[weaksauce]

That is still regressive. A truly progressive tax system would be similar to what we have now but with much fewer deductions that the affluent can use to lower their effective tax rate. (Oft cited that warren buffet has a lower effective tax rate than his secretary because of all the deductions and loopholes.)

Not to mention that there is a huge misunderstanding of how progressive tax rates work. A very affluent businessman was on tv saying they would essentially have no motivation to work if the marginal tax rate increased for him when Obama was campaigning. His idea was that the tax bracket above 250k per year would somehow affect his entire income if he earned more than that figure so he would only want to work until he had 249,999 dollars and then stop making money to avoid "making less money". Of course the marginal tax rate is the rate that your money is taxed above that threshold. In this case the tax rate would go from say 15% to 20% on the money earned after 250k. Let's say you made 260k that year. Your extra tax burden because of the marginal rate increasing would be 20-15= 5% on the 10k dollars. You don't get taxed an extra 5% on all your money made like that fellow thought.

Flat tax is regressive and sales tax is regressive.

[Frondo]

I find the whole claim that people, who are otherwise hard-working people, doing whatever it is they're doing to make a lot of money (running a business, lawyering, doctoring, whatever), are going to look at an increased tax rate and just stop doing whatever they're doing. That doesn't make sense to me, from every business owner, lawyer, and doctor I've ever known.

No one would say anything even remotely like, "well, my practice is going well, I saw 20 patients today, oh what rewarding work, but what with these taxes I'll just stay home".

Every single wealthy person I've ever known, their motivation has been the thing they do first, the money a distant second. Maybe I just know pretty decent wealthy people, I dunno.

[djrogers]

> That is still regressive

No, it's clearly not. Lemme give you some examples assuming a 15% flat tax and a 25K pre-bate (or credit, or whatever you want to call it):

1) 25k income, $0 tax - effective tax rate = 0% 2) 50k income, $3,750 tax - effective tax rate = 7.5% 3) 100k income, $11,250 tax - effective tax rate = 11.25% 4) 1M income, $146,250 tax - effective tax rate = 14.625%

It's clearly a progressive tax, as the rate goes up as income goes up. Feel free to call the above rates or the idea of a flat tax unfair, but please don't try to glance the meaning of well defined terms like 'regressive tax' to mean what you want them to.

[weaksauce]

There are two definitions of a regressive tax. the first deals strictly with the percentage rate and the second deals with the proportionality of effect toward lower class incomes. Your flat tax would be strictly progressive on the first front but regressive on the second even more regressive if tax deductions are still a thing. The only fair tax is one that is progressive and accounts for diminishing marginal utility of a dollar. Just like sales tax is a flat tax it's regressive because of the elasticity of demand for essentials.

[Cshelton]

The point that the businessman was trying to make is not that he misunderstands how marginal tax rates work, but for the next dollar I'm going to earn, I now get to keep less. My incentive to earn the NEXT dollar is therefore less.

This is exactly why we don't have a tax rate on the top bracket of 90% like in the Eisenhower era. It's not about being taxed on all your money when you make over that amount, it is, where is the incentive to grow my self or my company if I only get to keep $0.10 of the next dollar I make.

Most people who pay multiple tax rates across brackets understand how it works.

[weaksauce]

Listen, I saw it and I know what he said. he said if he goes one dollar over 250k he would make less than if he had not gone over that threshold. this is complete bullshit and it was either an ignorant understanding of marginal tax rates or a deliberate way to obfuscate the issue with a national tv appearance where you can feign ignorance and most of the population doesn't understand tax rates.

He didn't say after 250k my motivation to work is gone because a smaller amount is returned to me.(iirc the tax rate wasn't that much more than it was before anyway) he said he would lose money if he went over that threshold of 250k.

[djrogers]

> he said if he goes one dollar over 250k he would make less than if he had not gone over that threshold.

That actually is theoretically possible - there are numerous tax credits and deductions that come with income caps, and while they are generally phased out, it's not always a smooth slope, and can have some cliffs.

Obviously he'd be in a very odd and like one-time situation if that were the case, but it is possible with how screwy our tax system is.

[weaksauce]

> Obviously he'd be in a very odd and like one-time situation if that were the case, but it is possible with how screwy our tax system is.

That scenario is possible, sure. either way it's disingenuous to make the claim that they would lose money by making one more dollar when the tax breaks were not part of the discussion and that cliff would exist regardless of the marginal tax rate on the high earners(which they were discussing). I am ALL for simplifying the tax code to remove subsidies and loopholes and other complexities to the tax code. I am not for removing the progressive nature of the tax code.