Talk:Flat tax/Archive 1

message: This article needs a complete rewrite.  Its:
-poorly written and structured overall
-contains seemingly dozens of redundant points; after every argument in the "for" section there is the counterargument- WHICH IS JUST REPEATED AGAIN IN THE "AGAINST" SECTION WHICH THEN INCLUDED THE COUNTERCOUNTERARGUMENT.
-included untrue generalizations such as "the main argument of flat tax proponents is..." or "proponents of the flat tax sometimes"
-Is never specific and has no outside sources.  This looks like a third grade essay.
-This is a big issue.  It can be structured better than "arguments for" and "arguments against", which is again a really juvenile way of formatting this type of information.  The topic could instead be structured into more useful categories like "flat tax collection" (about the various methods that have been proposed to collect such a tax), "effect on tax revenue", "distribution of revenue between social classes", "moral arguments", "effect on tax fraud" (discussing on how flat taxes in other countries have lead to more people reporting their income), "tax simplification", "historical economic effects" (laying facts on how flat taxes have effected national economies, etc.
-basically, this whole article is an embarassing piece of crap.  I plan on working on it tonight.
god i'm done for today.  I added a lot of good shit on different proposed flat tax implementations, but somebody needs to clean it up.
Good expansion of pro and con -- and still NPOV. 
May I suggest, though, that we list a couple of the major flat tax proposals and then separately describe what advocates say about them?  User:Ed Poor, who is unbiased as he opposes all taxes equally!
:Good idea Ed, but I don't know enough about this (I happened to read Sen. Armey's book about it, but not much more) User:Verloren
It looks like SimonP and I hit this one at the same time, but with similar outlooks on the subject.  His made it on line first while my mouse decided to freeze, so I've only done a bit of editing for now. Eclecticology
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A note to add that would be insightful (and also should be shown in the graduated tax article) would be a mention of graduated tax brackets and what percentage of governmental income typically comes from the different brackets.  In a graduated tax country, does the wealthiest tax bracket pay 50% of income tax receipts, or 10%?  This could help illustrate the arguments.  Tempshill 03:22, 30 Oct 2003 (UTC)
thread_title: Cleanup

message: "The replacement of a progressive tax system with a flat tax system reduces taxes for the richest people in society. This, of course, is a powerful argument in favor, if one happens to be, or to represent, one of the richest people in society. Since these people control many opinion-forming organisations, including newspapers, television channels, and political parties, many such organisations advocate a flat rate tax."
- This doesn't sound quite neutral to me.
LOL, i totally agree.  How is a neutrality banner added again?  I can't believe someone cared little enough about wikipedia's reputation to put that statement in the "Arguments for" section
:Just how much tax the wealthy pay is not easily determined. A flat tax appears to reduce the tax owed by the wealthy. But current income taxes
give the wealthy ample opportunities to game the system. It is quite possible that many wealthy few households would pay more under a flat tax, especially a flat tax that replaced payroll taxes and premiums for social insuraces, as well as the income tax. But at the end of the day, should we deny ourselves the benefits of a flat tax, simply because a few thousand Bill Gates and Michael Jacksons might pay less tax? Beware of public policy driven by envy.202.36.179.65 01:10, 29 April 2006 (UTC)
replies: text: Sooooo different from the Scandinavian stereotype!!
"avances economies" don't have a flat tax? What does that mean? It should be defined what "advanced" means because the word itself does not imply anything other than a notion of superiority, which is in this case very POV.
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"After World War I, a progressive income tax was introduced in the majority of countries to fund increased government spending for social programmes and, in particular, large scale wars. In more recent years it has become apparent that very high tax rates for the highest income classes (at one point, Sweden had a top rate of 90% income tax) are useless: the taxpayers, especially the rich and mobile ones, evade these taxes. Arthur Laffer therefore predicted that lowering tax rates would actually increase tax returns"
The extract above is highly biased in it's assumptions to Swedish high taxes being "useless". 
Read the article below to see how effect they've been,
http://www.monbiot.com/archives/2005/01/11/punitive-and-it-works/ A Guardian article by George Monbiot, on the Swedish tax system. It focuses on it's positive effect to the country’s economic competitiveness, while at the same time reducing inequality. The article cites sources such as the United Nations Development Programme; Human Development Report 2004, the US Department of Labor Bureau of Labor Statistics (1960-1998), The Economist, 2004. Pocket World in Figures, 2005 edition and the Institute of Social Analysis http://www.columbia.edu/~sr793/papers.html.
Thanks for the link, I have modified the text. --Rob 14:23, 21 September 2005 (UTC)
thread_title: Neutrality

message: This article (as with a number of Wiki articles) is currently somewhat US centric. Although some aspects of it are applicable to other countries, many of the examples and a number of the arguments (e.g. the claims with regards to the complexity of the US tax code, food stamps etc) are not, or at least not directly (perhaps the tax code of other countries is complex, but how complex etc)60.234.141.76 12:55, 24 August 2005 (UTC)
replies: text: I added the limited geographic scope tag. Seano1 02:19, 5 September 2005 (UTC)
thread_title: US-centric

message: One problem with this article is that it mixes many different concepts such as progressive tax, tax deductions and capital gains tax in ways that are often unspecified and confusing. Seano1 02:26, 5 September 2005 (UTC)
thread_title:  confusing at points 

message: There are quite a few spelling errors in this article - don't have time to correct them myself. Ben Finn 18:59, 8 September 2005 (UTC)
thread_title: Spelling

message: I have deleted the sentence "It was only under the influence of Karl Marx and related thinkers in the nineteenth century that progressive income tax was introduced, which was seen as more just." as this is entirely ahistorical. As noted in Income_Tax, the introduction of a progressive income tax in Britain preceded Marx's birth by 20 years, and income tax in the US didn't become significantly progressive until WWI. Ramon123 09:52, 18 September 2005 (UTC)
replies: text: It remains the case that the Communist Manifesto called for a steeply progressive income tax pending the advent of the Revolution. Such taxes became a standard part of the platforms of socialist and communist parties in multi-party democracies.202.36.179.65 00:19, 29 April 2006 (UTC)
thread_title: Curious reference to Marx

message: "Currently, the German tax system is the most complex tax system in the world." Source, please? Deltabeignet 23:12, 19 September 2005 (UTC)
replies: text: Many thanks. Deltabeignet 03:20, 5 October 2005 (UTC)
thread_title:  German tax system 

message: A good article I thought. I had a comment which I thought I would add to the text (not knowing much about wikipedia) but have found out is more appropriate here. Do with it what you will.
"Race to the bottom":
this phenomenon certainly has some force, though if the end result were complete social collapse as described above then the political incentive to lower taxes for the rich would be absent, which would nullify the argument. It is unclear how the effect would be stronger with flat taxes than with progressive taxes. For developing nations to be harmed, it must be the case that there is a stratum of people in the developed country who benefit from the flat tax, and that some people in the developing country have the option of moving into this stratum in the developed country (with greater incentive to do so), reducing the developing country's ability to tax them. But the taxable, rich, mobile people in the developing country would be in general members of the middle class if they relocated to the developed country, which is precisely the class that is unlikely to benefit from a flat tax rate.
CSMR 03:52, 20 September 2005 (UTC)
replies: text: There is nothing about the "race to the bottom" that is peculiar to the flat tax. A race to the bottom (better, tax competition across jurisdictions) will always be with us, unless nation states invoke tyrannical measures to limit the geographic mobility of persons and of financial capital.202.36.179.65 00:22, 29 April 2006 (UTC)
thread_title:  Comment on "race to the bottom" 

message: Through tax deductions, the state can stimulate investments in, e.g., renewable energies or other things it considers worthwhile. In a flat tax system without deductions, the state no longer has this option.
What a nonsense, stimulate investments in? I would say investments would then not be (or less) hindered by government interference, as the real value of those investments do then become clear for entrepreneurs. It's the opposite that is true, that taxes of any sort are a hindrance for allowing the right investments being made.   
Intangible 19:13, 14 October 2005 (UTC)
replies: text: Still the wording is akward, because in a flat tax system the state can lower the tax rate, and voila,  it would stimulate investment. Intangible 01:30, 20 October 2005 (UTC)
replies: text: I see what you mean, but I was thinking about specific investments that the state could choose to support. That is, in a flat tax system, the state cannot influence exactly what people invest in, unlike in a progressive tax system where there could be deductions for certain investments. --Rob 12:23, 20 October 2005 (UTC)

text: The flat tax of Hall and Rabushka, allows the immediate expensing of capital outlays by business, with indefinite carryforward of any resulting tax losses. Tax losses would also accrue interest at the T Bill rate. This would strongly favor investment over the current USA and Canadian regimes. Giving further tax advantages to certain types of investments, while not in the spirit of the flat tax, are nevertheless wholly feasible.202.36.179.65 00:26, 29 April 2006 (UTC)
thread_title:  Influence on particular investments 

message: This article seems to be somewhat biased in favour of flat tax. As someone who is trying to make himself more aware of both the pros AND the cons, this article strikes me as being very one-sided. The Arguments In Favour section is much longer and more detailes than the Arguments Against section, for example.
I think we need a few more people who oppose to flat tax to make a sensible contribution to the article, and I think a neutral party needs to carry out some balanced editing. It's a mess.
:I agree that the article can use more cleaning up (I did some cleaning myself a while ago - earlier the article seemed overly biased against flat tax, perhaps I went too far in the other direction). As far as I can see, the central issue with regard to flat taxes is whether it is fair to the people. This is discussed in a separate section.
:The arguments in favour section is not that much longer (8 lines on my screen), it just has more (small) subsections. Perhaps the impression of a bias can be removed by putting the "against" arguments first? Or by collecting minor arguments in favor in a single subsection? --Rob 16:31, 2 November 2005 (UTC)
thread_title:  Bias? 

message: I'm not convinced that this is the case - certainly not in every country. Take a look at the article on Lithuania, where it's clearly stated that "in a report published by the US Department of State in June 2005, the minimum wage has not changed since June 1998 and stands at $107.50 per month, well below the poverty threshold. The average wage stands at $336.8 per month". As someone who's lived in Eastern Europe, I am definitely of the opinion that things have NOT improved for the vast majority of people in these countries since the early 1990s. In fact, for some - especially the very poor and those of pensionable age, living standards have actually worsened since the fall of Communism. Obviously I'm not advocating Communism, but I am saying that the so-called "economic miracle" that flat tax has supposedly played such a huge part in is at best an illusion, at worst a right-wing fallacy. What prevails in these countries today is a growing inequality.
: Please take a look at the statistics before making such comments. The average wage for the lower deciles has steadily increased in both Estonia, Latvia and Lithuania. I do not know, where have you lived in Eastern Europe - it is pretty diverse here - but at least here in the Baltic states the things have improved quickly during last ten years. And the minimum wage in Lithuania was $185 per month in 2004 and should currently be higher, the report of US Department of State was badly outdated.
This part: "the number of new firms registering in Slovakia jumped 12%." It a lopsided argument. A year before the flat tax was introduced new firms registered were (if I remember correctly) 15%. Therefore this argument is taken out of context. Besides flat tax is not the only factor in the economy.
:I am agnostic about the truth of the heading to this thread. That said, comparing the standard of living pre and post Communism is very difficult. The problem is the enormous consumption subsidies of the old regime, and the cheating on quality. Under Communism, your job entitled you to an apartment, and the rent was nominal. Moreover, the electric bill was an utter joke. However, you often had to share that apartment with another family. Young adults and young married couples often had to live with their parents, for lack of any alternative. Divorced couples often continued to live together, for lack of alternatives. The main penalty for being fired from your job was loss of your apartment. Health care was free, but most Russian doctors had a training equivalent to a registered nurse in the USA. Moreover, the clinics in rural Russia often had no hot water and the most rudimentary equipment and supplies. There were enormous inequalities, based on cards entitling you to shop in special stores, and to enter higher quality hospitals. Under Communism, if you were entitled to something, it was cheap. But quality and availability could be seriously deficient.
:The former Soviet economies now pretty much run in the manner familiar to most readers of this entry: you get what you can pay for, and there are a range of goods and services of varying quality, with varying prices. Hence the inequality that was always there became much easier to detect and measure.202.36.179.65 00:37, 29 April 2006 (UTC)
thread_title:  Quote: "Supporters of the flat-tax counter that analysis of average income level for the poor in these countries clearly show that incomes have improved" 

message: I think this article would benifit from having a nice simple table detailing all the countries in the world (not just in the Eastern Bloc) that have a flat tax, and maybe those with proposals, listing what the rate is, an explanation of its usage etc. so that one can easily see where and how this style of taxation is being implemented.
--Sclaydonuk 14:56, 28 December 2005 (UTC)
thread_title:  Table of flat tax users 

message: Forbes' "Flat tax" plan is a consumption tax so is does not tax all income. It taxes spending only (income minus savings).
The actual rate is also 20.5% though it is advertised as 17%. It is 17% if the tax is included as part of the base. $17 of $83 is 20.5% but 17% of $100 ($83 plus $17). I made the necessary changes.
:To call a $17 tax on a pretax income of $100 a tax at the rate of 17%, is entirely appropriate.202.36.179.65 01:03, 29 April 2006 (UTC)
replies: text:  This needs some clarification. The tax is 17% OF consumption, if consumption is defined as income minus savings. "On" implies that it's 17% on top of consumption. If consumption is defined as pre-tax spending, it's 20.5% on top of consumption. --66.28.235.62 19:00, 13 December 2006 (UTC)
thread_title:  Forbes' Plan Misrepresented 

message: This entry and Talk Page, often fails to appreciate the following points in favour of the flat tax:
* A flat tax on all income exceeding some exempt amount, indeed implies a flat marginal rate (at least on all income exceeding the exempt amount", but also implies a progressive average rate of tax, calculated as (Tax owed / Pretax income);
* A flat tax can be combined with a "demogrant," resulting in a universal benefit for the poor. I have argued elsewhere for a flat tax at a rate of 28-30%, replacing the income tax on personal and corporate incomes, and the FICA tax, combined with a payment of US$50/week to every legal resident of the USA. Most ordinary households would be somewhat better off under such a tax;
*The flat tax can be designed to extinguish most opportunities for businesses to game the system;
* The main advantage of the flat tax is that it can be designed so that:
**Only businesses and the self-employed owe it. Others need never interact with the tax authorities;
**All income, especially investment income, would be taxed once, at the source. There would be no need to trace income to its ultimate recipient;
**A business tax return would be at most one page long;
**Business investment is immediately expensed. This makes life easier for business and the tax authorities, and would rightly stimulate such investment;
**Compliance would be utterly trivial for any business that keeps its books using computer software;
**The main problem for the tax authorities would be businesses understating their revenues and overstating their expenses. 
Anyone with any experience filling out tax returns for businesses or sophisticated investors, or who has ever worked for the IRS,
should appreciate how the flat tax could make life easier by many orders of magnitude. I grant it would also lead to a Great Depression
among CPAs!
Nothing is ideal; adopting the flat tax raises some hard transitional problems. Banks, insurance companies, and nonprofits pose other problems not discussed here. 202.36.179.65 01:03, 29 April 2006 (UTC)
replies: text: I took a liberty to delete the comments from the "estonian economist" (Olev Raju), who has never been taken seriously as an economist, and is representing views of a rather populistic party. Also the Gini coefficient has been reducing in Estonia for some years now. —The preceding unsigned comment was added by 80.235.57.25 (talk) 12:00, 13 January 2007 (UTC)
thread_title: Flat Tax makes life hugely simpler

message: To demonstrate its benefits, proponents of flat tax use the largely former-Communist countries of Eastern Europe as examples, several of which have adopted the system. Some of these nations, particularly the Baltic Countries, have experienced exceptional economic growth in recent years. However, there is a growing concern with the effect that flat rates of taxation are having on these countries, both socially and politically, and arguments have been made that flat tax has had less influence on economic growth than previously thought. 
FTA: It is indeed hard to sort out the rise in growth attributable to the flat tax regime from the rise due to end of Communism and the entry into the EU.
*Lithuania has experienced amongst the fastest growth in Europe, and levies a flat tax rate of 33% on its citizens. Advocates of flat tax talk of this country's declining unemployment and rising standard of living.  They also state that tax revenues have increased following the adoption of the flat tax, due to a subsequent decline in tax evasion and the Laffer curve effect. Others point out, however, that Lithuanian unemployment is falling at least partly as a result of mass emigration to Western Europe. The argument is that Lithuania's comparatively very low wages, on which an overly regressive flat tax regime is levied, combined with the possibility now to work legally in Western Europe since accession to the European Union, is forcing people to leave the country en masse.
FTA. "Forcing" is overwrought. It is fact that western European wages are much higher than Lithuanian ones. Can we blame Lithuanians for taking advantage of their country's new EU membership and seeking to work for western European wages?
 The Ministry of Labour estimated in 2004 that as many as 360,000 workers may have left the country by the end of that year, a prediction that is now thought to have been broadly accurate. The impact is already evident: in September 2004, the Lithuanian Trucking Association reported a shortage of 3,000-4,000 truck drivers. Large retail stores have also reported some difficulty in filling positions .
FTA: Joining the EU simply means that Lithuanian wages will have to rise. The Lithuanian native speakers are out there, but simply making higher pay in western Europe. They will return if and when Lithuanian rises sufficiently. That's the way the cookie crumbles.
*Again in Lithuania, it has been argued that whilst a new urban elite is certainly emerging in the country, poverty remains rife, average salaries pitifully low and that for the vast majority of people things have not markedly improved.
FTA. This is typical of the entire former Soviet block. Wages for all will rise, but only gradually over the next several decades.
 According to a report published by the US Department of State in October 2005, the minimum wage increased in 2005 to $197.50 per month (the first rise since June 1998), well below the poverty threshold. The average wage stands at $458 per month , .
FTA. A high minimum wage would only reduce the jobs on offer, and lead to more emigration. In most countries cannot afford a minimum wage above the "poverty line." It is still the case for most human beings in most economies, that they are fated to be working poor. Most of humanity is still held in thrall by the iron law of scarcity. The solution is not a rise in the minimum wage, but a negative income tax and economic growth.
*It has been said that whilst in most countries the introduction of a flat tax has coincided with strong increases in growth and tax revenue, there is no proven correlation between the two.
FTA. And no such proof is possible. Causation requires controlled experiments, impossible for national tax policy.
A study by the IMF showed for instance that sharp increases in Russian GDP growth and tax revenue around the time of the introduction of a 13% flat tax were not the result of the tax reform, but of a sharp increase in oil prices, strong real wage growth and an intensification in the prosecution of tax evasion .
FTA. Policy reality is often the very opposite of a controlled experiment.
*In Estonia, which has had a 26% flat tax rate since 1994, studies have shown that the significant increase in tax revenue experienced was caused partly by a disproportionately rising VAT revenue . Moreover, Estonia and Slovakia have high social contributions, pegged to wage levels . Both matters raise questions regarding the justice of the flat tax system, and thus its long-term viability. The Estonian economist and former chairman of his country's parliamentary budget committee stated in September 2005 that "income disparities are rising and calls for a progressive system of taxation are getting louder - this could put an end to the flat tax after the next election" .
FTA. A flat tax must be designed so as to replace the VAT and social insurance premiums, not just the income tax. Most European households
pay more in VAT and social insurance premiums than they do in income tax (this is even true in the USA: at least 40% of American households
pay more FICA and sales taxes than they owe in Federal income tax). Employers should be allowed to credit social insurance premiums against their flat tax liabilities. Otherwise, the flat tax will rightly be seen as regressive.
: I took a liberty to delete the comments from the "estonian economist" (Olev Raju), who has never been taken seriously as an economist, and is representing views of a rather populistic party. Also the Gini coefficient has been reducing in Estonia for some years now. —The preceding unsigned comment was added by 80.235.57.25 (talk) 12:00, 13 January 2007 (UTC)
thread_title: Flat tax isn't working in Eastern Europe

message: I thought others may find this article on flat taxes interesting  and may wish to incorporate some of its information into the article. Remember 16:23, 18 October 2006 (UTC)
thread_title:  New Study 

message: We may want to add something about the "Fair Flat Tax Act" in the U.S. Senate - not sure if there is a house bill. We may also want to add something about the flat tax sponsored by Michael Burgess in the House.  It has the most cosponsors of any Flat tax bill in U.S. congress. Morphh (talk) 15:51, 24 October 2006 (UTC)
thread_title: Fair Flat tax

message: I wanted to comment on the discussion of "fairness" in this article.  I find reading through this article way to many POV to what is fair or unfair.  Personally, I don't think the term should be used at all in the article as it is completely subjective.  The article should explain the aspects of the tax and not add POV labels.  For example.. the entire section on "fairness" - should be relabeled something like "Tax burden" that discusses how opponents feel that the current system is more progressive then a flat tax.  Quickly describe that a progressive tax would tax higher income earners at a higher tax rate... The proponents would add that flat tax proposals include income brackets that provide some progressive steps but also removes loopholes that are used by wealthy under the current system.  As another example - is there any value in calling the dividend tax "unfair".  Just describe the impact - a flat tax would eliminate the double taxation on income from stock dividends and realized capital gains.  This would improve economic growth.. blah blah blah. Describe the issues, show the points, but do not affix labels to what is "fair" - this is for the reader to determine.  Ok.. off my soap box.  :-)  Morphh (talk) 18:41, 11 November 2006 (UTC)
thread_title: Fairness

message: As a non-economist, I find the term very opaque.
:Made some changes to try and address this comment.  Morphh (talk) 02:30, 17 November 2006 (UTC)
thread_title:  Clarify Border Adjustable 

message: I am removing the reference to "double taxation" from this section, as that is not a generally accepted term for dividend taxes, but a pejorative rhetorical device applied to various kinds of taxes (e.g., estate tax, capital gains) by those who oppose them. Djcastel 15:08, 6 December 2006 (UTC)
replies: text: I've flagged the current text for a reference. The double taxation comment is actually more accurate than identifying flat tax with the treatment of dividend taxation. The flat tax can be applied to individuals, companies, or both; if both pay a flat tax (as in e.g. Russia), the dividends do in effect have income/profit tax applied twice (and may have a reduced rate to recognize this). I would say that unless this section is referenced in some way, it should be deleted (it is not really a flat tax issue at all).--Gregalton 17:04, 20 April 2007 (UTC)
thread_title: Dividend Tax

message: Yikes - this section is terrible.  Why are we posing questions?  "may be all well and good"... This reads like a blog entry.  I'm busy at the moment, so perhaps someone else could take a look at this.    I also wanted to state that I really dislike the format of For/Against.  It would be more encyclopedic to address each issue as a whole.  For example, a section on "Simplification" should cover pros/cons of that issue.  Morphh (talk) 15:47, 21 December 2006 (UTC)
thread_title: Ensuring Simplification

message: I've moved the below section from the article as I think it is a WP:Troll magnet, U.S. centric, and not appropriate for the Flat tax article.  It is a random group of criticisms / rebuttals with no form.  If there is a particular criticism that merits inclusion, then it should included in the body of the article.  I also don't know what Flat tax bill they're talking about here.  In the rebuttal, they make statements that contradict the most supported flat tax bill (flat tax option - Freedom Flat Tax (H.R.1040) by Michael Burgess).  Morphh  (talk) 14:34, 16 May 2007 (UTC)
thread_title: U.S. libertarian and conservative tax debate

message: Substituted at 14:47, 1 May 2016 (UTC)
thread_title: Assessment comment