[southernmissouri2007]

When the Rich/Wealthy pay lower tax rates or if they paid a flat tax would the Rich still pay more money in taxes when the rich still pay more money in taxes since there will be more tax revenue because the economy will grow also 10% of a million dollars is more then 10% of hundred dollars and the Rich will have less reason to try to find tax loopholes and or tax shelters in other words the flat tax is progressive ?



A Brief Guide to the Flat TaxBy Daniel Mitchell, Ph.D.


July 7, 2005



Frequently Asked Questions



Q: Should the rich pay more?



A: Under a flat tax, the rich do pay more than the poor. A wealthy taxpayer with 100 times more taxable income than his neighbor will pay 100 times more in taxes. However, a flat tax does not impose special penalties on those who contribute the most to the nation's prosperity by subjecting them to punitive and discriminatory tax rates. For those who think the "rich" should pay a higher percentage of their income, the generous family allowance effectively creates a modest level of "progressivity." For instance, a family with an annual income of $20,000 faces a tax rate of zero. Wealthy taxpayers also benefit from the family allowance, but the effective tax rate on an income of $1 million will be only a tiny fraction below the statutory tax rate.

This approach is much fairer than the current system, which penalizes investors, entrepreneurs, and others who create wealth for the American economy while simultaneously providing myriad deductions, credits, exemptions, and other preferences that are much more likely to be exploited by upper-income taxpayers. The flat tax eliminates these special-interest loopholes, ensuring that the rich play by the same rules as other taxpayers.



http://www.heritage.org/research/report ... e-flat-tax

[Rei Murasame]

Okay:

• If they are going to eliminate loopholes, then they could just eliminate loopholes without implementing the flat tax plan. Oh, but they won't do that. The fact that the plan is presented in that sort of language at the end, reveals exactly whose minds the flat tax idea came from. The people who are using the loopholes. The tone is: "We'll close the loopholes if we can also reduce the official tax rate". Who is the "we"? You know.
  
  
• They openly admit that they have no idea what effect such a plan would have on the already-existent budget deficit situation. I guess if they spend very little time living in the country, whether any of the infrastructure or social programmes actually have funding, would be of low priority to them.

[Bubba]

... there will be more tax revenue because the economy will grow also 10% of a million dollars is more then 10% of hundred dollars

No, this is wrong: first of all it wouldn't be a tax cut if the rate stayed at 10%, furthermore 9% of $100 is a larger amount than 10% of $50, but not necessarily worth more (economic growth means inflation and generally rising wages) and finally it is nowhere near certain tax cuts lead to economic growth, even without disturbing influences like wars and eceonomic crises.

Conclusion: under a lower tax rate the rich may pay more, but this is far from certain and it's also far from certain the government's purchasing power (which is what matters when the government wants to buy tanks, roads, medicine, teachers, etc...) would increase, even if the dollar amount of tax revenue increases.

[Negotiator]

Well, why would there be a general rule about this ? This is a question of numbers and conditions.

If the flat tax is HIGHER than the maximum tax of the previous system, AND if the state provides many general services from the now massively increased tax income (such as free medical treatment, generous pensions, generous child benefits, free public transport, subsidized food prices, free residence for everyone ...), thus reducing living cost of the average person, the average person might actually benefit from flat tax and gain a higher living standard from it.

But the former is, well, unlikely. In general though flat tax is set at a lower rate than the tax of the previous system, which very likely reduces instead of improves the possibilities of the state and reduces the services the state can offer. Then the average person usually will pay twofold for flat tax (a) they will often have to pay more taxes (b) they will have more expenses.

Flat tax in itself is obviously a step backwards from progressive tax.