Comment Re: What could possibly go wrong? (Score 3, Insightful) 358
That's a VAT or consumption tax.
A flat tax is just that. Same tax rate for everyone. Devil is in the details, most flat tax supporting politicians want to exclude capital gains and solely tax wages. That's essentially not going to work. Total wages were $6,009,831,055,912.11. FY2013 budget is $3.803 trillion. You'd need a 63% tax rate on all wages, with no exceptions, exemptions, EIC or deductions.
Current tax system is partly as FUBAR as it is because folks want to gouge the rich, and the rich don't want to be gouged. So you end up with both. If you're an honest self-employed contractor making between $35k-70k, your tax rate is about 44% in my state. Half of social security taxes are paid by the business, unless you're self-employed. The rich didn't like their 12.4% + 2.9% haircut on something they'll never use, so the SS and Medicare taxes cap out at $113,700.
If everyone paid their share without trying to gouge anyone else, it wouldn't be a nasty mess. But good luck trying to teach economics and tax codes to Occupy Wall Street crowd, and surprisingly some of the dumber or more short term focused rich folks.
A flat tax is just that. Same tax rate for everyone. Devil is in the details, most flat tax supporting politicians want to exclude capital gains and solely tax wages. That's essentially not going to work. Total wages were $6,009,831,055,912.11. FY2013 budget is $3.803 trillion. You'd need a 63% tax rate on all wages, with no exceptions, exemptions, EIC or deductions.
Current tax system is partly as FUBAR as it is because folks want to gouge the rich, and the rich don't want to be gouged. So you end up with both. If you're an honest self-employed contractor making between $35k-70k, your tax rate is about 44% in my state. Half of social security taxes are paid by the business, unless you're self-employed. The rich didn't like their 12.4% + 2.9% haircut on something they'll never use, so the SS and Medicare taxes cap out at $113,700.
If everyone paid their share without trying to gouge anyone else, it wouldn't be a nasty mess. But good luck trying to teach economics and tax codes to Occupy Wall Street crowd, and surprisingly some of the dumber or more short term focused rich folks.