I have some misgivings with a flat tax as a matter of mechanism, rather than fairness.
I advantage myself with a flat tax set specifically for the Citizen's Dividend for which I champion, of 14.5%, to replace all direct basic welfare including Social Security, EBT, housing assistance, and the like. Such a tax, being flat, takes a measure of the entire economy: it is not impacted by the shifting sands of income inequality, while yet following inflation automatically to the great benefit of never having a need for adjustment. This mechanism is of tremendous import for a Dividend off the economy.
A standard flat income tax, on the other hand, diminishes the wages of the lower workers. By diminishing the wage of the worker--of the poor and of the middle class--such a tax encourages businesses to put forth additional effort to eliminate the need for the worker. I do not propose that a business should run inefficiently to preserve the working class; but the working class, paid an income below the cost of automation or of any other new process which reduces the need for the working class, are the more efficient option until such time as such new processes become less costly to implement. It is therefore apparent that raising the necessary wages to entice the working class to employment would also hasten the transition to such new processes, while the economy suffers less from slow transitions so that it may heal from its minor scrapes and scratches rather than suffer from more major wounds in their stead.
Because there is so little gain from taxing the working class, it seems sensible that the lower income workers may experience lower taxes. To flatten our tax system, the 39.6% which the high-income earners pay would become 39.56%, while the 10% which the lowest wage workers pay would also become 39.56%; this seems nonsense to me when considering the required salary increases to retain the standard of living of the working class, and the encouragement of businesses to eliminate some set of such jobs at earliest convenience.
I have no moral issues with everyone paying their fair share; indeed, I dislike the concept of overtaxing the rich simply because the poor have a poor lot and we wish to take from those who have more than us without calling it property and theft. I simply recognize the mechanism of economy, and seek to strike a fair balance to support that mechanism.
Social Security is originally a welfare system designed such as to ensure that retirees will have some money when they retire. It is a countermeasure to economic collapse in such a way that banks are raided by depositors and forced to fold due to insolvency, and a counterpart to the FDIC which insures deposit accounts against insolvency.
I am quite aware of the economics of welfare programs, and the political methods of controlling public opinion. The terms "Social Services", "Social Security", and "Social Welfare" are used interchangeably in some contexts, particularly in America where "welfare" carries automatic negative connotations and so a number of programs have been termed "Social Services".
It is also interesting that the opposite happens in common conversation: unemployment is technically a form of insurance, although also a form of welfare; it is, thus, described as such depending on the speaker's motive. When a person becomes unemployed, he is often told, as I have been, that unemployment is "his money", because "he paid it in taxes" (this is strictly untrue: it's paid by a business based on how many of its former employees have collected unemployment historically, and thus less is paid if fewer employees go on unemployment). When unemployment is discussed publicly in an economic downturn, such as the Great Recession of 2007, it is termed as a form of welfare--going so far as to mandate an expansion of unemployment insurance as a welfare service at the Federal level, paying for it in taxpayer dollars to extend terms from 6 months to 12.
Regardless, social security is Government retirement aid in cash dollars. Social Security also provides Hospital Insurance, ostensibly, as medicare and medicaid; interestingly, if you have assets, they won't give you a fucking nickel unless you spend your own money first and firmly run out: it's means-tested insurance, which screams "welfare" so hard in your face that you must have gone deaf at your age not to hear it. By this mechanism, high-income earners--who are mandated to pay a much higher premium than low-income workers, almost twice as high--are entirely unable to collect on this "insurance" in any way.
Of course I did not count healthcare or education services in my calculations, as they aren't relevant to my larger argument. We could probably classify healthcare as welfare, at least medicaid and medicare, but that is an issue of current debate and is sensible to land on either side of that argument; education is more the shape of a social service, and is neither a necessity for life nor a thing which must be provided at any particular time to provide for life, as would be surgery or food or shelter.
And besides - its just liquor and smokes money anyway! No matter how poor they are I know they still have too much because (I imagine) they are boozing and guzzling up a storm! Bad poor person for having vices in my imagination!
On the one hand, we have people calling for taxes on liquor and cigarettes to be banned because they just, mostly, hit the poor, who smoke too much and drink too much.
On the other, we have these same people claiming that's not a thing.
Meanwhile, my city has taken a disliking to its image, and so has rescinded thousands of liquor licenses in areas it wants to "clean up", so as to encourage the poor to move somewhere else. It works.
You also seem to have a fetish for attacking a rational thought because it is distasteful, rather than accept that it is reasonable and useful.
That's a lie.
In 2013, the US Government spent $960.8 billion on retirement benefits (social security taking up the lion's share); $160.4 billion on sickness and disability (social security again); $109.7 billion on food security; $170.7 billion on income security; $9.7 billion on other family and children focused welfare; $160.9 billion on unemployment; and $46.7 billion on housing assistance (I exclude other HUD activities, such as community building). This totals $1,618.9 billion in 2013, of which $1,268.7 billion was Federal spending.
The total personal income in 2013 was $14,301 billion; income from welfare is taxed (stupid), so the base personal income comes to $11,884 billion.
What percentage is $1,618.9 of $11,884?
Stop manipulating the numbers. The per-capita income I calculate is $49k, but excludes anyone under age 18 and excludes income FROM WELFARE, because of course we tax your social security and unemployment income for some stupid reason; including taxes taken from welfare paid out, it's $59,340. Dividing out the amount the government spent on welfare, you get $6,717 per capita, or 13.7% (my number), 11.3% (including taxes taken out of welfare paid out).
By the by, I tend to ignore the taxes from welfare when doing the math because I am looking at replacing the welfare system, and that so-called income will dry up--its replacement will be untaxed, because taxing it just adds complexity and is stupid. It's like a secret tax: we could tax you 3.6% more, but instead we'll just tax welfare 10%, and notice welfare isn't working because it's too low, and increase it, and raise the amount of tax collected to justify welfare. Taxing the poor on money you're giving them that you took from the rich is just a way to pretend you're not taxing the rich--if you didn't tax the welfare payout, you could just make it that much smaller! Anything I come up with for welfare says "untaxed" stamped right on the box, because why the fuck would we give you a pile of money and then come back to you and demand you give some of it back?!
It appears that word does not mean what I think it means. How odd. Wasn't there a word of that structure that meant "to cut away"? As in surgery, when a tumor is [!excised]???
If you're just trying to assert that the tax is made progressive, sure. It's a graduated tax system in some way I guess, although the described implementation is impossible to track (how do you know how much people bought? The government doesn't know what you paid in sales tax...). If you're trying to assert that this is a good plan or of any use.... no.
Because that wont get you money; it'll just leave you untaxed.
I've done some exercises exploring high taxes on the poor. The results are astounding: jacking up taxes insanely doesn't actually hurt the poor. If you make $10,000, you pay 17.2%--10% income and 7.2% social security, a total of $1,700/year. If we jack it up to 25%, you wind up paying $2,500/year, or $67/mo more. That's annoying if you're poor, and will cause a crisis; but the fact is the poor are largely consuming cigarettes and booze at a higher cost than that, and any general instability (a flat tire, or being scheduled for fewer hours at K-Mart) will cause the same problem.
By the same token, dropping taxes off the poor doesn't help. The standard deduction of near $6000 makes the above calculation laughable: you're talking about taxes on $4000, and the actual impact is about $27/mo, with the same consideration. Likewise, the taxes you pay in the first place are about $57/mo, which would be helpful, but is going to allow you to live the same slum lifestyle with just a tiny bit less worry each day, unless you get a flat tire or need a tooth filled and have to shell out $800 and your life is destroyed.
By the time you've jacked up taxes on the poor enough for it to matter, you've exceeded the tax rate of a flat tax system. The top-tier income tax here is 39.6%; if we jacked taxes up on the poor, we could have a flat tax of 39.56%. At that rate, the resolvable crisis of being poor and losing $50 is no longer "other poor people live on like $200 less, so figure out how to survive"; it's "holy crap, half my money is gone!" and it's started to become a real social problem.
I resolved this largely by eliminating all welfare taxes by eliminating all direct welfare, accounting for 36% of Federal spending. This, plus the state welfare services conjoined to these, drops $16.2 trillion from spending and taxes; I then add on a 14.5% tax to collect $17.2 trillion. At the bottom bracket, it comes to 11% + 17.2% = 28.2%, a bigger bite; but, at $10,000/year, you'd lose $1,820/year to that. The separate 14.5% tax is divided up evenly among every natural-born American citizen resident in country (territories, military bases, etc.), proving $7,125/year in the 2013 numbers I used for income and population.
The result of this is a slightly increased tax on the rich (39.84% instead of 39.6%) and a smooth transition upwards. There's a sudden tax increase in the middle, around $120k income, because social security taxes cut off there and mine don't. Everyone under the per-capita income comes out slightly richer; everyone above it comes out slightly poorer. There's no unemployment because everyone gets a $600 check from the government (social security) every month: a family is getting $1200/mo, flat out; this number follows inflation and any increase in total income (individual and businesses), and of course the real buying power increases as the economy gains wealth.
By a number of economic factors--largely the absolute lack of risk in housing the unemployed, as they will have a precisely-known amount of money for you to align your cost structure to and build out a sizable margin when deciding how much to charge them and what kind of flat to rent them--businesses become suddenly capable of drawing a tidy profit from the poor and downtrodden, mostly by taking their money. The poor, in exchange, gain access to housing and food, although the housing is small and the food is of most basic quality, along with other basic needs. Welfare traps evaporate, as you continue to collect the only welfare in existence until you die. Economic dips and downturns are buffered against, mass unemployment doesn't create as much of a crisis, and welfare costs don't spike in these situations.
It's not as simple as people like to think. So many moving parts dependent on so many other moving parts. It took me a month to get it right.
That's not enough taxes. The government spends 13.68% of all income across the country on welfare alone.
As well, this tax excises taxes from the poor and shifts them solely on the rich. Taxing the rich as a cash cow isn't a good proposal, although a progressive tax system has many merits (the largest of which being that high taxes on the poor drive up wages, which acts as an avoidable tax on the rich by way of reducing human resources--eliminating jobs--through process management).
I have a better system already anyway, one with many features beyond "eliminate income inequality." My target was to eliminate poverty and increase economic stability, and I have succeeded in that and more. Now I just need an implementation plan, and a wielding of power to have it pushed into public policy.