There’s a fundamental issue I keep running into when talking with pro-flat taxers. It seems most people understand that “a flat tax with no deductions” is the most fair to everyone. The problem is that most pro-flat-taxers are referring to their own (or a friend’s) “flat tax” plan and know very little (if anything) about the actual Flat Tax Plan (S173) that is already in front of Congress.
The biggest problem is that when one person refers to “a flat tax” and another person refers to “a flat tax”, the two people *think* they’re talking about the same plan, when in fact they’re not. One person is often talking about their adaptation of what they think the flat tax is (or should be), while the other may be talking about a completely unrelated and different version of a flat tax.
Unless both people are on the same page, any references made are irrelevant to each other. So this post is to help put everyone on the same page. You can talk about YOUR VERSION of a flat tax all you want, but understand that unless you make that distinction, anyone who is even partially informed will think you’re referring to the ONE flat tax that is currently in front of Congress.
The ONLY flat tax that truly matters is the ONE flat tax in front of Congress
That flat tax (S173) calls for a 17% income tax. BUT!! What the drafters of the flat tax fail to tell you is that the flat tax rate DOES NOT INCLUDE PAYROLL TAXES (that’s another 7.65%; or 15.3% if you’re Self-Employed). That means the Gov’t will TAKE 24.65% of YOUR paycheck (32.3% if you’re Self-Employed). That is an ASTOUNDING 1/4 to 1/3 of YOUR MONEY!!!
Congress should offer 15% flat tax across the board — for everyone, no exceptions. Abolish deductions & let the 47% pay their fair share.
— PolitixGal (@PolitixGal) November 17, 2012
There are a few problems with what PolitixGal said:
- The Flat Tax (S173) is actually 17%.
- The Flat Tax (S173) DOES NOT include SS/MC (FICA) Taxes. So, both you and your employer are still stuck paying Payroll Taxes.
- The Flat Tax (S173) already has numerous deductions built in; such as the “BASIC STANDARD DEDUCTION” which treats people differently and includes a hefty Marriage Penalty.
There is no excuse for not going with a flat tax rate across the board with no deductions… oh yeah…. it takes the corruption out too!
— Dagwood Bumstead (@Daggy1) June 8, 2013
Oh, but there are plenty of
excuses reasons, Daggy:
- The Flat Tax (S173) does NOTHING to remove the Corruption. It is still just an income tax. It leaves the corrupt IRS in place, does not Repeal the 16th Amendment, and does nothing to ensure Politicians, illegals, or the underground economy pay tax.
- Our Current Income Tax system started flat (See Revenue Act of 1861).
- Our Current Income Tax system was “re-flattened” by Reagan in 1986.
- The Flat Tax (S173) already includes loopholes AND it does nothing to prevent future loopholes.
- The Flat Tax (S173) treats the rich as if they are poor and the poor as if they are rich.
- The Flat Tax (S173) forces Employers to hide their portion of Payroll Taxes by reducing Employee Pay.
A Little about the FairTax
- The FairTax is a fresh new idea that has never been used in any other Country. It was designed, researched, and developed by U.S. Economists, to work specifically with the U.S. Economy.
- The FairTax is a single-rate (“flat”) tax on the Consumption of NEW goods/services. It DOES NOT TAX USED GOODS.
- The FairTax returns (on average) 22.65% in taxes back to you on top of providing you with additional money to ensure you do not pay tax on your necessities.
- The FairTax rate of 23% INCLUDES payroll taxes and there are NO exemptions, NO exceptions.
- The FairTax Prebate ensures that NO US Citizen pay taxes on their necessities.
- The FairTax will not only ensure the 47% pay their “fair share”, it will also ensure POLITICIANS pay their fair share.
- The FairTax Prebate ensures ALL products remain taxable; removing the ability for politicians to open future loopholes.
- The FairTax taxes everyone equally at the register; while ensuring nobody pay taxes below the poverty level.
- The FairTax allows the tax burden to be placed where it always ends up anyways: On the consumer.
There is more about the FairTax that Flat Taxers would love, they just need to understand. Here are some links to help:
fairtax.org/flatfaircompare – Comparison Chart of Flat Tax & FairTax