The Deficit Discussion Part 1...Flat Tax
Normally, politics is on my avoid list. So today's post will avoid it. However, the deficit itself is a totally non-party issue. With the Occupy groups and the Tea Partiers all yelling their own thoughts about everything from Wall Street to the Gold standard, I feel it is finally time to give my uninformed opinion. Hey, they all have uninformed opinions, so why shouldn't I?
Opinion number one. Flat Tax. A while back a man named Steve Forbes pushed for a flat tax instead of the weird, biased tax code we currently have. Yes, this would put a few dozen accountants out of work, but for the good of everyone involved, let's flatten it out. Herman Cain feels 9-9-9 is the solution...well, that is just stupid. 9% Income, 9% Corporate, and 9% Federal Sales Tax is all well and good when it comes to middle and upper class, but the poor would be paying 18% plus Social Security, Medicare, and State Income and Sales Tax. For a group of people that can barely pay rent and utilities, that adds up fast. Even the middle class would take monsterous hits when they wanted to buy that $200,000 home and had to pay an additional $18,000 in Federal Sales Tax. There is only one advantage I see to a Federal Sales Tax...people would start saving their money again. At least the people who can afford it will.
Rick Perry on the other hand is looking at a 20/20 flat tax. 20% Personal Income and 20% Corporate. Here we go again...Small business would take a hit first, then the low income people would still take a hit. Business itself would have an elevated cost across the board at 20%. They will have it at 9% as well, but not like 20%. With the way our economy is structured with manufacturing selling to distribution selling to wholesale selling to small business retail, that 20% can add up quickly. Of course the Internet is mitigating some of that by having some manufactures selling directly and reaping the rewards, but again...small business will not be able to compete with that and will either shut down or suffer.
So is flat tax the answer. Not really. This is why the flat tax has never been implemented to begin with. However, a tiered (or elevated) flat tax may end up working...and keep those accountants in business. Let's drop the write-offs. Let's drop capital gains, let's drop the deductions (why reward Octomom?), let's not seperate medicare, and Social Security, and let's start using a tiered flat tax. It works like this...
So how much is this in revenue for the government? Over $1.2 Trillion. The budgeted federal revenue from income taxes is expected to be $1.145 Trillion.
Source:http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/tables.pdf
Corporate Taxes? a solid 5% across the board should do it.
No Federal Sales Tax.
Lastly, Social Security and Medicare. Stop the cutoff. If you make more than $110,100 in a single year, you have paid the limit of your Social Security. But why? Just keep paying the percentage. The Federal Government budget is $761 Billion paid into Social Security for 2012. So that 13 Million people that stop paying into the Social Security System, would continue paying into the system. I am thinking that may just save the system as a whole.
This brings me to my point (as I almost always have one). The flat tax is an idea that has been brought up multiple times and has fallen flat. The poverty line is just too high to pull something like that off. But having big jumps in tax rate to income doesn't really make sense either. So think about how this will affect the 46.2 Million people in poverty that are still citizens in the US.
Opinion number one. Flat Tax. A while back a man named Steve Forbes pushed for a flat tax instead of the weird, biased tax code we currently have. Yes, this would put a few dozen accountants out of work, but for the good of everyone involved, let's flatten it out. Herman Cain feels 9-9-9 is the solution...well, that is just stupid. 9% Income, 9% Corporate, and 9% Federal Sales Tax is all well and good when it comes to middle and upper class, but the poor would be paying 18% plus Social Security, Medicare, and State Income and Sales Tax. For a group of people that can barely pay rent and utilities, that adds up fast. Even the middle class would take monsterous hits when they wanted to buy that $200,000 home and had to pay an additional $18,000 in Federal Sales Tax. There is only one advantage I see to a Federal Sales Tax...people would start saving their money again. At least the people who can afford it will.
Rick Perry on the other hand is looking at a 20/20 flat tax. 20% Personal Income and 20% Corporate. Here we go again...Small business would take a hit first, then the low income people would still take a hit. Business itself would have an elevated cost across the board at 20%. They will have it at 9% as well, but not like 20%. With the way our economy is structured with manufacturing selling to distribution selling to wholesale selling to small business retail, that 20% can add up quickly. Of course the Internet is mitigating some of that by having some manufactures selling directly and reaping the rewards, but again...small business will not be able to compete with that and will either shut down or suffer.
So is flat tax the answer. Not really. This is why the flat tax has never been implemented to begin with. However, a tiered (or elevated) flat tax may end up working...and keep those accountants in business. Let's drop the write-offs. Let's drop capital gains, let's drop the deductions (why reward Octomom?), let's not seperate medicare, and Social Security, and let's start using a tiered flat tax. It works like this...
- If you make less than $15,000 per calendar year, you pay nothing. Anyone who makes so little to try to survive from shouldn't have to deal with taxes. (64.296 Million People of the US) $0 Federal Revenue.
- For people who make between $15,000.01 and $25,000, your tax will be a flat tax of 5%.(37.251 Million People of the US) $36.4 Billion Federal Revenue
- For people who make between $25,000.01 and $35,000, your flat tax is 8%. (27.788 Million People of the US) $65.5 Billion Federal Revenue
- For people between $35,000.01 and $50,000, your flat tax is 11%. (29.801 Million People of the US) $136.2 Billion Federal Revenue
- For people between $50,000.01 and $75,000, your flat tax is 14%.(27.191 Million People of the US) $227.9 Billion Federal Revenue
- For people between $75,000.01 and $100,000, your flat tax is 17%.(11.193 Million People of the US) $161.3 Billion Federal Revenue
- For people between $100,000.01 and $250,000, your flat tax is 20%. (10.8 Million People of the US) $324 Billion Federal Revenue (based on average income of $150,000)
- For people making over $250,000.01, your flat tax is 23%.(3.1 Million People of the US) $249 Billion Federal Revenue (based on average income of $350,000)
So how much is this in revenue for the government? Over $1.2 Trillion. The budgeted federal revenue from income taxes is expected to be $1.145 Trillion.
Source:http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/tables.pdf
Corporate Taxes? a solid 5% across the board should do it.
No Federal Sales Tax.
Lastly, Social Security and Medicare. Stop the cutoff. If you make more than $110,100 in a single year, you have paid the limit of your Social Security. But why? Just keep paying the percentage. The Federal Government budget is $761 Billion paid into Social Security for 2012. So that 13 Million people that stop paying into the Social Security System, would continue paying into the system. I am thinking that may just save the system as a whole.
This brings me to my point (as I almost always have one). The flat tax is an idea that has been brought up multiple times and has fallen flat. The poverty line is just too high to pull something like that off. But having big jumps in tax rate to income doesn't really make sense either. So think about how this will affect the 46.2 Million people in poverty that are still citizens in the US.
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