GOP scam Tax plan cuts for rich and hurts everyone else

It is by definition of a regressive tax. It's regressive because the lower incomes will be marginalized more by the tax rate than higher incomes.

http://www.investopedia.com/terms/r/regressivetax.asp

 

Can you point me to the post where you criticize the Eisenhower code for its' 50% exclusion allowance?

 

Yes, the tax rates were up to 91%, but you also had much lower standard deduction and personal exemptions, which were not always adjusted for inflation, per the Internal Revenue Code of 1954. You also did not have the AMT, which came about in 1968 because the upper 1% were paying far less taxes than that of the remaining 99%.

There are some comparisons, but our federal individual tax rate is now the second lowest amongst the industrialized nations, so this comparison is not as far as you woulud think.. .

 

And the Internal Revenue Code of 1954 has to do with what exactly?

 

Your use of the word marginalize is senseless. And it does not appear in the definition you provide.

Let's look at your link: Definition of 'Regressive Tax'

A tax that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder.

A flat tax takes the SAME percentage from low income people and high income people. NOT a larger percentage as the definitionn clearly states.

The example of the cigarette tax that I gave does result in a higher percentage.

 

IN order for poor people to pay 0%, the consumption tax would have t od more than pay a rebate or prebate, it would have to exempt certain food such as milk, meat, eggs, and bread from the consumption tax. If that happens, the rate will no longer be 17% as it is proposed, but in upwards of 50% if you want to make the bill revenue neutral.

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What part that the lower incomes would be hit harder do you not understand? That is what marginalized means in my post.

Sheesh.

 

My apology. I erred in assuming you were one of the posters advocating for a return to that code.

 

Adjusted for inflation, federal government collects far more money now than it ever has. Which I think is a more valid comparison that looking at marginal rates.

 

No. There are no exemptions required. And FairTax does not propose 17%. Furthermore.......if your claim is that the rate would need to nearly triple since the inception of the plan, then perhaps we should be talking about the increase in spending that is cause of that.

Don't Sheesh me. Answer my argument. I took the definition YOU provided. And showed how a flat tax is not regressive. Your job is to counter that with a demonstration that a flat tax results in the lower income person paying a higher percent.. If everyone is paying the same percent, that won't happen.

 

The lower income groups do not get hit harder than the higher income groups in a flat tax plan. All get hit the same. Which is why it is not a regressive tax.

Compared to the current code, yes, they would get hit harder. It's why I don't support a straight flat tax. I am good with some level of progressivity.

But the issue at hand is your erroneous declaration that a flat tax is regressive. It is not.

 

It is still not valid in some respects to today and least of which the dollar amount of what was collected. The economy was smaller than today and that is why there was less collected, assuming everything else remains equal.

 

I agree re complexity of the code. And that the Camp plan leans more toward milque-toast than a transformational reform.

But the crux of the problem is too much progressivity. Bottom line is that the federal government is overly dependent on a handful of uber wealthy folks. The incomes of the vast majority of Americans have little to no effect on the federal revenue stream. But, as we saw in 08, a decline in the stock market reduces the incomes of that uber wealthy group to such an extent that federal revenues shrink dramatically. So politicians have an incentive to not only keep that group wealthy, but to also have policies that keep that group consistently wealthy. So if the market drops--or the economy slows---, they provide bailouts or other special programs that keep the revenue stream alive.

We would be better off with fairer/flatter. (AND a signficant drop in federal spending, but that is another thread.) Which is why I think the Camp plan, while not an ideal reform, is an improvement.

But the bottom line is that federal government is going to be more concerned about the folks that butter its' bread than they do about the majority that does not. They will placate that majority via handouts at a level to keep them from overt revolt. But that is all. There is no reason to do more.

 

You have demonstrated how it might benefit the wealthy ( not exclusively ).

But not how it would have hurt anyone else

 

Fairtax proposals for the rate have ranged from 17% or 23%. In fact, the general consensus is 23% for the Fairtax. Additionally, the plan would call for a rebate or a prebate. The rebate could be done once a month or at the end of the year.

You only looked at the first sentence and ignored that the lower incomes would be hit harder. The reason why lower incomes would be hit harder is because they would have to choose between paying taxes or paying for a necessity.

 

If you want to look at revenues as a percent of GDP......fine. The CBO reports that the current revenue projections have us at the historical average by the end of next year. So that still does not justify your claim that federal government is collecting less.

The problem with using percent of GDP instead of comparing via inflation is that federal debt contributes to the growth of the economy. And that new money is fueling the wealth disparity. And that small group of wealthy is providng federal government.

I don't think this is healthy. I think that evaluation in terms of inflation is better. It forces us to confront the same reality that confronts our middle and lower income groups. If federal government is not allowed to grow faster than inflation, and federal government is required to collect taxes on a fairer/flatter basis......then federal government will actually have incentive to keep everyone on the same growth pace. Instead of needing to be concerned only with helping the rich get richer in order to keep the federal revenue stream alive and in pace with debt-driven economic growth that funnels new money to a small group of uber wealthy.

 

I am familiar with FairTax.

You are ignoring the specifc requirement that a regressive tax results in a higher percent paid by the lower income groups. AGAIN......a flat tax imposes THE SAME rate on all groups. That is not regressive.

"Hit harder", in the context of whether a tax is regressive, means the lower income groups pay a higher percentage of their income in taxes. Period.

It appears that you may be conflating the issue by looking instead at net cash remaining after taxes. You can do that if you want. But you cannot legitimately claim that having less in your pocket after paying taxes means that the tax is regressive. Because it is not.

 

This is pretty deceptive.

I think that the capital gains tax should be raised and corporate tax lowered to about the same, and nobody should be exempted. Fair is fair.

 

Why are Democrats/liberals all about trying to hurt the rich? I believe that even if the rich GAVE ALL THEIR MONEY to the poor and lower-middle class, the Democrats would STILL not be happy. Without a bogeyman they create.....they don't know how to participate in politics. Right now, their bogeyman is the Koch Brothers. They never mention, however, that the Koch Brothers give MILLIONS each year to good and philanthropic causes. They won't tell you that. Dems were okay when they were the main ones participating in the c4's and c3's.....but now that conservatives have decided to do so also......then the Dems now want to change the rules. Typical.

 

It is based on rational choice theory which poor are hit harder and why it is a regressive tax. Flat taxes are regressive. How regressive is the question. that is why with all flat taxes, they have extremely high standard deductions and/or personal exemptions to ease said burden.

 

"Regressive" or "progressive" are only important if you think redistribution of income at gunpoint is a valid function of government.

 

Then you have not met the mafia, have you?

And no, I am not talking about the IRS here

 

So if I pay more in taxes then you is that regressive or progressive? Oh and can I call you a moocher if I do?

 

NO, NO, NO. A thousand times NO.

A regressive tax is a tax that results in a higher percent of income paid.

A flat tax is NOT regressive. And excise tax usually is. A flat tax with the same standard deduction applied to everyone is progressive.

Once again, you are using the wrong definition of 'hit harder'. If I earn $100k and am taxed 10%, and you earn 25k and are taxed at 10% WE ARE BOTH HIT THE SAME.

"HOW" regressive refers to the difference in the effective rates of our taxation. In the above it is THE SAME, 10%, which is why the flat tax is not regressive. In an excise tax, let's say the tax on smokes is 50 cents a pack. We each smoke a pack a day. So we each pay $182.50 a year in cigarette tax. That is a greater percent of your income at 25k, and a lesser percent of my income of 100k. So it is regressive.

Yes, a standard deduction makes the flat tax progressive. But it does not reduce regressivity because there is not regressivity to a flat tax to begin with.

 

Yep. They don't show you the list of unions that EACH give far more to the Dems than the Koch brothers give to the GOP. They also don't talk about the Koch brothers' libertarianism.....prefer instead that folks think they are social authoritarian control freaks.

The libs/Dems are often obsessed with outcomes rather than with equal opportunity. You can see that in Alyssa's erroneous argument about regressive taxes. But we could give every person in this country the exact same net worth today, and a year from now we will have folks that have increased that worth, and folks that have squandered it to nothing. Outcome cannot be engineered unless you take complete control over an individual. Yet they call the GOP the control freaks......

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I hear ya

But again......I don't have a problem with some level of progressivity in our tax code. I do have a problem with the current way-out-of-whack level of it, though.

 

What do you mean by 'pay more in taxes'? If you pay a greater percent, but your income is lower......then you are experiencing regressivity. If you pay a lower percent, but your income is higher, then you are experiencing progressivity.