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View Full Version : My Analogy To The Newly Proposed Flat Taxes




swisht
10-20-2011, 12:52 AM
Hey everyone! New member. Been lurking for a long time, but finally decided to start posting. I don't know if this is the right area, but I'm sure someone can move it. I've been working on this analogy. I know it's a little long, but it's the easiest way I've been able to show people how a flat tax or 999 will end up hurting the every day American. Thanks!


Taxation used to be like this - The guy wearing the Rolex pays for the steak he ordered, and the guy wearing the Fossil pays for the burger he ordered. Then, out of a mixture of goodwill and luxury, the Rolex patron leaves the tip. He knows the man with the Fossil on his wrist needs it more than he does, and he was quite pesky with the waiter about the wine selection.

Bush Tax Cuts Era is like this - The guy wearing a Rolex pays for the lobster he ordered. The man with no watch orders the house salad, trying to watch both his weight and wallet, and then pays for it. The two split the tip. Right before the bill is paid, the man in the Rolex complains that his Lobster was overcooked and deserves some sort of compensation. The waiter, knowing full well that the salad was the only logical thing he can take off of the menu and still get a decent tip, takes the salad and drinks off of the bill, but leaves just the lobster. The new bill comes back and two are faced with the question of who should pay what. The man in the Rolex pays for 75% of it. The man without the watch doesn’t mind, because a quarter of the price of the lobster was about the same as the salad. He thinks he’s fine. Then the man in the Rolex asks for tip money. He spends more on a salad than he originally thought.

What the GOP future tax code would look like - The man in a gold suit takes his broke friend out to dinner at the restaurant he owns. They both dine on lobster and filets until they’re bellies are full. The dinner is free and considered a business expense by the man in the gold suit. There is no bill, but the man in the gold suit insists that it would only be fair for them to leave a tip for the service. Reluctantly, the poor man agrees because he sees the importance in sharing the responsibility. The rich man takes out a stack of cash from his pocket, peels back a few hundreds, fifties, twenties. Slams down a ten and says keep the change. The poor man takes out his credit card to cover his portion and signs his life away to debt.

1836
10-20-2011, 03:12 AM
Welcome to Ron Paul Forums! I'm not a mod, so I can't move it, but you could perhaps have it elsewhere.

Taxation is a complicated concept if you are taxing income because, as it is pointed out all too often, it is far easier for the millionaire to pay a high tax rate than it is for the poor guy with kids to pay an even lower rate.

I believe that, if you are to tax consumers at all, a flat-rate tax system with a built in fixed rebate to adjust for the regressiveness of the flat rate is the best and fairest solution to raise revenue for government.

Milton Friedman had a model like that called the "negative income tax." It would basically be a flat rate income tax with a rebate deducted from the tax burden; however, if you were poor enough to pay so few taxes under the flat rate, the rebate would be mailed to you as a subsidy. In this sense, the tax is not terribly regressive and still maintains the fairness and predictability that makes a tax more workable for people.

I also really like the FairTax idea, more or less. I don't know that the exact plan they have is perfect, but it is much better than the current system. As with the negative income tax, the FairTax includes a "prebate" to get rid of low-income regressiveness.

Perhaps the ideal would be that our government would simply be small enough to where we could levy some very particular taxes to pay for the entire government, as in the 1800s when the government was funded mostly through trade tariffs and liquor taxes.