BREAKING: IRS Hacked!

a reply to: AugustusMasonicus

But flat taxes are extremely regressive, especially when the wealth gap is large. Making more money doesn't cause a person to consume more past a certain point. Instead they either save or reinvest the money (or give it away for political power). A flat tax today in order to get the same revenues we currently have (which still aren't high enough) would require a 40% or even 50% tax rate because so much money is tied up in the top 1%, that causes the taxes for everyone else to drastically increase.

originally posted by: Aazadan

But flat taxes are extremely regressive, especially when the wealth gap is large.

Which is why I also stipulated a relink of the dollar to commodities. A gold or commodity linked dollar would prevent the rampant printing and subsequent devaluation of currency. The wealth gap only began to dramatically widen after the country was removed from the gold standard.

Making more money doesn't cause a person to consume more past a certain point. Instead they either save or reinvest the money (or give it away for political power). A flat tax today in order to get the same revenues we currently have (which still aren't high enough) would require a 40% or even 50% tax rate because so much money is tied up in the top 1%, that causes the taxes for everyone else to drastically increase.

The fact that you think the government does not collect enough money is frightening. I want them to have less, not more, it would make them more responsible with what they took in instead of the inept, inefficient and dangerous model we have now.

Actually, I'm just curious so I looked. 200k is about where quality of life stops substantially increasing and more money goes to saving rather than spending. Thus 200k is the breakpoint where your tax rate begins to decline in a flat tax because spending stops. That happens to correspond to the 94th percentile. Here's the chart by percentile capping at 200k.

99 200000
98 200000
97 200000
96 200000
95 200000
94 200000
93 187412
92 177123
91 168227
90 160864
89 154131
88 147725
87 141453
86 136231
85 131032
84 125260
83 117025
82 106770
81 102060
80 99424
79 97298
78 95174
77 93165
76 90794
75 88317
74 85811
73 83011
72 79838
71 77160
70 75296
69 73866
68 72539
67 71150
66 69658
65 68140
64 66639
63 65192
62 63469
61 61654
60 59670
59 57213
58 54282
57 51922
56 50353
55 49225
54 48095
53 46956
52 45871
51 44769
50 43564
49 42327
48 41113
47 39953
46 39064
45 38051
44 37194
43 36253
42 35295
41 34272
40 33281
39 32188
38 30999
37 29999
36 29306
35 28560
34 27811
33 27033
32 26311
31 25505
30 24675
29 23873
28 23034
27 22013
26 20860
25 19964
24 19375
23 18768
22 18204
21 17659
20 16992
19 16358
18 15736
17 15064
16 14447
15 13732
14 12999
13 12207
12 11366
11 10482
10 9832
9 9235
8 8764
7 8226
6 7626
5 6922
4 6028
3 5184
2 4134
1 2451

That roughly represents amount spent, though once you hit the 35th percentile some amount of that is saved, after retirement it eventually gets spent, or spent as an inheritance. Since those are percentiles, from here it's easy to figure out how much is being earned since each bracket represents 1% of the 242 million taxpayers or 2,420,000 people. That results in a total taxable earnings of 15,090,038,260,000 or just under 15.01 trillion.

In order to fund the government at 4 trillion which is the current break even point it would require a flat tax of 27%. If we want to pay down some debt, say 500 billion per year (a 40 year prospect to pay it off) it requires a flat tax of 30%. That's just for the federal budget. Then you have state and local budgets which add a little more, roughly 2%. So you're up to a 32% flat tax. That's lower than the 40% I estimated but still quite high.

With the way our current tax system works a comparable tax rate (33% bracket) begins at $186,351. However our system doesn't tax all earnings at that rate, only earnings above that number, thus your $89,351 to $186,350 earnings are taxed at 28%. Thus, someone who is at $200k today is paying 10% on the first $9075 of that, 15% on the next $28,725, 25% on the next $52,450, 28% on the bulk at $97,000, and 33% on the last $11,650. That results in an overall tax of $49,198.25 or 24.599%. Add in state and local and it's closer to 26%.

So what we can conclude from this is that the 94th percentile would suffer a 23% tax increase from a flat tax jumping from an effective rate of 26% to 32% , all the way down to the person at the 10th percentile (the lowest who currently pays tax) who would see a 220% tax increase.

This is why a flat tax such as a VAT is a bad idea. Now if you're saying it should be administered as an income tax rather than a sales tax you get back into the needs for income verification and processing income and you're right back at your need for the IRS that you said you wanted to get rid of.

Your tax calculations are way off. I pay over 50% between local, state and federal and I do not personally make over 200K.

The government does not need more money, they need less.

originally posted by: AugustusMasonicus

Your tax calculations are way off. I pay over 50% between local, state and federal and I do not personally make over 200K.

The government does not need more money, they need less.

I was using federal rates there. I probably screwed up on state however I can't adjust it since I closed the spreadsheet, the specific tax rate also varies by state, I live in Ohio which has a rather high state tax and it still came up close for me me. Local it's impossible for me to calculate because it's different in every single city. However if you want to then just focus on the federal part because that's the same for all of us.

When it comes to the argument that the feds need less money here's how I see it. Our current budget isn't sufficient, things like NASA, education, disability, welfare, these are all underfunded. On top of that we have 17 trillion in debt, of which we need to get rid of roughly half (some debt is a good thing), we have infrastructure that needs rebuilt to the tune of a couple trillion dollars, and on top of all that we have $128 trillion in unfunded liabilities in the next 40 years (another 3.2 trillion/year basically). Even if we were to not increase spending, revenue still needs to double to cover these other costs.

a reply to: Aazadan

There is not enough money on the entire planet to pay that debt.

originally posted by: AugustusMasonicus
a reply to: Aazadan

There is not enough money on the entire planet to pay that debt.

There is when you're talking about a 40 year outlook, but that's not really the issue. The issue is that if we don't start dealing with these problems now they're all going to hit us at once. We need to come up with $128 trillion by 2052. We need another $10 trillion by 2020 for the debt. We need another 5 trillion right now to rebuild our roads, dam's, farms, power, and water grid. We need another 1 trillion/year to stop deficit spending and fund the things that need funded.

Any way you look at it, through a combination of cuts (though I'm not sure what we could cut) and increased revenue we need to come up with another 7 trillion per year.

None of this even touches what we need when the next banking collapse happens. A lot of money needs to be found. The only saving grace in all of this is that we can take advantage of runaway inflation to reduce the pain a bit but that is a double edged sword.

originally posted by: Aazadan

A lot of money needs to be found.

There is not enough money, period.

Even if you had a one year 100% tax rate on everyone you would not even have enough money to cover the entire budget.

originally posted by: AugustusMasonicus
There is not enough money, period.

Even if you had a one year 100% tax rate on everyone you would not even have enough money to cover the entire budget.

But we're not talking about needing to come up with the money in 1 year. We have more in the range of 40 to 50 years to do it.

a reply to: Aazadan

Holy cow dude. If there is not enough income in one year to cover the BUDGET how are you going to get more to cover the rest of the budget AND service the debt?

When you spend more than you make you either stop spending as much or print more money. As a private citizen I only get one of those options.

originally posted by: AugustusMasonicus
a reply to: Aazadan

Holy cow dude. If there is not enough income in one year to cover the BUDGET how are you going to get more to cover the rest of the budget AND service the debt?

When you spend more than you make you either stop spending as much or print more money. As a private citizen I only get one of those options.

The budget is currently 4 trillion, GDP is much higher than 4 trillion. There is plenty of money to increase revenues which can then either go to the debt or a higher budget.

originally posted by: Aazadan
The budget is currently 4 trillion, GDP is much higher than 4 trillion. There is plenty of money to increase revenues which can then either go to the debt or a higher budget.

Take it all man. We are in the problem we are now due to people like you who think confiscatory taxation is salvation.

Ever wonder why people and businesses are moving overseas?

originally posted by: Another_Nut
i havent filed taxes in over 15 years

and neither should you

this would stop all these problems in their tracks

dont file and dont worry

ez

Look out your door quick!!!!

a reply to: AugustusMasonicus

I too like a flat tax plan. Rand Paul's plan is for a flat 17% for everyone in the country. Deducted from income whether payroll, benefits or profits. Cutting all other tax code so your money only gets taxed once. You asked where the extra money will come from?

It will come from the other 47% of the population that do not pay federal taxes now. It may not be popular with the current socialization going on under Emperor Obama. But everybody will pay the same amount and it seems reasonable to me.




I forgot to mention. The 17% rate is the starting rate families will still be able to deduct dependents.

a reply to: Aazadan

You can not rely on GDP numbers anymore, even the man that came up with the concept of GDP very clear said that a country's economy can not be measure by GDP alone because is always the human factor, I see it as with corruption and sugar coated numbers, we all know that Bush during his administration was a master at numbers manipulation.

originally posted by: Greathouse
It will come from the other 47% of the population that do not pay federal taxes now. It may not be popular with the current socialization going on under Emperor Obama. But everybody will pay the same amount and it seems reasonable to me.

The 47% that don't pay collectively only own 2% of the wealth in the country. Even if they end up paying taxes, you're essentially taxing nothing and will see no measurable increase in tax revenue due to them. The only way they can contribute to the revenue issue is if the wealth gap shrinks and they in turn have something to tax.

originally posted by: AugustusMasonicus
Take it all man. We are in the problem we are now due to people like you who think confiscatory taxation is salvation.

Ever wonder why people and businesses are moving overseas?

Opposed to lowering taxes to fix a revenue problem when we're already to the left on a laffer curve?

You seem to disagree, you believe we have a spending issue and not a revenue issue. Tell me right now, by sector how much should the government be spending? For reference here's the current amounts:

Social Security - 845 billion
Healthcare - 831 billion
Defense - 596 billion
Non Defense Discretionary (education, nasa, fda, foreign aid, etc) - 583 billion (if you cut here, be specific as to which programs)
Mandatory - 420 billion
Interest - 229 billion

It looks to me like there are very few cuts possible. Cutting healthcare removes 831 billion but we get those costs right back in insurance premiums, our best option here is single payer because the world over has shown it to be the least costly method. Regardless, repealing Obamacare or single payer really only saves probably 300 billion.

Social Security, mandatory, and interest must be paid. That leaves some defense spending, and an absolute maximum discretionary of 583 billion that can be cut. So really if we cut everything to the bone that's 583+200 (defense)+300 or just over 1 trillion. Considering we need to come up with about 8 trillion a year to fix our financial status, we would still need to find another 3 trillion in tax revenues, and those of course would decline because this assumes we're cutting everything such as road maintenance, schools, medicinal research, and everything else.

a reply to: Aazadan

You're looking at it the wrong way. Millions upon millions of people in the US do not meet the minimum criteria for mandatory filing of income tax. So they don't file. This way they will also pay 17%.

And a great number of that 47% also received earned income credit which will go away under a flat tax.

originally posted by: Greathouse
a reply to: Aazadan

You're looking at it the wrong way. Millions upon millions of people in the US do not meet the minimum criteria for mandatory filing of income tax. So they don't file. This way they will also pay 17%.

And a great number of that 47% also received earned income credit which will go away under a flat tax.

If they don't meet the minimum criteria for filing that means they have very little income. They have nothing to tax.

Here, I wrote my own tax proposal on this site recently, I'm going to reference some numbers from it.
www.abovetopsecret.com...

From the 40th income percentile to the 1st they collectively own 0.8% of all wealth in the country. As a percentage of all income in the country it is similar. Lets round up however and say they have 1% of all income in the country. At a 17% tax rate that means you're only adding 0.17% to tax revenues. While I have no problem with people on the bottom paying a tax (if nothing else it's good to feel like you're contributing, and for others to feel like people aren't just leeching) there is almost no measurable benefit to revenues from doing so.

a reply to: Aazadan

they don't meet the minimum criteria for filing that means they have very little income. They have nothing t

The last time I checked I could be wrong now. But $7000 was the minimum requirement. Add on everyone receiving benefits from the government. Along with the other factors I mentioned earlier. That's a lot of money!!!

Presidential candidates since 1996 have pushed for a flat tax. They have all had very wise people advising them. I believe a flat tax will work but it is being resisted for nefarious reasons.



And I don't believe the numbers you referenced take a full accounting of the wealth. You are talking about 1% of the people in this country. You are not including the banks and corporations oil companies yada yada yada.......... Who in turn will be losing their tax shelters if IRS code is cut. ( which Rand Paul mentions in his proposal)





You obviously know more about this than I . ( completely sincere remark) Do me a favor take a look at this tax plan and let me know what you see wrong with it so that I can look into it?

The only fault I could find was the cut from paying Social Security. But then I thought why should we fund A system that soon to be dead anyway?

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