[Rhodes22-list] Flat Tax Anyone? What is fair Dave(political rant)

[Brad Haslett]

Bill,

Lucky you!  My company is a not-for-profit entity as well.  That wasn't our
goal when we started but we've discovered some hidden benefits.

The WSJ article referred to mid-career, two wage earner couples - that's Fan
and myself.  We live modestly (small mortgage), save aggressively, and don't
get involved in exotic tax schemes.  As a result, our effective federal tax
rate has always been around 25%, much higher than the average truly
rich person like Teresa Heinz.  The garden variety small craftsman, say a
plumber or an electrician, who owns his own business is in the same boat.

"Fairness" is in the eye of the beholder.

Brad


On 1/14/07, Bill Effros <bill at effros.com> wrote:
>
> Brad,
>
> I'm not a wage earner, and my company is a non-profit--just like Stan.
> We pay no taxes under this "flat-tax" system?
>
> Bill Effros
>
> Brad Haslett wrote:
> > Bill,
> >
> > How is "income" defined here?
> >
> >
> >
> > If you are a wage earner, income would be the amount on your W-2 less
> > what
> > you put in savings, (assuming the savings aspect survived Congress).
> > If you
> > are self-employed, nothing would change; your net profit for the
> > year-end is
> > your income.
> >
> > Does the "flat tax" replace all other taxes.
> >
> >
> >
> > No.
> >
> > Is the gasoline tax gone?
> >
> >
> >
> > No.  My personal opinion is that we should be paying about $4 per
> > gallon for
> > fuel, with a floating tax implemented over time to bridge the gap
> between
> > the market price of gasoline and the $4 target.  I know this sounds
> > strange
> > coming from a free market disciple but this is a matter of national
> > security.
> >
> > Are tobacco and liquor taxes gone?
> >
> >
> >
> > No.  Those are local taxes and here in the Bible Belt a big fund raiser.
> >
> > Can cities and states tack on other taxes over and above the "flat tax"?
> >
> >
> >
> > Yes.  Each state is still responsible for their own spending and revenue
> > raising schemes.
> >
> > Are property taxes gone?
> >
> >
> >
> > No.  Property taxes will still be used locally to fund schools and local
> > government, as they should be.
> >
> > What about taxes on the sale of securities and real estate?
> >
> >
> >
> > Some flat tax advocates suggest eliminating capital gains.  I personally
> > think we shouldn't tax the gain on assets held over two years.  This
> > encourages long term investment and throttles real estate speculation.
> >
> > What about fees charged by the government?  Why should the government
> > charge for entry to parks?  Or postage?  Or fees for passports?  Aren't
> > these all just hidden taxes?
> >
> >
> >
> > These are user fees and they wouldn't change.  Airlines will still pay
> > landing fees to support the airspace infrastructure, etc.
> >
> > Please fill in some more blanks on how the "flat tax" actually
> > works--how everything becomes so simple and fair.
> >
> >
> >
> > The fair and simple is that the lowest income earners ($40K or less)
> > don't
> > have to fool with federal income taxes at all.  The top 1% (read Bill
> > Gates)
> > actually pays the same marginal rate as everyone else.  The 2% to 5%,
> > that's
> > you and me kid, probably won't see much difference except that our
> > friends
> > who borrowed a million dollars for a house may rethink their
> > decision.  For
> > the 6% to 50%, life gets a lot simpler, and for the bottom 50% the tax
> > burden decreases.
> >
> >
> >
> > Brad
> >
> >
> >
> >
> > On 1/14/07, Bill Effros <bill at effros.com> wrote:
> >>
> >> Brad,
> >>
> >> How is "income" defined here?
> >>
> >> Does the "flat tax" replace all other taxes?
> >>
> >> Is the gasoline tax gone?
> >>
> >> Are tobacco and liquor taxes gone?
> >>
> >> Can cities and states tack on other taxes over and above the "flat
> tax"?
> >>
> >> Are property taxes gone?
> >>
> >> What about taxes on the sale of securities and real estate?
> >>
> >> What about fees charged by the government?  Why should the government
> >> charge for entry to parks?  Or postage?  Or fees for passports?  Aren't
> >> these all just hidden taxes?
> >>
> >> Please fill in some more blanks on how the "flat tax" actually
> >> works--how everything becomes so simple and fair.
> >>
> >> Bill Effros
> >>
> >> Brad Haslett wrote:
> >> > Bill,
> >> >
> >> > There are a gazillion different versions out there, including the
> ones
> >> > currently being used in Eastern Bloc countries.  The one I like best
> >> > is the
> >> > one proposed by Steve Forbes.  Basically, the first $40,000 or so of
> >> > household income would be tax free with adjustments for family size
> >> > and type
> >> > (single v married).  After the threshold, consumption, meaning income
> >> > minus
> >> > savings, would be taxed at a flat rate, 17% in Forbes proposal.
> >> Corporate
> >> > income would be taxed at the same 17%.  Going back to the old 80/20
> >> rule,
> >> > the 20% of taxpayers who pay 80% of the taxes still would.  Much of
> >> > the 80%
> >> > who pay little taxes anyway would be exempt, and what they did owe
> >> > could be
> >> > calculated on a postcard. Gone would be the deduction for home
> >> > mortgage interest and other itemized deduction.  The idea is that a
> >> > flat tax
> >> > encourages savings while discouraging subsidized spending on
> oversized
> >> > houses, etc. The original income tax in the US was a flat tax of 1%.
> >> > We had
> >> > a lot fewer accountants and tax attorneys back then.
> >> >
> >> > Brad
> >> >
> >> >
> >> > On 1/14/07, Bill Effros <bill at effros.com> wrote:
> >> >>
> >> >> Same question, Brad:  How does the flat tax work?
> >> >>
> >> >> Bill Effros
> >> >>
> >> >> Brad Haslett wrote:
> >> >> > Chris wrote:
> >> >> >
> >> >> > "If the system steals all their wealth then I guess those guys
> >> won't
> >> >> > bother
> >> >> > to earn their
> >> >> > vast sums of money."
> >> >> >
> >> >> > Precisely!  That is exactly what happened when marginal tax rates
> >> were
> >> >> in
> >> >> > the 70 to 90 per cent range.  That, and people got involved in
> >> >> > sophisticated
> >> >> > tax dodging schemes.  Our current code is far more complicated
> than
> >> >> > necessary because of all the tinkering done over the years to
> >> achieve
> >> >> > various social aims.  Under a flat tax, the top 20% of earners
> will
> >> >> still
> >> >> > pay over 80% of the total tax collected. Those 10,000 square foot
> >> >> > McMansions
> >> >> > won't be subsidized and driving a leased Hummer to work won't make
> >> >> much
> >> >> > sense either.  JFK said it best when he explained why he was
> >> cutting
> >> >> > marginal rates, "a rising tide raises all boats."
> >> >> >
> >> >> > If the ultimate goal of a nations tax system is to achieve equal
> >> >> > incomes for
> >> >> > all,  you get Cuba, North Korea, and a few other third world
> >> >> countries.
> >> >> > Every other industrialized nation interested in growing their
> >> economy
> >> >> has
> >> >> > given-up on such foolishness.
> >> >> >
> >> >> > Brad
> >> >> >
> >> >> >
> >> >> > On 1/14/07, Geankoplis <napoli68 at charter.net> wrote:
> >> >> >>
> >> >> >> Dave,
> >> >> >>        There seems too much hand wringing about the unfair taxes,
> >> the
> >> >> >> crushing burden of those taxes on the wealthy.  I agree with you,
> >> >> isn't
> >> >> >> wealth the reward?  Didn't the system benefit those wealthy
> >> >> people?  If
> >> >> >> that
> >> >> >> system exist to reward these people then why shouldn't they pay
> >> >> more to
> >> >> >> support it?  They have more to loose than the little guy.  If the
> >> >> system
> >> >> >> steals all their wealth then I guess those guys won't bother to
> >> earn
> >> >> >> their
> >> >> >> vast sums of money.  People can complain all they want but their
> >> >> actions
> >> >> >> speak louder than words.  If the amount of taxes someone pays is
> >> more
> >> >> >> important than what they make, let them work minimum wage, an
> >> obvious
> >> >> >> luxurious level of existence that should be suppressed as it is
> >> more
> >> >> >> money
> >> >> >> than someone really needs.
> >> >> >>
> >> >> >> Chris the tax payer
> >> >> >>
> >> >> >> -----Original Message-----
> >> >> >> From: rhodes22-list-bounces at rhodes22.org
> >> >> >> [mailto:rhodes22-list-bounces at rhodes22.org] On Behalf Of
> >> >> >> DCLewis1 at aol.com
> >> >> >> Sent: Friday, January 12, 2007 8:29 PM
> >> >> >> To: rhodes22-list at rhodes22.org
> >> >> >> Subject: Re: [Rhodes22-list] Flat Tax Anyone? Tossing ball back
> to
> >> >> >> Slim(political rant)
> >> >> >>
> >> >> >>
> >> >> >> Interesting that Ed thinks 36% tax is an oppressive tax rate (and
> >> >> that's
> >> >> >> the
> >> >> >> max rate, not on your gross, its after deductions).  Look at the
> >> >> >> roads  you
> >> >> >> travel, the ATC, national security, public health, the commerce
> >> >> >> infrastructure, etc - seems like a one time good deal to me.
> >> >> >>
> >> >> >> For those of you who worry that you're paying school taxes for
> >> other
> >> >> >> peoples
> >> >> >> kids, ask yourself who is going to be paying into the Social
> >> >> >> Security  fund
> >> >> >> on your behalf 10 years from now - it's those kids.  You better
> >> hope
> >> >> >> they're
> >> >> >> educated and have good jobs, their Soc Security deposits are
> >> >> >> going  straight
> >> >> >>
> >> >> >> to you.
> >> >> >>
> >> >> >> Further, while Ed makes a good point regarding founders that
> begin
> >> >> and
> >> >> >> develop companies, I suggest they are likely a small fraction of
> >> >> the 1%
> >> >> >> under
> >> >> >> discussion.  I would encourage you to consider the real 1% -
> >> consider
> >> >> >> the
> >> >> >> Grasso'
> >> >> >> s, who didn't start, found, begin or develop anything he just got
> >> >> >> the  NYSE
> >> >> >> to
> >> >> >> give him an egregious pay package.  Or Nardelli of Home Depot,
> >> >> >> or  Skilling
> >> >> >> of Enron, or Conrad Black accused of looting the Tribune, or the
> >> >> >> guys  that
> >> >> >> looted Tyco, or McKinnel of Pfizer, or Immelt of GE, or
> >> Waggoner of
> >> >> >> GM,
> >> >> >> or
> >> >> >> Ford
> >> >> >> of Ford......  Lets cut out the mythology and deal with cases,
> >> and
> >> >> >> there
> >> >> >> are
> >> >> >> a ton of cases, and in all those cases the MBAs that won the
> water
> >> >> >> cooler
> >> >> >> wars stepped up to run major corporations and made out like
> >> bandits
> >> -
> >> >> >> that's
> >> >> >> the real story and that's the real 1%.  I can't think of a single
> >> >> >> S&P 500
> >> >> >> corporation that's run by it founder.  And I
> respectfully  suggest
> >> >> that
> >> >> >> the
> >> >> >> MBAs
> >> >> >> that win the water cooler wars are no more entitled to  special
> >> tax
> >> >> >> consideration by society than anyone else - they are not
> >> >> founders,  they
> >> >> >> are
> >> >> >> watch
> >> >> >> standers, and there is a difference.
> >> >> >>
> >> >> >> Regarding founders: If you do found and develop a public company,
> >> you
> >> >> >> make
> >> >> >> out like a bandit even with the current tax code - and I don't
> >> >> begrudge
> >> >> >> that
> >> >> >>
> >> >> >> one  bit.  But you reasonably make out so incredibly well that
> >> even
> >> >> >> after
> >> >> >> taxes
> >> >> >> you are incredibly well off.  Consider Phil Knight, the guy who
> >> >> founded
> >> >> >> Nike
> >> >> >> - I think he's the 48th richest guy in the US even after the
> >> current
> >> >> >> taxes,
> >> >> >>
> >> >> >> and that's fine but he doesn't need a change in the tax code to
> >> help
> >> >> him
> >> >> >> out
> >> >> >>
> >> >> >> he's doing very well thank you.  Consider Bill Gates, I think the
> >> >> >> richest
> >> >> >> guy in the US, money up the gazoo - under the current tax
> >> >> code.  Michael
> >> >> >> Dell,
> >> >> >> absolutely not suffering at all - under the present tax code.
> >> >> None  of
> >> >> >> the
> >> >> >> founder types I've mentioned need special consideration from the
> >> >> >> tax  code,
> >> >> >> they
> >> >> >> are all doing very very well by any standard - and I don't
> >> begrudge
> >> >> >> their
> >> >> >> doing well, but neither do I feel sympathy for the tax they pay.
> >> >> >> They've
> >> >> >> got
> >> >> >> it made and some of the reasons they have it made is the
> >> >> larger  society
> >> >> >> respects and enforces their intellectual property rights - at a
> >> real
> >> >> >> cost
> >> >> >> to the
> >> >> >> larger society - the larger society facilitates their production
> >> >> >> efforts
> >> >> >> with
> >> >> >> roads, power, terminals and infrastructure and security of all
> >> >> >> sorts, and
> >> >> >> generally enables the commerce that they profit from so greatly -
> >> >> >> so  maybe
> >> >> >> they
> >> >> >> should pay more for that increased support.  If that increased
> >> >> support
> >> >> >> weren't
> >> >> >> there, they'd have nothing or very much less.  The
> >> customs  inspector
> >> >> >> standing on the dock looking for counterfeit Nikes is not paid by
> >> >> Phil
> >> >> >> Knight, but
> >> >> >> Phil Knight benefits directly from that customs
> >> >> inspector's  activities,
> >> >> >> maybe
> >> >> >> Phil Knight should pay more tax than the rest of us.   Maybe Bill
> >> >> Gates
> >> >> >> should
> >> >> >> pay more taxes, the US Government is investing time and  manpower
> >> >> trying
> >> >> >> to
> >> >> >> mitigate software pirating efforts in Asia and around the
> >> world, a
> >> >> >> direct
> >> >> >> significant beneficiary is - Bill Gates.  I don't begrudge  any
> of
> >> >> these
> >> >> >> guys
> >> >> >> their wealth, but I also think they, more than some day
> worker  in
> >> >> South
> >> >> >> Carolina,
> >> >> >> are constructively exploiting, using, and benefiting from the
> >> full
> >> >> >> range
> >> >> >> of
> >> >> >>
> >> >> >> government services and in consideration they should pay
> >> more  taxes.
> >> >> >>
> >> >> >> Dave
> >> >> >>
> >> >> >> __________________________________________________
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> >> >> >>
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