the interest on our debt based money system. So, obviously, before instituting such a tax, we would need to scrap the illegal and mis-titled Federal Reserve System. Good riddens, but good luck. We know what happened to the last guy that even mentioned his intentions. RIP, JFK!

The only truly 'flat' tax would tax ALL citizens on ALL purchases. It would not allow for businesses to be free of paying taxes on their expenses or investments. It would tax ALL purchases. To be even more progressive, a higher tax would be placed on purchases of imports. Corporate 'persons' should be held to the same moral standards as any other 'citizen' and they should be held to a standard of loyalty to the flag just as any other citizen. I think the 'writeoff' should go away completely, and there should be no tax loopholes for businesses. Why do you think Murdock can actually get away with paying nothing? A flat tax on corporations, and the suspension of investment and expense loopholes, would go a long way toward seeing to it that Murdock pays some taxes.

Otherwise, without these considerations, the 'flat tax' truly is madness, and will certainly increase the tax burden on the middle and lower middle classes.

I don't know... right away I was thinking of a dozen ways that I would try to save money by AVOIDING all the friggin really unnecessary consumption that I do on a daily basis pretty much because there would be an immediate pay-off in NOT consuming, and having to really think about consuming, and plan for consuming, and I think that would be a huge plus in forcing a lot of Americans to become more aware of what rote consumtion is really all about and the kind of damage that it can do, well the pain would be IMMEDIATE. In our instant gratification mode society, its like the flat tax is just the kind of stimulus we all need to start seriously considering alternatives to our greedy consumer lifestyles.
You know, I tend to be very socially/culturally liberal, but I do think that the liberal modes of ecomonics are just as entrenched and exceedingly frightened of change as the conservative social/cultural POV's tend to be. We have some really valid points on how they need to change and I think they have some valid points on how to shake things up economically. I think the reason a lot of their economic ideas have crashed and burned is because they have to twist every idea to sort of still accomadate neoliberal ecomonic priorites that were developed half a century ago. We need a clean break from that. I mean, we gotta start doing something and all of the liberal ideas seem to begin and end with - 'just don't do anything that might jepordize our funding sources,' and I think a flat tax may well just do that... but they will have to evolve/adapt like the rest of us.

Screw this. I have a better idea. Repeal the REAGAN tax cuts, put the top margin back at 72% and actually make the rich people pay their share. They have been making out like bandits for almost 30 years, now, I say it's time to put them back into the position of having to pay since they are the main beneficiaries of the republican ruling class.

Look, since Reagan came into office, we have been getting the shaft. OUR wages have gone up 33%, while the rich and ultra rich have seen over 400% increases. The price of a car has gone up over 800% in that time. The price of food, over 125%. We have been losing money for 27 years, and have been paying more for everything, as well as being taxed even higher than the rich. The investing class pays 18%, we pay 35%. Think THAT is fair or sustainable? You work your ass off, and pay nearly twice in taxes what those who sit by the pool and wait for the dividend check to show pay.

It's time for the country to put things back in order. The rich, who already have FAR more than they will ever need, pay next to nothing, while those of us who work and sweat pay a third of our wages to a system that doesn't repond to our needs at all. All it does is give MORE of OUR money to those who already have more than they can ever spend in a dozen lifetimes.

Repeal the REAGAN tax cuts, and then we can START to talk about a fair tax system. And it doesn't involve business getting tax breaks for taking our jobs away, moving factories overseas, and poisoning our children with substandard food and toys.

I think poverty and overconsumption feed on one another...

But to pick a finer point: Watkin refers to the consensus that people should pay more tax based on their ability to afford to part with the money. But as Lakoff has pointed out on this site, the philosophical basis of progressive taxation rests on the understanding that the rich benefit more, in absolute dollars but even as a proportion of their overall economic well-being, from the commonwealth, i.e., education, infrastructure, etc., which is sustained by taxation. So you can hate Robin Hood (I don't) and still see the justice of progressive taxation.

oops now I see that got that in there. Well it seems worth reiterating after reading this discussion anyway.

There is something about this flat tax proposal that has not been mentioned yet, how to pay it and when.

I have two examples, a house and a car:
The car first, let us assume a new one, which would be about $20,000, o.k. so an inexpensive one. So a 30% tax would equal $6,000.
Now for the house, ignoring the really expensive markets, a new house would probably be $150,000. So your tax would be $45,000.
Don't stop reading there's more to consider like how do you pay it?
Up front at the time of purchase. Gee, just imagine that for the car. $6,000 before you even make your first loan payment. The house, well let's be generous and say you'd need to pay 10% down, so that's $15,000, nope, actually $60,000 if you had to pay the tax at the time of purchase. Talk about a housing market crash.

Another option would be to include the sales (consumption) tax in the loan. Well that means, you'll be paying the lender interest so you can pay your tax. Just like you do now if you pay property taxes using your credit card, but don't pay it off that month. Alternatively, the tax payment could be spread out over the life of the loan, so that means you'd be paying an additional 30% of the principle at the time of each loan payment. Assuming that you don't have to pay tax on the interest of the loan, that is.

Any way you look that's quite a bite out of your paycheck.

Finally what about businesses, especially corporations, won't they have to pay a consumption tax. They do consume, if nothing else, office supplies. No, that's not right, they also have to pay for corporate cars, their buildings, etc. And where would they get the money, by raising their prices, of course,and passing it to the end-users, the people.

We should keep income tax on higher incomes only: above about $100,000 or $200,000. It's stupid to penalize wage earners, but it is good to hold back the politcal buying power of the high income earner. Likewise keep the estate tax on multi-millionaires. Begin taxing pollution. Especially tax toxic pollutants and all greenhouse gases.

I did my Christmas shopping in a series of east coast towns and believe me, no one had to give a second thought as to the actual usefulness or necessity of most of the crap that the shopping carts were just overflowing with, everywhere I went. ( I was just as bad.)
I keep hearing how rough everyone has it right now, and it was just kind of hard to believe yet. This woman I work with is in danger of foreclosure on her home and cries at work everyday, but when she got paid last week she took her teenaged daughter and nine of her friends out to the most expensive sushi place in town and ran up a $600 bill. I can think of tons of examples like this. Yet I keep hearing that this is being done to us/them by evil greedy conservatives. There is more going on here than meets the eye. We ALL need to change.
I am sick to death of these articles that continually defend the staus-quo and blame the other guy. THE STATUS-QUO IS NO LONGER FUNCTIONAL, IN FACT IT IS KILLING US. The best we can do is go shopping. If you have a better idea, don't hint around about it, lets hear it - otherwise, I just suspect you of having the most to lose if someone else's idea gets a shot. In the meantime, someone with the most simple to understand plan, for better or worse, is going to charm us all down a new path because we are about ready for that to happen now and anyplace is looking better and better than here.

A flat income tax can only work with a flat income. How many flat taxers would want all their income to go into a Community Chest to be EVENLY distributed to all inhabitants? That would let all the greed out of our American system of values.

The Sales tax or consumption tax is in fact a regressive tax. The poor pay a greater percentage of their income on sales tax because they are forced to spend most. if not all of their income just to live. The wealthy people pay only a part of their income for living necessities and therefore much of their income remains untaxed unless spent.

I like a simple progressive tax with no exemptions. We do not need wide differences in taxable income categories. With computers to assist us a simple predetermined progressive mathematical number could be applied to each gross income earned in simple one thousand dollar increments. A new more rational poverty level needs to be developed and no one that falls within that level would pay any income tax. The progressivity of the incremental income tax from the poverty level upward would increase steeply at the top levels of wealth. The idea that we exist as a community of people each with dignity and worth and that no one is allowed to become so rich as to isolate themselves from the American community should become enshrined in tax law. This would guarantee that harsh negative meddling of the super rich in the American economy would be minimized, and a new balance would be accomplished.

As PJD said in his spot on post, taxing consumption "is ALWAYS deeply regressive".

Tax reform, however, if done correctly, is the key to progress. It's the way to end the monstrously inequitable distribution of wealth, the seemingly endless cycles of boom and bust, and a thousand related social and socio-economic ills. Done correctly, tax reform is the single most fundamental progressive reform, and it's no exaggeration to say that of all measures envisioned in the history of political economy, none would bring us as near to utopia as the "single tax" proposal of Henry George.

Tax reform may strike you as too frail a reed to bear the weight, but please take the time to read the works of the man John Dewey called America's greatest social philosopher, especially Progress and Poverty (1879):
http://www.henrygeorge.org/pcontents.htm

For an introduction to George, see Mason Gaffney:
http://www.schalkenbach.org/100-years-later.html

And on the deliberate suppression of George's thought and the corruption of economics, this interview with Gaffney:
http://progress.org/gaffnint.htm

Noteworthy: Dennis Kucinich's chief economic policy adviser, Michael Hudson (http://www.michael-hudson.com/), is a Georgist. And yes, he's drafting a new tax policy for the U.S. (As though one needed another reason to like DK.)

BTW, easy on the indiscriminate references to "income tax". Are we talking about earned income or unearned income? Ending the private confiscation of economic rent -- unearned wealth that by rights belongs to the whole community -- is the crux.

PJD, yohocoma: please note that I said a progressive consumption tax should also tax investments, as they are actually a form of consumption. Simple interest, perhaps limited to the rate of inflation, would not be taxed.

kogwonton, Galifray: to be a true consumption tax, it needs to be a "value added tax;" in other words, everything is taxed at every step, but with credits for taxes paid against taxes received. So if you make a widget that has $6 worth of parts that you sell for $10 and the tax rate (for simplity's sake) was 10%, you'd pay 60 cents tax on your parts, and collect $1 tax on the sale. When it's time to pay the taxes collected, you deduct the 60 cents you paid on parts and pay the government 40 cents -- the tax on the value you added to the parts.

Combining these threads, the same thing would hold true of investments. Put four zeros after the previous example's numbers to see what you would end up paying on a house that you bought for $60,000 and sold for $100,000.

Of course, this would not apply to failing investments, such as the infamous oil depletion allowance that oil companies with post-peak wells make a killing off of. Just like in gambling income, deductions for taxes paid would have a ceiling of the taxes received.

Again, I do not know the particulars of the Huckabee plan. But I have spent a great deal of time and research on this, and am totally convinced that a properly executed consumption tax would be good for the earth. Would some people get hurt? Sure, people get hurt whenever anything changes. But imposing a penalty on consumption can only be good on the earth in the long run.

PJD,

Per NADA (National automobile Dealer's Association) in 2006 the average new car sold in the US was $28,450. (see p2, upper right of http://www.nada.org/NR/rdonlyres/C18D7380-0175-4D46-BC65-AF2AA8A2C268/0/NADA_DATA_2007_NewVehicle_Department.pdf }

Yes, there are new cars that cost less, just as there are new cars that cost much more. Hence the average. So I don't think that considering a $20K car "inexpensive" is that far off base, nor does it mean that all the CD readers make 6-figure incomes and consider a new Civic (lets say) a trifle. Perhaps Galifray should have used the term "less expensive" to be more accurate.

Also keep in mind that there are 7 used cars sold for every new one.

the proposal vs reality.
Lets say the proposal got passed, and , to make the math simple, lets say it is a 10% rate. So when you go out to buy a 20K car, and a rich guy goes out to buy a 100K car, you pay 2 and 10K right ?
No.
you pay 2K, the rich guy gets a deal where they setup some complex tax avoidance thing, and he winds up paying ...a lot less then 10K
Beyond that, one has to realize that the idea that we have to not tax the rich so they can save money to invest in new companys to make more stuff is, like most theory in economics, appealing in theory, but wrong in practice.

Speaking of Huckabee lunacy, this morning on CBS' Face The Nation, he was asked to defend his flat tax and one example happened to be a new car purchase. Talk about exaggerating and just flat out wrong! (sorry I don't have a link to transcripts yet)

Basically his argument was the buyer would have all his take home (OK so far) to offset a 20-30% consumption tax on the car. He then went on to say that "23% of the cost of that new car comes from the manufacturer paying corporate income tax along with the cost of regulatory compliances."

Basic accounting: Corporations pay taxes on income/profits - not on the entire cost of a given vehicle. Lately GM & Ford rarely make more than 8% pre-tax (if that; much of that profit coming from financing not manufacturing; some years they lose money so no taxes paid), that would work out to 1-2% of your car's price going to pay taxes to Uncle Sam.

Regulatory compliance? I've seen inflated numbers used to support this. They include development costs for new fuel efficient engines (as though market demand was irrelevant), crash worthiness, airbags, seat belts, pollution control, safety glass, etc.

So, yeah, if I wanted the equivalent to a 70's-era Trabant or '64 Ford Falcon (minus safety glass and seat belts), then yes I guess consumers would have a 23% cheaper car.

What's frightening to me is that I think Huckabee really believes that crap about flat tax - or is blissfully ignorant/trusting in his advisors. But this is a Republican meme lately, eliminating all taxes on corporation and investment income. Recently got in an argument with a small town rural (not wealthy) Rush-acolyte who told me in all sincerity that "eliminating taxes on corporations and investors will be the best thing that ever happened to the working man" since it would result in immediate drops in the price of all goods. He was dumbfounded how an MBA from University of Chicago (Milton Friedman's alma mater) could disagree.

The Repubs have worked at getting people to vote against their own economic interest since the 1880s, so they're pretty good at it. Be afraid.

PJD,
So I messed up my inexpensive a little, though I went to a dealership recently, at their invitation, and the least expensive "sale" car was still well over $10,000 for a "previously owned," that is, used car, that had been seized for non-payment.

I note that you did not object to the $150,000 price tag on the house, nor did you comment on my ponderings on paying the taxes.

Oh, and for the record, I have lived most of my life in the lower 40% income range, at times in the bottom 10% even, so I am not a rich progressive slumming.

In my tax plan, there is no income tax and no direct tax on consumption, but there is a corporate revenue tax. Every corporation pays a tax on every dollar of revenue -- not on "profit" but on revenue. Corporations are free, of course, to pass the tax along in the price of goods and services. Thus the end-user, the consumer, pays the tax anyway in the end, as is always the case anyway.

I haven't done the calculations to see how much the tax would have to be, but I suspect it would be a fairly low number.

Anyone see a serious problem with this idea? If so, then talk me out of it.

One has only to look at a "bell curve" of US income distribution to understand that there are a lot more of us at the lower income levels than there is at the upper income levels. OK, here's one:

http://visualizingeconomics.com/2006/11/05/2005-us-income-distribution/

What we have right now, at this very instant in time, is a program where the far right of this graph pays the vast majority of the total tax collected in the country.

It hasn't always been this way; actually, it's been far worse:

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#History_of_progressivity_in_federal_income_tax

Instead of actually collecting a percentage of taxes from everyone, we're actually punishing those on the far end of the income scale for their audacity in actually achieving a high income, therefore providing a dis-incentive for average folks to work hard, risk their capital, and spank them if they make too much.

What is "fair" depends on what end of this scale you are on. If you're on the right side, you're seeing an increasing amount of your income being confiscated and you're watching as millions of low-income workers pay zero, nada, zilch. If you're on the left side, you're struggling to make rent payments, buy food, and keep your head above water.

Very few would argue that the bottom end of the economic ladder should be taxed MORE when they are struggling. Very few would argue that the upper brackets should be taxed LESS when it means that new Ferrari might have to wait 3 months because of the taxes.

It's those of us in the MIDDLE that have the conflict. What do you define as "rich" and what do you define as "poor".

And furthermore, what do you define as the PURPOSE of government when it comes to the redistribution of wealth froom those who HAVE the wealth to those who DO NOT have the wealth?

Should taxation play a part in this transfer?

There's the root of the argument in most taxation discussions.

With regard to a "Corporate Tax" taking the burden of funding our country, remember that we actually want corportations to survive, don't we? As much as we'd like to portray them as evil enclaves of slavery and oppression, they do actually employ people, help them earn health benefits, and help fund reasonable retirements for a lot of folks. Do we want to provide incentives or disincentives for corportions to exist, grow & thrive? Me?; I'd like them to do just fine. No, I don't want them to spew profits while punishing workers, but organizations like that typically die of their own greed, Exxon/Mobil not withstanding.

A "perfect" system of taxation would be truly fair, and fair from all perspectives. It would allow each member of a free society to participate in the democracy completely and fully. You would have full access to the necessary information to made decisions, and have the ability to provide your fair share of funding that democracy. Some will pay less, and some will pay more, but all will pay their fair share.

In my theoretical taxation paradigm, none would pay zero as it is actually a disencentive to participate in government when you pay nothing. How can you feel a part of the democracy when you are exempted from paying for any portion of it? Not everyone will feel this way, but it's how I see the situation.

There are many, many ways to make income taxes less complex.

First, use more standard deductions. Almost no one ever uses actual auto costs: gasoline bills, repairs, etc. They use standard mileage. About half of everyone uses a standard deduction rather than a Schedule A. If you really want to take the guesswork out of a tax return, break up the Schedule A deductions into 1. a mortgage deduction, with an income-related floor, 2. a standard medical deduction with a floor and 3. Everything else, with a floor. The goal is to get 95% of everyone to take the standard deduction and skip the calculations. As a rule, put floors on every deduction until going through the code is a snap for most people. People should be able to write in their W-2 income, checkoff "I'll take standard" on an average of 95% of everything, look up their tax and be done.

Second, round every figure off to the nearest hundred dollars. The government tortures everyone and creates a huge transfer of wealth to private tax companies because the government is a stickler for tax torture. Go fire a few sticklers.

Third, combine a few wacky items into one seamless tax lookup. My favorite crock is the earned income credit which goes in two places on the 1040 form.

Solving the 1040 by giving everything to rich people is a bad solution.

The best plan is to keep pushing benefits to the rich individuals and corporations and letting it trickle down to the middle class and poor, just like Ronnie said it would do.It is so simple to do and all it requires is a little patience until it starts working. The pesky estate tax should also be eliminated as it is not the government`s business to take any of the hard earned money from CEO`s, sports coaches and players, buracrats, retired congresspersons, and other valuable people. We could also change the 40 hour workweek to 60 or 80 so the lower income people would make more money and could take care of themselves. It will all be great if we just get the government out of everything but war,faith-based programs, morality issues, school curriculums,etc.

GUYS and Gals: This whole discussion is an example of how the right wing is winning...why ? cause we are all using the term "flat tax" - they are beating the crap out of us on the nomenclature thing.

Every progressie who writes anything on this should adopt some alternate wording. I don't have a good alternate word, but it should not be something of the form "the x tax, also called the fair tax..."
Pyschologically, we have to remove the term "flat tax" from the discussion and REPLACE it with something else - denial is not, psychologically, a good tactic.
How about "fools tax plan" or "Gates tax plan" or something like that ? surely there must be someone on this thread with a good imagination for this sort of thing.
every time one of us even types "flat" and "tax" google rankings go up, the word flat is implanted in more brains - this is one of the ways the right is getting the american people to vote for things tht are harmful , with propaganda, and all the posters who tped the words "flat tax" are, unwittingly, helping

Hey wasn't a "consumption tax" already tried on luxury goods during the Clinton era? I remember the rich running out to buy their yachts and expensive cars before the tax went into effect. And to Jan: like communism, forcing people to consume less by increasing taxes on goods is likely to create more problems than it solves. Civil unrest is likely to be one of them. Expect many more homeless, along with families trying hard to provide for their children. And do we do away with the earned income credit as well?

I don't disagree that people need to be more responsible with their spending and their lives, but is up to big govt to decide where to apply the pain? Now a flat tax might not be so bad if people actually got something in return, like medical care and quality daycare, but not more wars and war machines. Let's get THAT aspect of our house in order first. Fat chance, eh?

It all goes back to what I've posted here before: there has to be a revolution from within before meaningful change can occur from without. Now, both can and must occur simultaneously. Only a "spiritual" (not religious, which is the antithesis of what is authentically spiritual) society can be a compassionate one.

Here's another unintended consequence. When you use your credit card, you put the tax of the item also on the charge.
Here is another problem.
A national sales tax would be even worse. This has been estimated at around 23%. When one includes state sales tax, the total sales tax would be around 30%. This would be applied to all purchases including automobiles and homes. Since one would have to finance these taxes, one would also be paying interest on this money. What a boon to the business institutions. The high level managers, boards of directors, and CEOS would be paying their sales tax from the interest they earn from the middle class on their taxes. This would expand to any business that could finance their own products. Therefore, the wealthy would pay virtually no taxes at all. Under this plan, the middle class would be paying almost the entire tax burden of the country. Again the middle class gets the shaft.

I think, that like democracy, the progressive income tax isn't perfect but its the best tax sructure out there. Like so many other things the neocons have done, they have perverted the system while giving the middle class a small bite of the apple to keep them happy.

A consumption tax to finance the federal government is regressive. If a billionaire pays the same tax rate on a new Bentley as a wage earner pays on a used car, it isn't fair, and a young family that has to purchase so many new things with a limited income would be sunk. Its just tax cuts for the rich revisited.

I think the government should go back to the business of balancing the budget with fair taxation and programs that ecomically maintain our infrastructure and defense, provide some sort of minimal national health insurance, and provide minimal safety nets for those in need. Many loopholes should be closed, and any company making money in the US, wherever incorported, or contracting for the US abroad, should pay fair tax on that income. Pork barrel amendments to legislation have to stop. The government also has to provide programs and incentives for reduced GHG emissions.

I hate to say it, but the Clinton/Gingrich era was about as close to good government as we have seen in a long time. (The uncontrolled globalization/off-shoring legacy is a negative, but it started years before Clinton, most of the damage has been done during the Bush administration, and the neocons love it.)

Yes, a progressive income tax is the best way to make the rich pay ... except for the fact that many of them have no income. Technically. Fromn a progressive point of view, income tax just aint working.

A consumption tax hits those who consume. But the rich do not consume in propotion to their wealth. It's just socked away in investments. It's the poor who consume all they have.

So what is needed is - a wealth tax. One very effective form of this is an inheritance tax. But a straight-up wealth tax would be fair ... except that assessing people is quite difficult.

My own preference is for a very stiff tax on the transfer of securities that have been held for less than a certain amount of time, to turn the stockmarket back into a place where you could raise venture capital rather than it being a mere casino. But that's another story.

Paul M,

Good points, but I think that wealth=consumption.

I'm going to approach wealth here as a zero sum game. Wealth is like energy in physics, the ability to get work done, to change things, to motivate people.

So even if the wealthy are just stocking money away somewhere -- they are (therefore) denying wealth from others. They force the working-poor and middle-class to work their lives as indentured servants. They penalize the poor with interests on loans, while rewarding themselves with interests earned on investments. Centralized pools of wealth are, in a sense, a sort of malignancy in their own right. Indeed, they may be one of the chief motivators of consumption.

If people didn't have to work so much to simply put a roof over their heads, they'd modify less matter (manufacturing, consumption, etc.). They'd have time to repair things, build locally, etc. We're kept running on a treadmill -- by stocked-away and denied wealth.

"Not invented here" syndrome? But Henry George was American. Maybe "re-inventing the (flat) wheel".

The problem of tax reform was solved conclusively over 125 years ago -- Kucinich and Nader know it and shape their tax policies accordingly -- though John Locke for one was onto the essential idea as early as 1691:

"It is in vain in a Country whose great Fund is Land, to hope to lay the publick charge of the Government on any thing else; there at last it will terminate. The Merchant (do what you can) will not bear it, the Labourer cannot, and therefore the Landholder must: And whether he were best to do it, by laying it directly, where it will at last settle, or by letting it come to him by the sinking of his Rents, which when they are once fallen every one knows are not easily raised again, let him consider." ('Some Considerations of the Consequences of the Lowering of Interest and the Raising the Value of Money')

"Land" in the sense at issue now includes spectrum assignments associated with telecommunications licenses, airport gates and arrival and departure time slots, portions of the gene pool (subject to claims of corporate ownership), orbits for commercial satellites, oceanic shipping routes protected by national armed forces, as well as mineral deposits, urban lots, railroad rights of way, easements, aquifers, etc. The private confiscation of "site" value -- unearned wealth created by the community -- is the fundamental problem. The solution is simple: tax site value and un-tax everything else.

What would the "single" tax do for us? For an inspiring general forecast, see the Mason Gaffney interview linked above.

No one has managed to improve on the single tax. No other tax policy delivers its combination of equity and efficiency. No one has manged to refute the broad and deep political economy on which it rests. On the contrary, what Tolstoy said remains true today:

"The chief weapon against the teaching of Henry George was that which is always used against irrefutable and self-evident truths. This method, which is still being applied in relation to George, was that of hushing up...People do not argue with the teaching of George, they simply do not know it."

Fortunately Michael Hudson knows it. Check out what he's doing with Kucinich.

Why hasn't the single tax been implemented? There's a strong temptation to ascribe the resistance (or rather, concealment) to rentier greed. As pychological explanations go that may be perfectly true, but the prevailing system of land tenure with private confiscation elicits and fortifies greed as much as greed enforces the system. Saints are all very well, though not strictly needed. The key is to remove the temptation to raid the commons, an activity that's currently legal, respectable, and openly indulged. The single tax removes the temptation; it's the addicts who won't have it.

A flat tax is regressive and will only benefit the wealthy. Be careful when someone says that they want to simplify your life and make it "fairer". This is a smoke screen for a large rip off and we should all know better by now.

It is folly to try to talk about any tax system and *not* make a distinction of the very different income streams from land, labor and capital - the *only* three economic factors that can "pay" tax.

Greens would do well to combine their strength with environmental issues by choosing a tax system that helps preserve open space and channels growth, investment and developemnt into the existing urban/suburban footprint. As doc j mentioned earlier, converting from the "net" income and sales tax systems used in most states to a tax system based on taxing land rents is the best means - by far - to achieve positive environmental outcomes.

The current "net" income tax is a bad joke that is used by government to assure that the wealthy taxpayers keep campaign contributions coming - or enacted - for their favorite deductions and loopholes that politicians can spin into nice soundbites that they say will "promote growth", or "promote fairness", or that help "get the big, bad governemtn off the backs of 'ordinary' taxpayers."

Currently - and for many years - lower income people, small businesses and working people in general have been slipping backwards economically. Indeed, in contrast to even 20 years, two people now need to work to support most families - mainly to pay costly income and sales taxes, and housing costs - whereas the wealthy - often landlords, speculators and big business owners - have seen their fortunes soar.

To correct this imbalance, greens should advocate for tax reductions on working people, families, homeowners and small businesses in exchange for taxing land rents. This tax rebate will help families tremendously, and will help the economy too since almost all of the money they receive in tax reductions would be recycled back into the economy to help create jobs and profits for businesses.