Political Party Tax Plan

[Raider5678]

"$3,700,000,000,000

That's how much money the United States government spent in 2015 to run. The majority came form taxes, but not all of it. Now, we know that it's a pretty popular position to say you're going to lower taxes. But the problem, is that nobody ever lowers taxes. They simply find another way to make you spend your money. This going through back doors and trying to make it seem like you're saving the average american money, is harmful. First of all, it makes taxes so hard that it almost takes a professional to explain how to pay your taxes. Second, it makes it really hard for you to budget your money, because the taxes keep taking away from it at different times. A little here, a little there, and before you know it you've given a good portion of your taxes to the government, but you don't realize just how much. We propose, that we simplify this problem.

We can't eliminate taxes, we need the money to run the government. We can't lower them, because it'll simply lead us to find other ways to get money, typically more complicated and expensive measures. The best we can do, is simplify it. Rather then having tons of taxes, we can simply compile it into one large tax for the federal government. State taxes although, would have to be let to the states for now, but we'll make it a priority in the future to simplify state taxes too.

20.5%

That's the tax rate we would collect. All at once, from your initial paycheck. Everything else is your's to keep. We got this number by calculating the gross domestic income(GDI) of the United States of America, approximately 18 trillion. This would completely fund the federal government, all at once. Rather then having 10 different taxes all taking a piece of your income. Making it easy to calculate how much you make. Simply multiply your income by 79.5% and you know how much of your money is yours. This means no more social security tax and no more medicare tax. Congratulations. Taxes simplified."

 

Would this tax plan actually work?

Obviously it's designed so the average person who reads it will be like "oh yay, simpler taxes!", considering it's meant to gain support for this political party, but it seems straight forward enough. But then, nothings this simple. So where did they go wrong in this thought process?

 

 

Edit:

The one good thing I see is that they aren't promising something that's too good to be true.

Just saying they'll make it a little easier.

Edited May 1, 2017 by Raider5678

[CharonY]

It is a slightly long-winded way to propose a flat tax. There are proponents of this, but there a lot of issues with it, including a disproportionate burden on long income brackets (and 20.5% would be too low at current expenditures).

[Raider5678]

It is a slightly long-winded way to propose a flat tax. There are proponents of this, but there a lot of issues with it, including a disproportionate burden on long income brackets (and 20.5% would be too low at current expenditures).

What would the tax rate have to be?

 

They did discount state taxes, so I'd assume they meant local taxes.

Which meant that left only the federal government would be run off of these taxes.

[Delta1212]

There are a few issues with a flat tax like this, but let's tackle the big one first:

 

 

A minimum wage job worked 40 hours per week every week gives you a total annual income of $15,080. The federal poverty level is $12,060 a year.

 

If you tax $15,080 at 20.5%, your net income falls to $11,988.60.

 

Taxing someone on minimum wage at that rate puts them under the federal poverty line even if they work full time.

 

Also, people's money generally gets spent in order of certain priorities. There are always people who are dumb with their money, but we're going to look at how this affects even people who are responsible.

 

People generally tackle very basic needs like food and shelter first.

 

Then then you get into things like transportation costs for work, and basic necessities for hygiene and clothing.

 

Once all of the basic needs are met, then you can start saving for things, and putting some money towards basic entertainment. Even if it's just an Internet connection, which may also be considered a semi-necessity in the modern age.

 

Then once that is covered and people are able to save they can start thinking about vacations, luxuries and investments.

 

 

Those groupings divide people into tiers based on how far along that chain of priorities their income stretches. Different people can stretch the same amount of money to different levels, but there are limits for even the most frugal.

 

 

Money taken from the top tier might decrease their vacation budget. Money from the tier below that may mean post-poning their retirement. Money from the tier below that may mean they have to walk to work or can't get their at all, and money from the bottom tier may mean they don't eat or lose their home.

 

What the same chunk of income represents to each group is very different. You don't want to tax the food out of anyone's mouth. Ideally, the best bucket of anyone's income to take money from is the luxury bucket. If you tax everyone at the exact same rate, you are failing to take into account the fact that one person may be capable of putting 50% of their income into the luxury bucket, while another person may have no money at all for the luxury bucket.

 

For the first person, losing 20% of their income is barely felt. For the latter person, 20% of their income being taken away may very well be crippling on a day to day basis.

 

A progressive tax rate allows for taxes to be taken from each bracket based on how much of a groups income likely falls in that disposable bucket. A flat tax shifts the burden so that the tax rate creates greater hardship at the bottom in order to lower the amount that the top bracket has to pay out of their vacation fund in order to achieve a balanced budget.

[Phi for All]

I'd like to see a tax plan that didn't give added advantage to wealthy people who already have a LOT of advantage. If we were playing pool, I wouldn't mind playing against someone wealthy with a fancy stick who got tutored on how to play, but I'd prefer that he doesn't ALSO get to lean on the table, tamper with my cue, or block the holes I'm trying to use.

 

Have you thought about what you're spending taxes on? That's a great way to reduce the burden. Personally, I think too much public money goes into private resources. We mix our socialism with our capitalism, and it's wrong for both systems, imo. I'd like to see us use private funds for growth, and public funds when people are more important than profit. What do you think of the idea of a public service that creates work for unemployed people manufacturing a few basic items for those on welfare (or a similar setup where capitalism and profit aren't the priority, leaving the most resources to do the most public good)?

[Raider5678]

There are a few issues with a flat tax like this, but let's tackle the big one first:

 

 

A minimum wage job worked 40 hours per week every week gives you a total annual income of $15,080. The federal poverty level is $12,060 a year.

 

If you tax $15,080 at 20.5%, your net income falls to $11,988.60.

 

Taxing someone on minimum wage at that rate puts them under the federal poverty line even if they work full time.

 

Also, people's money generally gets spent in order of certain priorities. There are always people who are dumb with their money, but we're going to look at how this affects even people who are responsible.

 

People generally tackle very basic needs like food and shelter first.

 

Then then you get into things like transportation costs for work, and basic necessities for hygiene and clothing.

 

Once all of the basic needs are met, then you can start saving for things, and putting some money towards basic entertainment. Even if it's just an Internet connection, which may also be considered a semi-necessity in the modern age.

 

Then once that is covered and people are able to save they can start thinking about vacations, luxuries and investments.

 

 

Those groupings divide people into tiers based on how far along that chain of priorities their income stretches. Different people can stretch the same amount of money to different levels, but there are limits for even the most frugal.

 

 

Money taken from the top tier might decrease their vacation budget. Money from the tier below that may mean post-poning their retirement. Money from the tier below that may mean they have to walk to work or can't get their at all, and money from the bottom tier may mean they don't eat or lose their home.

 

What the same chunk of income represents to each group is very different. You don't want to tax the food out of anyone's mouth. Ideally, the best bucket of anyone's income to take money from is the luxury bucket. If you tax everyone at the exact same rate, you are failing to take into account the fact that one person may be capable of putting 50% of their income into the luxury bucket, while another person may have no money at all for the luxury bucket.

 

For the first person, losing 20% of their income is barely felt. For the latter person, 20% of their income being taken away may very well be crippling on a day to day basis.

 

A progressive tax rate allows for taxes to be taken from each bracket based on how much of a groups income likely falls in that disposable bucket. A flat tax shifts the burden so that the tax rate creates greater hardship at the bottom in order to lower the amount that the top bracket has to pay out of their vacation fund in order to achieve a balanced budget.

But the typical american pays 22.65% in taxes off of their paycheck before they even touch it, so what's the difference?

http://www.venturescholar.org/moneymatters/handle_money/know_paycheck/know_paycheck.htm

 

A 20.5% would actually be a tax cut. Pretty much nothing, but still something.

I'd like to see a tax plan that didn't give added advantage to wealthy people who already have a LOT of advantage. If we were playing pool, I wouldn't mind playing against someone wealthy with a fancy stick who got tutored on how to play, but I'd prefer that he doesn't ALSO get to lean on the table, tamper with my cue, or block the holes I'm trying to use.

 

Have you thought about what you're spending taxes on? That's a great way to reduce the burden. Personally, I think too much public money goes into private resources. We mix our socialism with our capitalism, and it's wrong for both systems, imo. I'd like to see us use private funds for growth, and public funds when people are more important than profit. What do you think of the idea of a public service that creates work for unemployed people manufacturing a few basic items for those on welfare (or a similar setup where capitalism and profit aren't the priority, leaving the most resources to do the most public good)?

Hence budget. I'd like to focus a lot on some of the things you described, while also allotting a larger budget to science and technology research. If you'd like to help me with this process, that'd be great.

Edited May 1, 2017 by Raider5678

[Delta1212]

The average American pays 22.5%~ in taxes if you include state and local taxes which this flat tax does not. Those add up to between 9% and 10% on average.

 

So you need to take that 20.5% flat tax rate and add 9% to it. Bringing the total up from 22%-23% for the average American to nearly 30%.

 

That is not a tax break for anyone and would be a disproportionately large increase on the bottom tax brackets.