Times are tough all over

[DanaC]

*Smiles at Lookout* you do realise, of course, that from my perspective the 'flat tax' system is a weapon of class war.

The higher up the income scale you go, the less impact that 15% tax will have on you and your life. If a household has a single earner bringing in $55k a year, 15% of the $20k higher bracket income impacts on decisions about some fairly basic household needs. When someone is paying $4 million in tax as 15% of their earnings above $35k, that doesn't leave them wondering if they can afford to put both their kids through college.

[eta] there's no need for progressive taxation, or anything else, to box us into class warfare. Class conflict is an inherent part of a class based society. You guys may define class differently, but it is there. And the conflict exists when the needs of those classes collide and conflict.

[Urbane Guerrilla]

Originally Posted by DanaC

[Y]ou do realise, of course, that from my perspective the 'flat tax' system is a weapon of class war. . . Class conflict is an inherent part of a class based society. You guys may define class differently, but it is there. And the conflict exists when the needs of those classes collide and conflict.

I think the entire point of the American republic's (or republics') existence, economics-wise, is that at bottom "the needs of the classes" don't conflict. Everyone has to make a living, and that isn't open to dispute. Any differences of detail are usually differences of scale.

[HungLikeJesus]

But Dana, you can make that statement about every financial decision and purchase between those two groups.

[lookout123]

The purpose of the tax isn't to ensure everyone feels the same weight of burden, it is to raise money for necessary government functions. Penalizing someone for making more doesn't help those that make less to feel better about anything.

More importantly a system like this eliminates the millions upon millions of dollars spent every year trying to beat the tax system. (beat = not pay extra, not pay so little you get audited and penalized)

Most middle class Americans pay in the hundreds of dollars each year for an accountant to make sure they're doing things right and all they while they keep their fingers crossed hoping they don't get audited.

The very wealthy pay thousands up thousands to build tax shelters and bend the system to benefit them.

Who do you think feels the burden of that cost more sharply?

Two men go to a car dealership to replace their old vehicles. One makes $50,000/year the other makes $350,000/year. Who feels the pain more when they purchase a $30,000 car? Should we lower the price for one and raise it for the other so they feel pain equally?

Our government is not meant to make sure we all experience the same pain and joy in equal amounts.

[TheMercenary]

Originally Posted by lookout123

Two men go to a car dealership to replace their old vehicles. One makes $50,000/year the other makes $350,000/year. Who feels the pain more when they purchase a $30,000 car? Should we lower the price for one and raise it for the other so they feel pain equally?

Our government is not meant to make sure we all experience the same pain and joy in equal amounts.

More importantly the person who makes 50k a year needs to recognize that they cannot afford a 30k car and needs to get a car that costs 12k. That is what gets people in trouble. Living outside their means. They have this sense of entitlement to "stuff" ownership. The real estate mess is a large part of this as well. Now we have to pay for their bad decisions? I don't think so. Let them go bankrupt. Same for the big corps. And then you will get "what about the children!?!?!?" Sorry, ask mommy and daddy why they bought a Car/house/whatever they could not afford.

[TheMercenary]

We pay an accountant to keep us out of trouble and to find ways to pay less tax legally. That is the way it is set up. If we all pay the same rate regardless of income not only would they get more money to run the government, we could make things simple for even the common man.

[lookout123]

Keeping in mind that this will not come to be for the simple reason too many people in powerful positions see this as an loss for them.

Accountants - oops, not as much demand

IRS - oops.

Politicians - Uh oh. There goes a major table slapping terrifying subject to rally the troops with.

[TheMercenary]

Originally Posted by lookout123

Keeping in mind that this will not come to be for the simple reason too many people in powerful positions see this as an loss for them.

Accountants - oops, not as much demand

IRS - oops.

Politicians - Uh oh. There goes a major table slapping terrifying subject to rally the troops with.

Which is why none of this will ever make it past any house of Congress. So basically we are stuck with the same ole system and making any attempts to legally shelter money, get tax breaks, or do what ever you can do to avoid wealth redistribution.

[lookout123]

Originally Posted by TheMercenary

Which is why none of this will ever make it past any house of Congress. So basically we are stuck with the same ole system and making any attempts to legally shelter money, get tax breaks, or do what ever you can do to avoid wealth redistribution.

Absolutely. That is the part that upsets me. I see politicians touting more "progressive" tax systems knowing damn good and well it benefits no one but themselves. they're power brokers, nothing more nothing less.

[lookout123]

Joe Sixpack can certainly be a doofus, we agree. But having capital gains taxed at a different rate than other "income" flies directly in the face of your warning in the last paragraph here. Clearly, those with capital gains at all are a minority, and those with a substantial capital gains exposure are a fraction of a fraction of the rest of the flat tax rate paying population.

Anybody who owns a little bit of a mutual fund outside of their retirement plan has to consider the capital gains tax at some point. That is more than half the country. (not going to pull the stats) Like I said 15% is acceptable. 0% would be better simply because I see what stupid tax-avoidance decisions do to individual retirement plans. Either way as long as it is standardized and "flat" I don't really care.

What?! I agree with you that 15 vs 14 vs 16 vs some other dang number is minutiae. But do you seriously mean that one side is more important than the other? YIN vs yang? How can expenses be more important than income?

How are expenses more important than income? Simple answer - my wealthiest client is a retired letter carrier. We all know they don't make a lot of money so his secret to success wasn't earning vast amounts of money - it was wisely managing the money he did earn so that it would meet his needs now and into future generations. It isn't what you make that matters, it is what you spend.

I picked the numbers I used based on some old back of the napkin stuff I did a long time ago. If 15% is insufficient to meet our initial needs - then start with 17%. I don't care so long as it is across the board. It is up to the government to prioritize our spending needs within the very real limits of the income that is generated. I cannot spend more than I make, neither can you, neither should they.

[Aliantha]

This is a question for Dana and Sundae.

Is the social services system in the UK means tested? The reason I ask is this.

My Dad has worked his guts out all his life in average income jobs, first as an electrician and then in sales. He's now 60 and comfortably retired with a business he still draws an income from, and several investment properties which he owns outright.

ETA: It's actually two businesses if you count the mangoe farm he owns and lives on.

My fathers question recently has been that he's contributed to our social security here in Australia for about 40 years, and continues to do so, but he can't even get a pension card so he can get a half price fare on a bus. He doesn't want health care or anything like that. He really just wants someone to acknowledge that he's been a valuable member of society.

Incidentally, from my observations of my father, it's what you spend that's far more important than what you earn.

[Kitsune]

I'm not able to check through this entire thread, but has anyone mentioned Iceland's woes?

The beleaguered Icelandic stock exchange plummeted by 77 per cent yesterday, following a three-day suspension of trading.

The OMX Iceland 15 Index fell by 2,326.2 to 678.4 - the lowest since April 1996. The fall in shares contrasted sharply with a strong performance by European and Asian shares for the second consecutive day. The Icelandic index has lost 89 per cent of its value this year, making it the worst performing stock exchange globally.

That just can't be good for those people.

What it is like to live on the edge of it: here and here.

A few months ago it costed me 64 ISK to buy one dollar. Last night, it was 127 ISK for one dollar. That means all imports like gasoline, cocoa puffs, Pampers and other necessities are sky rocketing. The stock market has collapsed and it looks like I've lost a big part of my live savings. The future is unknown.

Lots of people have their loans in foreign currency, but income in Icelandic Krona. Those people are in immediate trouble since the loans are much higher now than the house or car they used it to buy - and the payments have doubled.

The world is treating us like we’re dead. Bank accounts frozen. No buziness without cash payments in advance. No currency can be bought. The stock market is closed (not that I have anything left there). Imports have stopped because of closed currency markets and diapers, flour, sugar and other neccesities are selling out in the shops.

Sad to read. Makes me feel like we're freaking out over nothing in comparison.

[barefoot serpent]

Originally Posted by Kitsune

I'm not able to check through this entire thread, but has anyone mentioned Iceland's woes?

Yes, but Iceland is in the top 5 of the Happiest Countries

Researchers at the University of Michigan said Denmark's prosperity, stability and democratic government placed the country at the top of the rankings, with Colombia, Canada, Puerto Rico and Iceland all in the top 5.

[dar512]

Originally Posted by barefoot serpent

Yes, but Iceland is in the top 5 of the Happiest Countries

Are those polls recent? I suspect that should be past tense since they got run over by the world economy.

[barefoot serpent]

Originally Posted by dar512

Are those polls recent? I suspect that should be past tense since they got run over by the world economy.

Just 3 months ago. BTW Zimbabwe was last with it's 4-digit inflation rate. It's gonna get crowded down there -- and I don't mean the Southern Hemisphere.