Proposal - a flat income tax

[jamesmcm]

I hate the idea of flat tax. It makes things harder for the worse off, and cheaper/no noticeable difference to the wealthy. Those who can afford should be supporting those who can't

I completely agree with you.

If the Pirate Party is another neoliberal party then I won't support them.

[valisk1]

The Pirate Party, isn't, as far as I can tell, a Neo Liberal party, or any other traditional party of any kind.
The fact that because I, or any other member, can dare to openly suggest something you consider to be neo-liberal has led you feel you have to put your support on the line without examining whether there are merits, or not, in a given line of argument seems unfortunate to me.

[peterh]

The flat tax is an awful idea straight from the fountain of crappy ideas known in America as 'libertarianism'. This country is seeing, even with the minimally progressive tax policy of New Labour, a rapidly expanding gap between rich and poor even as the population becomes more educated. A flat tax would do nothing else but increase this gap even faster, plunging those already mistreated by the state into the kind of grinding poverty that has been almost unknown for some time in Western Europe. The only way a person can justify this is if they believe those at the bottom end of the income scale are somehow subhuman.

The rich do not need a tax cut in order for society to economically and technologically advance; consider for a second that when the US landed a man on the moon, the top tax rate was 77%

[valisk1]

I said I wasn't going to post in the closed forums, but okay, you've trolled me

I was expecting to see an actual argument against a flat tax put forward as alluded to by your post in the open section of the forum, rather than a series of unsupported assertions, insults and attempts to characterize people who might consider a flat tax as sociopathic.

[peterh]

That was an argument. You might notice, if you read again, the part where I made reference to facts in several places. Just because you don't like it, doesn't mean it isn't a valid argument.

[valisk1]

That was an argument. You might notice, if you read again, the part where I made reference to facts in several places. Just because you don't like it, doesn't mean it isn't a valid argument.

Facts such as the ones to support the below statement? As far as I can tell it contains two entirely unsupported assertions.

A flat tax would do nothing else but increase this gap even faster, plunging those already mistreated by the state into the kind of grinding poverty that has been almost unknown for some time in Western Europe.

Don't get me wrong I can see clearly how a flat tax that applied to all citizens equally would be a worse deal for the poor.
The idea we eventually came to was to exempt the lowest quartile of citizens from any tax and this was not a universal agreement by any means.
You do us the disservice of ignoring (should I assume you didn't read them?) the arguments of other posters whilst attacking a strawman characterisation of what you perceive to be a vanguard policy of a hidden libertarian contingent.

[peterh]

That was an argument. You might notice, if you read again, the part where I made reference to facts in several places. Just because you don't like it, doesn't mean it isn't a valid argument.

Facts such as the ones to support the below statement? As far as I can tell it contains two entirely unsupported assertions.

I notice how you've not demanded a list of citations until you came across someone who disagreed with you...

Don't get me wrong I can see clearly how a flat tax that applied to all citizens equally would be a worse deal for the poor.
The idea we eventually came to was to exempt the lowest quartile of citizens from any tax and this was not a universal agreement by any means.

So you create a lower-middle class ceiling where you get suddenly smacked with a bigger tax burden as your income increases? Hardly a recipe for class mobility.

You do us the disservice of ignoring (should I assume you didn't read them?) the arguments of other posters whilst attacking a strawman characterisation of what you perceive to be a vanguard policy of a hidden libertarian contingent.

You suggested the idea of dismantling progressive taxation, giving a substantial break to the rich from the current tax structure (which is historically very generous to the wealthy), and then added an exemption for the poor people you would cripple by this as an afterthought.

It did come across as a little bit John Galt, you must admit.

[korvalis]

if we're going to discuss the issue of tax, a possible solution would be to raise the personal allowance to a minimum wage equivalent (approx. £12k per year) and then tax above that at current rates.

[valisk1]

I notice how you've not demanded a list of citations until you came across someone who disagreed with you...

Most people disagree with me one way or another

So you create a lower-middle class ceiling where you get suddenly smacked with a bigger tax burden as your income increases? Hardly a recipe for class mobility.

You are worried that a lower middle class would suffer a bigger tax burden as their income increases?

Am I in someway missing the point here, I thought you were arguing that those who could afford to pay ought to pay and that the amount they pay should increase as their means to pay did, it sounds to me like you are now entering a plea that taxation is actually suppressing those who can afford to pay unfairly. You are in fact now arguing against yourself and seemingly pressing a libertarian point of view.

You suggested the idea of dismantling progressive taxation, giving a substantial break to the rich from the current tax structure (which is historically very generous to the wealthy), and then added an exemption for the poor people you would cripple by this as an afterthought.

It did come across as a little bit John Galt, you must admit.

You are assuming your conclusion, that a flat tax necessarily give a tax break to the rich, even one that excludes from the start the continuing of actual tax breaks for tax payers.

I'd imagine whether it gives a tax break would depend upon how high the rate would be. Given that I suggested rolling all taxes into the flat tax, and excluding the possibility of taxing the poorest in society, it would be interesting if such a tax could possibly give the rich a tax break whilst maintaining anything like current spending levels.

To finalize, I sadly can't admit it, as I haven't read any of Rand's works so I am unaware if the comparison is valuable.

[peterh]

You are worried that a lower middle class would suffer a bigger tax burden as their income increases?

No, I am worried that there would be a barrier between working class and lower middle class where the burden suddenly increases. Your tax profile, as you increase a persons income, curves the wrong way; there is a steeper increase in tax at the lower end than at the upper end.

Progressive taxation is the only income-based form of taxation that will work. Trickle down failed in its stated aims, but succeeded in its true aims of lining the pockets of the rich whilst breaking the back of the working class.

[valisk1]

You are worried that a lower middle class would suffer a bigger tax burden as their income increases?

No, I am worried that there would be a barrier between working class and lower middle class where the burden suddenly increases. Your tax profile, as you increase a persons income, curves the wrong way; there is a steeper increase in tax at the lower end than at the upper end.

Progressive taxation is the only income-based form of taxation that will work.

Okay, after stripping away the other objections we move onto the substance of your actual argument against a flat tax.
An ethical objection to the tax curve being overly steep at the mid-lower end potentially retarding 'class mobility'. In our case this lower end is those with incomes above £25k p.a.
And you are suggesting that a person who could potentially earn, say £35k up from £25k would be put off by the fact that their tax burden would rise from £0 to £3k? (30% taxable on all income above £25k)

I have to ask you, what exactly do you imagine would stop a person from continuing to move up, in such a tax regime, I can't see many hold backs (with the exception of people who believe they ought not to be taxed and so choosing to remain under the starting point). If anything a clearer structure and removal of regressive taxes ought to encourage social mobility.

[peterh]

Okay, after stripping away the other objections we move onto the substance of your actual argument against a flat tax.
An ethical objection to the tax curve being overly steep at the mid-lower end potentially retarding 'class mobility'. In our case this lower end is those with incomes above £25k p.a.
And you are suggesting that a person who could potentially earn, say £35k up from £25k would be put off by the fact that their tax burden would rise from £0 to £3k? (30% taxable on all income above £25k)

No, but it reduces their income gain from £10k to £7k. They will likely have to work much harder and/or longer hours to get that pay bump, and the harsh introduction of tax might make it not worth it. Meanwhile, the rich can increase their incomes indefinitely without incurring a tax increase.

It isn't my only argument by the way: 30% is way too low for the top tax bracket - its a 20% cut on the current historically low rate. Tax breaks for the rich do nothing for society; like I pointed out the US landed a man on the moon with a 77% top tax rate.

I have to ask you, what exactly do you imagine would stop a person from continuing to move up, in such a tax regime, I can't see many hold backs (with the exception of people who believe they ought not to be taxed and so choosing to remain under the starting point). If anything a clearer structure and removal of regressive taxes ought to encourage social mobility.

The tax structure has been on a general trend of flattening since 1979 (we've had pretty much consistent government since then) and it hasn't increased social mobility, it has corresponded with a collapse of it.

[cabalamat]

I hate the idea of flat tax. It makes things harder for the worse off, and cheaper/no noticeable difference to the wealthy. Those who can afford should be supporting those who can't

That's not necessarily true. If there is a threshold before one pays tax, and a welfare system providing people with enouh to get by on (I personally favour some form of citizens' income), and rich people are no longer able to avail themselves of legal fiddles to avoid paying tax, then it would be at least as or more redistributive as the present system.

Also, it would be a lot simpler to implement, which in itself would reduce the scope for tax avoidance.

Having said all that, I think it's a bit premature for us to have policies on tax.

[Herr_ABP]

No, but it reduces their income gain from £10k to £7k. They will likely have to work much harder and/or longer hours to get that pay bump, and the harsh introduction of tax might make it not worth it. Meanwhile, the rich can increase their incomes indefinitely without incurring a tax increase.

The "rich" would pay more tax as the tax would be a percentage of an individual's income. Why is there a belief that people earning over a certain amount should contribute a larger percentage when they are already contributing more due to the nature of percentages?

I've recently made the jump from being someone who wouldn't pay tax if the £25,000 personal allowance was implemented to someone who would and I don't understand the argument about reduced income gain. I'd still have £25,000 tax free but would have still ended up better off that I would have been were I earning under the threshold.