[4c2383f5c88e911]

A flat tax rate is not a good idea whatsoever; if you tax e.g. 20% of earnings ,do you believe people who earn $30k a year are impacted the same way as people earning $200k or more? Sure, those who earn more pay more, but it hits them in "extra" earnings, while the poor are taxed on money they need to survive.

A (very) progressive tax rate with a few ways of reducing the tax based on social (e.g. number of children, etc) criteria would probably work better here.

[chirau]

A "flat rate" can also be tiered. In this case I'd take it to mean a flat rate on all money earned during a time period. Whether income or capital gains, dividends, assets or whatever, you are still giving up x% of whatever you earned that year.

So even when tiered, a person earning under some amount in total might get a lower tax rate than a person earning a higher amount but it is still flat.

The "flat tax" would be taxed on all jurisdiction. So call it a "universal flat tax". That way, there is no persuasion to register in a foreign country and it would dissuade multi geography registrations as you would just be taxed in multiples by each territory.

To avoid double taxation, perhaps, a company can register in multiple countries but since the tax is the same everywhere, the portion of the x% taxed would be proportionally divided to the territories.

This assumes of course that the whole world agrees on one tax policy and tax havens are eliminated. :)

[openasocket]

Wait, how do you make the flat tax tiered? Isn't that an oxymoron?

[ghostbrainalpha]

You are correct it is an oxymoron, but the most realistic Flat Tax proposals do just that.

They say there should be a 20% tax, on any income above the $35,000 a year threshold. While it still does effect people on the lower end more, the first part of their income is at least partially untaxed.

And the bar is low enough that the super rich will not be able to create schemes to keep there income under that bar.

[openasocket]

I'm having trouble seeing a flat tax proposal that doesn't massively decrease tax revenue. Also, a tax on what, exactly? Income? Capital Gains? Sales? Property?

[cpursley]

> A flat tax rate is not a good idea whatsoever

Tell this to the nations which have successfully implemented a flat tax:

http://www.economist.com/node/3860731

https://en.wikipedia.org/wiki/Flat_tax#Countries_that_have_f...

It's ironic that a number of former Soviet countries have moved on to the flat tax, while the west has a progressive income tax (#2 plank of the Communist Manifesto).

[SimbaOnSteroids]

Idk about you but I can't think of many former soviet block countries that have a healthy distribution of wealth between working, middle, and upper classes. Furthermore the list of countries given there are not places where you want to be poor.

[cpursley]

I don't disagree. These countries often have systemic issues that go deeper than any one tax system can resolve.

[croon]

Are you saying that flat tax is good, but that all countries that have implemented it coincidentally have other economic issues that are wholly unrelated?

[sokoloff]

What is the list of countries where one would want to be poor?

[SimbaOnSteroids]

Obviously there isn't a list where you'd want to be poor , but I'd definetly rather be poor living in Sweden than poor living in Russia.

[sol_remmy]

ex-Soviet countries like Romania and Poland are definitely on their away up.

Compare them to slowly declining western European countries like Italy and Spain.

[sbalea]

Romania and Poland were never soviets. Communist, yes. Behind the Iron Curtain, yes. Members of the Warsaw Pact, yes (Poland is kind of obvious on this). But never soviets.

[0xcoffee]

How about a flat tax rate, but have essential goods be tax free?

[sp332]

That seems like an income tax mixed with a sales tax credit? It sounds awkward because income tax comes out of your paycheck but the sales tax is applied at the point of sale. You'd have income tax withheld, buy food with the money you have left over, get credited for the essential goods you bought, then pay rent, then get a credit for that...

[wolfgke]

> but have essential goods be tax free?

People/politicians are very creative in what is to be considered essential.

[turc1656]

You would do a flat tax on anything above X, where X is essentially a number calculated on base living costs in your area for the number of people in your household. Anything above X is taxed at a flat rate. This ensures people can afford to live and meet their minimum requirements. It also makes it so that the tax code is extremely simple.

For me personally - I would add one more change that most people don't like. I would put an actual cap on total income tax that can be paid in a single year. The reason for this is that these progressive systems act as a social welfare system that transfer money. That's why people propose a flat tax. Well, flat tax is much better but still presents the possibility for a wealthy person to pay, for example, 200k in income tax in a year. A lot of people would say "so what?". Well, I believe income tax shouldn't be treated as a maximum pain threshold. The basis of taxation is to fund public goods. We all consume roughly the same amount of public services on average. If someone is paying something like 200k a year in income tax they are paying way, way above anything they could possibly consume in public goods/services for that year.

[imglorp]

That might be oversimplifying what flat means. Suppose it's not a linear function? Pick your function to begin kicking in above the poverty line and maybe get linear above 200k.

But "no loophole tax" might be a better characterization of the flat idea, yes?

[maxerickson]

It certainly isn't an oversimplification in context. The comment up the thread that raised the idea of a flat tax defined it as "everything is taxed at a single rate".

Maybe single means a complex function? I doubt it.

[dageshi]

A flat tax you only start paying above a certain threshold then? For sake of argument everything under 20k is tax free, you pay flat tax on everything above? Problem solved?

[msla]

A lot of people would consider that flatly immoral, and as evidence that the poor aren't paying their fair share.

Remember that Flat Tax is also called Fair Tax. The concept of fairness is central.

[dageshi]

If everyone receives the same tax free allowance then it certainly is fair. Fairer and simpler.

[turc1656]

I think what msla is saying is that people who are at or below the threshold for taxation would contribute nothing to taxes, which would be unfair in theory because they consume public goods and services like the rest of us.