Tuesday, February 3, 2009

Hey! I've got an idea.


In light of recent Obama nominations to his cabinet, it has become obvious that our present tax system is overwhelming to our government leaders. I think now would be a good time for change. Below are some considerations as put together by the Heritage Foundation:

These major features of a flat tax are:

A Single Flat Rate. All flat tax proposals have a single rate, usually less than 20 percent. The low, flat rate solves the problem of high marginal tax rates by reducing penalties against productive behavior, such as work, risk taking, and entrepreneurship.

Elimination of Special Preferences. Flat tax proposals would eliminate provisions of the tax code that bestow preferential tax treatment on certain behaviors and activities. Getting rid of deductions, credits, exemptions, and other loopholes also helps solve the problem of complexity, allowing taxpayers to file their tax returns on a postcard-sized form.

No Double Taxation of Saving and Investment. Flat tax proposals would eliminate the tax code’s bias against capital formation by ending the double taxation of income that is saved and invested. This means no death tax, no capital gains tax, no double taxation of saving, and no double tax on dividends. By taxing income only one time, a flat tax is easier to enforce and more conducive to job creation and capital formation.

Territorial Taxation. Flat tax proposals are based on the commonsense notion of “territorial taxation,” meaning that governments should tax only income that is earned inside national borders. By getting rid of “worldwide taxation,” a flat tax enables U.S. taxpayers and companies to compete on a level playing field around the world.

Family-Friendly. All flat tax proposals have one “loophole.” Households receive a generous exemp tion based on family size. For instance, a family of four would not begin to pay tax until its annual income reached more than $30,000.[6]

Consumption-Based. A tax code that does not discriminate against saving and investment is considered a consumption-based tax system, regard less of whether taxes are deducted from the paycheck or collected at the cash register. In this respect, a flat tax is a type of consumption tax. The difference between a flat tax and a national sales tax is where the tax is collected. A flat tax is levied on income—but only once and at one low rate—as it is earned. A sales tax is levied on income—but only once and at one low rate—as it is spent.


vwatt said...

Sounds good to me...but what about things like the mortgage interest deduction?? Eliminating that would wipe out another 20% in home value over the short term..but over the long term that might be good-nobody would overpay or buy big house just to get a tax deduction. And a flat tax would eliminate all the "confusion" over what some of Obama's cabinet nominees seem to think they owe or don't owe!! I give Bush credit-at least he apointed people to the cabinet who were already worth so much money that avoiding taxes wasn't worth worrying about. He put Exxon millionaires and lobbyists in charge of the Interior department, and Cheney used energy execs to write the energy bill in 2001 and then said we're not even going to tell you who they were! I guess one positive of the Daschle announcement is that if the right wing ever gets back in power, the bar has been raised higher and it will be hard for a Citibank or Merrill Lynch official to ever have enough credibility(giving/taking bonuses while receiving bailout $$)to ever get confirmed for a cabinet position!

Brodad Unkabuddy said...

Bush who? We're talking Obama now. As far as the nominees and appointees are concerned, it still looks like the Washington of old as far as I'm concerned. I think real estate over the long term is always a good investment irregardless of deductions. Buy low, sell high.

Mike West said...

Politicians like to change tax laws in order to gain leverage and favors. The only way a flat-tax would pass is if it ever made it to a ballot and I don't see that happening. (Hate to tell ya but the idea has been around for years.)

Brodad Unkabuddy said...

You're right. It has been around for years. But now is the time to do something about it. I know I'm preaching to the choir here, but we ALL need to get more involved. Contact your Congressman or Senator and make them (or their staff) take the time to explain to you why it wouldn't work. It probably takes a staff member 10-15 minutes to respond to your email. Can you imagine how much attention advocates would get if thousands would email members of Congress? Sitting on our hands and saying that's the way it's always been isn't going to accomplish anything.