Saturday, October 29, 2011

Optional flat tax = a limit on how much tax you pay.

It's not that hard to understand.  An optional tax is in effect a tax cut but only for the wealthy people.  If using it you pay more, you stick to the current tax.  If using it, you pay less, you use it.  So in effect, people only use it to lower their taxes, never raise them (except for the stupid - but we tax the stupid enough already).  Worse, it makes it harder to raise taxes - as you have to raise both.  Which I am sure the GOP likes - they act like taxes are an incredible evil instead of the reasonable cost of freedom, security, and safety.

The question is - is it a good idea?  Nope.

Let's discuss why the GOP claims we need it.  At heart, taxes are complicated.  Could they be simpler?  Yes, they could.  There are certainly parts of the tax code that are way too complicated.  But a very simple tax code takes a reasonably good, working tax code with a few flaws and turns it in to an incredibly bad one.

The world is NOT simple.   If it were, problems would not exist  and people would not argue about it.  We need a tax code that can not be expressed in one sentence to deal with these complexities.

A key example is the complex problem of how you treat married couples.   Do you treat them as a single tax entity with a single income and a single set of deductions, or as two individuals.   If you treat them as a single entity, then you in effect are tremendously hurting the two income people.  All the various deductions they get are not doubled.   Their combined income pushes them up into a higher tax bracket.

But now try treating them as two people.   This works great for the double income families, but screws the single income families.   A man (or wife) trying to support his wife ( or her husband) and four kids on one salary has it pretty tough.  They family should not be forced to have both parents work, they need the help.

So the tax code gets complex because we want to be fair and life is COMPLEX.

When you simplify things, in effect you are saying "we don't care about your special circumstances."

Some of the special circumstances built into the tax code probably should go away.  But all of them?  Without even bothering to look at them?  No.  Bull crap.

The simplest possible tax code will by definition screw over (and that four letter word should really be spelled with an "f") some people.  The flat tax is designed to screw over the poor, the home owners, and families, among many others.

As I have said before, if simplicity is your only goal, then you should go after my "flat wealth tax", which taxes you on what you own, not what you make (income tax), or buy (sales tax).  But the 'simplify' people don't like that, because the flat wealth tax is good for the poor and the middle class, while treating the wealthy the same way their flat tax treats the poor.

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