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

[Brad Haslett]

Bill,

Congratulations, you win the prize for being cute and witty!  What we have
now is the real "chump tax".  If you are a high-end wage earner or small
businessman, you pay through the nose.  There is a point (well above my pay
grade) where the wealthy hire expensive but efficient tax counselors to
cut their effective rate.

But why waste time on this discussion? I'd explain why your analysis is
wrong but you don't appear to be in the mood to learn today. Yesterday you
ask for an explanation of how a flat tax would work and in less than 24
hours you're expert enough on the subject to call it a "fraud".  My default
position with you Bill is to not discuss economic issues and it is
obviously time to honor that position.

Brad




On 1/15/07, Bill Effros <bill at effros.com> wrote:
>
> Ah,
>
> So the "flat tax" can also be described as a "chump tax".  It only
> really applies to wage earners.  The rich never have to pay it at all,
> as they don't earn their income in the form of "wages" and their
> accountants can still cast their "profits" as "losses".
>
> This makes it very easy for the government to raise taxes whenever it
> wants--just change the 17% to 18% or 19%.  That's fair.  All the wage
> earners pay the same rate, while the truly rich try not to laugh in
> public.
>
> Teresa Heinz, by the way, was not a "rich person" until she married
> Henry John Heinz III of the inherited wealth "Heinz 57 Sauce" family.
> He subsequently became a Republican United States Senator, and died in
> an airplane crash, transferring much of his wealth to his wife--tax
> free, with provisions to insure that their children would eventually
> inherit great wealth--also tax free; and that it would not be
> transferred, instead, to any other Senator she might marry.  Especially
> Democratic Senators.
>
> The flat tax would not apply to her, either, as she would simply shift
> her money into non-profit corporations, and withdraw her money from
> tax-free bonds (causing municipalities to raise property taxes on wage
> earners) and, in all likelihood, pay even less in taxes than she does now.
>
> What a fraud!
>
> But, if you and the other wage earners really want to shift more of the
> tax burden onto yourselves, and away from people like me who don't earn
> their money from wages...you've got my vote!
>
> Bill Effros
>
>
>
> Brad Haslett wrote:
> > 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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