How would you reform the tax code?

[bytor2112]

I think that most of us would agree that taxes are necessary. The question is....how much should we be taxed and in what manner? We are taxed at the local, state and federal level and I HOPE that we can all agree that our elected leaders.....of both major parties, have proven to be poor stewards of our money. Since we don't all live in the same state, let's focus on federal income taxes. Our current system is repressive to say the least and the tax code is thousands of pages long. So, how can we change it?

Would you support?

1. A flat tax? Everyone would pay a fixed percentage of their income.

2. A consumption tax. Everyone is taxed at a fixed rate at the point of consumption.

3. Do you want to keep our taxes roughly the same?

Obviously, there are other issues as well. Like capital gains taxes, Estate taxes and corporate taxes. .......that's another issue altogether. (if we really want to see the economy roar, cut corporate taxes to zero, eliminate capital gains for 2 years and then keep low and we would see a robust economy......SIGH....I digress).

Any thoughts?

[Jbs2763]

flat tax

[bytor2112]

flat tax

15% or 20%?? Everyone or start at $20,000 per year income?

[skippy740]

Remember that our current tax system is set up so that certain behaviors are rewarded over others.

Homeownership should help improve the stability of our communities.

Children help to ensure that our culture continues to live and thrive to the next generation.

Businesses create jobs and opportunities for productive work.

Retirement savings so you may be less dependent upon the government's social security retirement program.

Those are the pinnacle areas where if we DON'T spend money, the government WOULD spend money.

In those areas, I think it should remain the same.

However, a taxation system is important in an economy where we can be capitalists. However, if capitalism isn't allowed to FAIL... what kind of capitalism do we have? I think the Government should NOT be involved in the survival of big companies - or ANY companies. Good companies should thrive and grow. Bad companies should be ALLOWED TO FAIL.

We should NOT be afraid of the natural economic progression of change that our country was founded upon.

I think a flat tax for both companies & individuals would be fine with deductions or credits for expanding a business or being a responsible citizen as I outlined above would be fine.

Oh, and NO PHASE-OUTS of those benefits no matter how high your income goes. If it's based on a FLAT tax and FINITE amount of deductions/credits, it won't make that much difference.

Just my take on it.

[Traveler]

I would reform the tax method and all social program payouts from the federal government at the same time and create what economist call a negative income tax. This would also create just one agency for the IRS, Social Security and welfare.

In essence a negative income tax creates a poverty line and all those that fall below the poverty line receive a government check (negative income tax) in the mirror image of those above the poverty line are assessed an income tax. Please note that such income tax should always allow incentive for individuals to earn more which then would be reflected to those below the poverty line also given incentive to earn more without losing an equal amount in benefit.

The Traveler

[TheyCallMeMom]

from what I have read of the fair tax I am on board with it.. I think its the only system that would work efficiently

[Traveler]

BTW – I prefer that income tax be the primary means by which the government raises monies from its citizens. The reason is because then ever citizen would be able to measure their real contribution and investment in the government – kind of like truth in labeling lets you know what you are really buying. Wouldn’t it be interesting if when we bought our food and other necessities we knew exactly what the government (state and federal) were taking from our hard earned means? As a rule of thumb it is about 40% to 45%.

The Traveler

[Aesa]

If it's a direct unapportioned (spelling?) tax it shouldn't be there because that is against free-market principles.

It's lawful, but it's unconstitutional also.

And if you want to keep taxes the same, then you're going to see them go up like crazy in the next 5 years (and onward) to serve the debt levels.

[TheyCallMeMom]

right..

before any tax system changes can be made, the government will have to reconfigure how it is currently set up

we have way too many government programs.. and its paid for by an unfair tax system..

[Guest]

I am for a consumption tax....

BUT... FOR RIGHT NOW. And this is very very easy to implement with very minimal change to current tax laws:

ELIMINATE WITHHOLDING TAX. EVERYBODY HAS TO WRITE A CHECK TO PAY THEIR TAXES. THAT'S RIGHT... JUST LIKE YOUR ELECTRICITY BILL.

You get your paycheck at gross (or less State Tax if you have one). You write a check for Fed Tax, SS and Medicare every month, due on the 15th of every month. You miss a payment, the government can sieze your assets.

You won't believe how many people I have talked to where I asked them, how much do you pay in taxes? And they answer, "I don't pay taxes at all... instead, I get $2,000 refund which I spent on a cruise. Isn't that great?"

Sigh.

In any case, you shouldn't have a tax code wherein over 50% of the voting population pays the least amount or none at all (that's how it will be after the "Bush Tax Cuts" are lifted and "Obama's 95% tax cuts" are implemented). Because then, you can always vote yourself a "raise" by eliminating your tax and increasing somebody else's...

[a-train]

Abolish the IRS, the SSA, Medicare, Medicaid, and replace them all with NOTHING. Let the individual have the fruits of his/her own labor and invest for their own retirement and pay for their own medical services as they see fit.

-a-train

[MarginOfError]

15% or 20%?? Everyone or start at $20,000 per year income?

I assume your percentages include social security and medicaid. My income tax for 2008 was just under 4.2%, but with social security and medicaid was around 16%.

My preferred method would be to do something greatly simplified, but still a progressive tax. It would go something like this (and I'm not firm on these percentages, this is just kind of out of my ear), and these percentages include social security, medicaid, and income tax

below the $20,000 -- 8% and income tax exempt

$20,000 - $50,000 -- 10%

$50,000 - $75,000 -- 12%

$75,000 - $100,000 -- 14%

$100,000 - $250,000 -- 16%

$250,000 - $1,000,000 -- 18%

$1,000,000 + -- 20%

No deductions, and no adjustments. All taxation would be done through withholding, freeing up a huge portion of the IRS to monitor government use of funds as opposed to hand holding citizen tax payers.

[TheyCallMeMom]

we need to tax consumer spending, not income,

[Guest]

I assume your percentages include social security and medicaid. My income tax for 2008 was just under 4.2%, but with social security and medicaid was around 16%.

My preferred method would be to do something greatly simplified, but still a progressive tax. It would go something like this (and I'm not firm on these percentages, this is just kind of out of my ear), and these percentages include social security, medicaid, and income tax

below the $20,000 -- 8% and income tax exempt

$20,000 - $50,000 -- 10%

$50,000 - $75,000 -- 12%

$75,000 - $100,000 -- 14%

$100,000 - $250,000 -- 16%

$250,000 - $1,000,000 -- 18%

$1,000,000 + -- 20%

No deductions, and no adjustments. All taxation would be done through withholding, freeing up a huge portion of the IRS to monitor government use of funds as opposed to hand holding citizen tax payers.

You will never be able to improve on your current tax code unless you get rid of progressive tax. Yes, GET RID OF IT. Because, any form of progressive tax is a vote-buying tool. Look back all the way to the invention of progressive tax and see how many campaigns have been raised on "class warfare" to pit a class against another because they have a bigger voting bloc!

You can't seriously think of improving on the current tax code without eliminating progressive tax. Because, you fix it now, a few elections later, it will all get spaghetti again after politicians start promising "this and that tax" to a certain majority of that progression!

[MarginOfError]

You will never be able to improve on your current tax code unless you get rid of progressive tax. Yes, GET RID OF IT. Because, any form of progressive tax is a vote-buying tool. Look back all the way to the invention of progressive tax and see how many campaigns have been raised on "class warfare" to pit a class against another because they have a bigger voting bloc!

You can't seriously think of improving on the current tax code without eliminating progressive tax. Because, you fix it now, a few elections later, it will all get spaghetti again after politicians start promising "this and that tax" to a certain majority of that progression!

thanks for your opinion, but I whole heartedly disagree with you. Eliminating the progressive tax seems more like a way to aggravate class warfare. The bigger issue with our tax code is that it is the wealthy that are able to circumvent the tax structure the most efficiently because they can hire people to find all the loopholes for them.

Take me, for instance, I deducted over 66% of my gross income from my taxable income, and then the IRS identified something I missed and knocked down my liability even more. And I'm not even an accountant.

And if you really think you have a progressive tax now, you're nuts. You do realize that the people in Congress are making enough money that they'd get hit hard by any progressive tax. Kind of explains why they like to pass the crazy tax codes..it allows them to work their way out of paying higher taxes.

Edited April 16, 2009 by MarginOfError

[Guest]

thanks for your opinion, but I whole heartedly disagree with you. Eliminating the flat tax seems more like a way to aggravate class warfare. The bigger issue with our tax code is that it is the wealthy that are able to circumvent the tax structure the most efficiently because they can hire people to find all the loopholes for them.

Take me, for instance, I deducted over 66% of my gross income from my taxable income, and then the IRS identified something I missed and knocked down my liability even more. And I'm not even an accountant.

And if you really think you have a progressive tax now, you're nuts. You do realize that the people in Congress are making enough money that they'd get hit hard by any progressive tax. Kind of explains why they like to pass the crazy tax codes..it allows them to work their way out of paying higher taxes.

You misunderstood my post, I think. I stated to eliminate PROGRESSIVE tax not eliminate flat tax.

And the theory that only rich people find ways to circumvent the tax structure is false... and this has nothing to do with taxes being progressive or flat.

[bytor2112]

Unless I am mistaken.....MOE is suggesting a bracketed flat tax? Which I would be ok with.

[hordak]

I use to like flat tax but i think it would disperportanently affect the poor working class.

Taking 10% from a family of 4 making 6 figures means no vacation to Hawaii

Taking 10% from a family of 4 making $20,000 could mean no health care.

I think the point of consumption could be good for the environment. People would be more likely to stick with used products/ hold onto there stuff longer to circumvent the tax, however this could be bad for the employees who make/ sell the new stuff that is not as in demand.

[bytor2112]

I use to like flat tax but i think it would disperportanently affect the poor working class.

Taking 10% from a family of 4 making 6 figures means no vacation to Hawaii

Taking 10% from a family of 4 making $20,000 could mean no health care.

I think the point of consumption could be good for the environment. People would be more likely to stick with used products/ hold onto there stuff longer to circumvent the tax, however this could be bad for the employees who make/ sell the new stuff that is not as in demand.

Also the people who don't report income.......drug dealers, etc.

[miztrniceguy]

I have been an advocate of consumption tax for many years instead of income tax. Tax only what is spent, not what is earned.

[Palerider]

Flat Tax....the Steve Forbes plan....

[Just_A_Guy]

My preferred method would be to do something greatly simplified, but still a progressive tax. It would go something like this (and I'm not firm on these percentages, this is just kind of out of my ear), and these percentages include social security, medicaid, and income tax

below the $20,000 -- 8% and income tax exempt

$20,000 - $50,000 -- 10%

$50,000 - $75,000 -- 12%

$75,000 - $100,000 -- 14%

$100,000 - $250,000 -- 16%

$250,000 - $1,000,000 -- 18%

$1,000,000 + -- 20%

No deductions, and no adjustments. All taxation would be done through withholding, freeing up a huge portion of the IRS to monitor government use of funds as opposed to hand holding citizen tax payers.

I like this, except that

a) I'd use a marginal-rate structure (so, if you make $100,000 under MOE's plan, you pay 8% on the first $20,000, 10% on the next $30,000, 12% on the next $25,000, and 14% on the last $25,000--that's how our current system does it);

b) I'd specify that this is on net income (for the self-employed who have business expenses);

c) Like MOE, I'd be flexible as to the actual percentages as long as the top marginal rate weren't more than about 30%;

d) I'd allow deductions for children and tax-deferred retirement savings.

[deseretgov]

Flat Tax.

Isn't tithing a great example.

[MarginOfError]

You misunderstood my post, I think. I stated to eliminate PROGRESSIVE tax not eliminate flat tax.

And the theory that only rich people find ways to circumvent the tax structure is false... and this has nothing to do with taxes being progressive or flat.

You're right, I just completely spaced on wording. Thanks for catching the error and I've edited my post to correctly state what I meant.

this is one of those classic cases where I should scream "listen to what I mean not what I say!" :)

[MarginOfError]

Abolish the IRS, the SSA, Medicare, Medicaid, and replace them all with NOTHING. Let the individual have the fruits of his/her own labor and invest for their own retirement and pay for their own medical services as they see fit.

-a-train

I can see where you get the idea to abolish the SSA, Medicare and Medicaid, but abolishing the IRS seems to imply that you want to abolish taxation entirely. If you actually believe that, then I'll have to call you a fool. For starters, without any taxation, we would be entirely open to foreign invasion as we would have no funds to maintain a well-trained military. Even a moderately sized militia from France armed with rolling pins and bikinis would be able to overrun the nation.

On the bright side, the progress of the invasion would be exceptionally slow as the roads and bridges would be crumbling and no one would be interested in building new ones. Oh, except of course private enterprises willing to charge you every time you went onto their road or bridge.

No taxation would eventually create a far more enslaved society than the current system.