U.S. Debt Ceiling. 31.4 Trillion!

[LousyResident]

Generally speaking what you’re outlining is a progressive tax scheme, flat is just flat. CO doesn’t have a standard deduction.

For CO I based the 4.4% on the income before deductions as a simplified method of accounting for that.

Progressive, kind of. From my quick tests it seems to cap "tax as a % of post deduction income" around 16% and there no substantial progression beyond roughly $150K in gross income. So quickly progressive from low to middle(ish) income then effectively flat. It would make it a lot harder to say that anyone isn't paying his/her fair share. It provides protection for the lowest income that's for sure and eliminates the 7 current tax rates to 1.

Anyway, I'd be curious what other people mean with they say "flat tax." I use the term but always assume there would still built in deductions, not just a flat tax on gross income.

The bigger question, which has been discussed before, comes down to how you estimate income and the deductions go into that calculation. Eliminating certain deductions for losses, especially carry forward losses, would make the biggest immediate difference in tax revenues. How come you can carry forward losses but not aren't forced to carry forward profits?

But that's already a(nother) complex situation with no clear or united plan, or even desire for a plan.

 

[brymoore]

Do we know the flat tax rate percentage to match the current tax structure?

 

[Sytes]

Generally speaking what you’re outlining is a progressive tax scheme, flat is just flat. CO doesn’t have a standard deduction.

That's a very broad brush. Flat is not just flat. In the debate scheme, sure, though flat tax is more than capable of low income / adjustable / variable... etc - as I mentioned earlier, FDR brought us welfare that was temp in nature, now common place, and for fair reason.
Flat tax discussed on a Hunt Talk forum is not set to define all aspects of the general theme of a different tax structure than current. It's a broad use of the term as is progressive, etc.

 

[Deleted member 28227]

Anyway, I'd be curious what other people mean with they say "flat tax." I use the term but always assume there would still built in deductions, not just a flat tax on gross income.

Remember Hermain Cain's 9-9-9 plan... here is a break down. Ties into this discussion of flat taxes and the issues with them.

https://www.washingtonpost.com/blogs/fact-checker/post/herman-cains-misleading-pitch-for-the-999-plan/2011/10/12/gIQAHszPgL_blog.html

 

[Deleted member 28227]

Flat is not just flat. In the debate scheme, sure, though flat tax is more than capable of low income / adjustable / variable...

That's literally the difference between CO and MA, so going to have to disagree with you.

CO has some credits like solar panels and some farm credits but essentially you plug in your AGI from your federal return and it gives you your taxes owed, no deductions.

MA is like a mini-federal return. You put in your MAGI then go through a bunch of worksheets that either up it for certain types of income or reduce it for things like rent.

Neither have tax brackets (will change in 2024 MA has voted to add an additional 4% tax on income over 1MM).

 

[Sytes]

Do we know the flat tax rate percentage to match the current tax structure?

That would be interesting - and fitting, considering the thread topic.

It fits with this more, how should I describe it, indepth assessment of a flat tax operation as it pertains to low income allowances, business, GDP, etc.

Growth & Opportunity Tax Plan: Details & Analysis

The federal tax code remains a major source of frustration and controversy for Americans, and a hindrance to economic growth and opportunity. Other countries, such as Estonia, have proven that sufficient tax revenue can be collected in a less frustrating and more efficient way.

taxfoundation.org

 

[Sytes]

That's literally the difference between CO and MA, so going to have to disagree with you.

The article above is a prime example of the additional detail involved in a flat tax setting that incorporates the ebb and flow of all defined gov't operations - nothing is lock defined. Most all is open for adaptation.

That's, as we say, life. Though sure, for sake of debate, I'd agree we can agree to disagree.

 

[brymoore]

That would be interesting - and fitting, considering the thread topic.

It fits with this more, how should I describe it, indepth assessment of a flat tax operation as it pertains to low income allowances, business, GDP, etc.

Growth & Opportunity Tax Plan: Details & Analysis

The federal tax code remains a major source of frustration and controversy for Americans, and a hindrance to economic growth and opportunity. Other countries, such as Estonia, have proven that sufficient tax revenue can be collected in a less frustrating and more efficient way.

taxfoundation.org

I did a quick google search and this might be wrong.

2019. $1.6 T in taxes collected. $11.9T in individual income taxed. Roughly a 13.44% flat tax would equal the same revenue as the current tax structure.

A definite tax cut for me!

 

[Sytes]

Consider the taxpayer's gov't $ saved to remove the convoluted current tax clutter as well! Haha!

 

[Deleted member 28227]

The article above is a prime example of the additional detail involved in a flat tax setting that incorporates the ebb and flow of all defined gov't operations - nothing is lock defined. Most all is open for adaptation.

That's, as we say, life. Though sure, for sake of debate, I'd agree we can agree to disagree.

Rhetorical bait and switch.

So not even advocating for a flat tax, just using the cache of it's seeming simplicity and then just making a less progressive progressive tax.

The lengths that rich folks go to lie to the middle class.

Per that article basically every state has a flat tax.

 

[Sytes]

Rhetorical bait and switch.

So not even advocating for a flat tax, just using the cache of it's seeming simplicity and then just making a less progressive progressive tax.

The lengths that rich folks go to lie to the middle class.

Per that article basically every state has a flat tax.

You're acting as though a bill to support NR tag numbers is strickly about non resident tags. reality, it's much more detailed! You're debating Flat Tax as simply the title - nothing else matters other than the title. Flat Tax means the entire U.S. tax structure is a bill with two lines.

Line #1: "U.S. Tax Structure"
Line #2: "Flat Tax for all entities in the U.S. is 20%"

End of U.S. Tax code.

That, Wllm, it debate rhetoric.

 

[LousyResident]

That's literally the difference between CO and MA, so going to have to disagree with you.

CO has some credits like solar panels and some farm credits but essentially you plug in your AGI from your federal return and it gives you your taxes owed, no deductions.

MA is like a mini-federal return. You put in your MAGI then go through a bunch of worksheets that either up it for certain types of income or reduce it for things like rent.

Neither have tax brackets (will change in 2024 MA has voted to add an additional 4% tax on income over 1MM).

Yeah see I don't like that at all. I may have missed it, but I don't recall hearing many, if any, people advocating for that kind of true, minimalist flat tax. Or maybe I just didn't realize that what some people wanted.

Although I could probably behind that if it had one extra line. 0% tax on AGI up to $60K, 20% on all income above $60K. Or whatever number makes sense I guess.

 

[Deleted member 28227]

You're acting as though a bill to support NR tag numbers is strickly about non resident tags. reality, it's much more detailed! You're debating Flat Tax as simply the title - nothing else matters other than the title. Flat Tax means the entire U.S. tax structure is a bill with two lines.

Line #1: "U.S. Tax Structure"
Line #2: "Flat Tax for all entities in the U.S. is 20%"

End of U.S. Tax code.

That, Wllm, it debate rhetoric.

I'm saying there is a difference between a flat rate and a flat tax.

Line:#1 "U.S. Tax Structure"
Line:#2 "Flat Rate for all entities in the U.S. is 20%"
Line:#3 Income deductions
Line:#4 Earned Income Credit
Line:#5...

Versus


Line #1: "U.S. Tax Structure"
Line #2: "Flat Tax for all entities in the U.S. is 20%"

End of U.S. Tax code.

 

[Sytes]

I'm saying there is a difference between a flat rate and a flat tax.

Line:#1 "U.S. Tax Structure"
Line:#2 "Flat Rate for all entities in the U.S. is 20%"
Line:#3 Income deductions
Line:#4 Earned Income Credit
Line:#5...

Versus


Line #1: "U.S. Tax Structure"
Line #2: "Flat Tax for all entities in the U.S. is 20%"

End of U.S. Tax code.

Bit nit picky, Wllm.

 

[LousyResident]

I'm saying there is a difference between a flat rate and a flat tax.

Line:#1 "U.S. Tax Structure"
Line:#2 "Flat Rate for all entities in the U.S. is 20%"
Line:#3 Income deductions
Line:#4 Earned Income Credit
Line:#5...

Versus


Line #1: "U.S. Tax Structure"
Line #2: "Flat Tax for all entities in the U.S. is 20%"

End of U.S. Tax code.

Yeah I'm definitely using "Flat Tax" as "Flat Rate" lol.

 

[Deleted member 28227]

Consider the taxpayer's gov't $ saved to remove the convoluted current tax clutter as well! Haha!

Depends. A system with bracket's might have less deductions and therefore is acutally less complicated.

A flat rate system might have a crap load of carve outs to get you to lower effective rates.

The only way it's actually less convoluted is if it's in fact a flat tax with zero deductions or credits.

 

[Deleted member 28227]

Bit nit picky, Wllm.

We are having argument about the tax code Charles

End of the day, I think it's more important for a single mom to pay rent and buy food for her kids then it is for me to buy a waterski boat. So I think the tax code should reflect that fact.

And no princes

 

[Sytes]

Depends. A system with bracket's might have less deductions and therefore is acutally less complicated.

Take this as you will though the estimate used in the article posted above notes the following:

"The burden of complying with the tax code is staggering, currently estimated to consume 6.5 billion hours at a cost of about $313 billion per year, equal to 1.4 percent of GDP.[1] Most of the burden is due to complicated business taxes that consume the time and energy of entrepreneurs and small business owners as well as massive tax departments at many large businesses. The estimate does not include the cost of tax planning, which is a significant industry on its own. Nor does it include the administrative costs and challenges that have clearly overwhelmed the IRS in recent years. Last year, for instance, the IRS answered only about 10 percent of the 73 million phone calls it received from taxpayers asking for help.[2]"

 

[SAJ-99]

You're acting as though a bill to support NR tag numbers is strickly about non resident tags. reality, it's much more detailed! You're debating Flat Tax as simply the title - nothing else matters other than the title. Flat Tax means the entire U.S. tax structure is a bill with two lines.

Line #1: "U.S. Tax Structure"
Line #2: "Flat Tax for all entities in the U.S. is 20%"

End of U.S. Tax code.

That, Wllm, it debate rhetoric.

I don't mind the flat tax in theory, but it could never work without scrapping the tax code and starting over. Your guy making $1B has 1000 ways to reclassify that income. Capital gains taxes are at most 20%. So when Elon sold all that Tesla stock he didn't pay income tax rates, he paid 20%. You want to start by making everything income, I am with you. Then the problem becomes 1) the guy making $40k now has to survive on $30k and the guy making $1B has to survive on $750m. Slight difference. And I need 25,000 of the 40k workers to make what I got from the one billionaire. That isn't a good ratio for the billionaire if the other 25,000 people start to feel something is unfair to them.

 

[Sytes]

but it could never work without scrapping the tax code and starting over.

It would be one heck of a transition... considering the politics behind such a transition. UGH!

Interesting enough the article shared their assessment in this overview / additional info:

"By simplifying the federal tax code, the reform would substantially reduce compliance costs, potentially saving U.S. taxpayers more than $100 billion annually, comprised of more than $70 billion in reduced compliance costs for businesses and more than $30 billion in reduced compliance costs for individuals related to individual income and estate tax returns.

We estimate that the reform would increase long-run GDP by 2.3 percent, raise wages by 1.3 percent, and add 1.3 million full-time equivalent jobs.

The plan would increase average after-tax incomes by 0.3 percent in the long run on a conventional basis. When including the benefit of higher economic growth, average after-tax incomes would rise by 2.1 percent in the long run. Though after-tax incomes increase on average, in any revenue-neutral reform, tax relief for one group of taxpayers necessitates tax increases for another group of taxpayers. Various aspects of the plan could be altered to achieve different distributional results.

By increasing GDP, the reform would reduce the debt burden as measured by the debt-to-GDP ratio by 5.9 percentage points over the long run.[9]"