second part. Wonât I lose deductions for state and local taxes? Again, the flat tax is designed so that, even without deductions, taxpayers still end up with a tax cut. The result of getting rid of the state tax deduction would be enormous public pressure on high-tax states to reduce their own exorbitant rates. Thatâs what happened in several states, including New York, after the federal tax cuts of 1986 when the highest rate was slashed from 50% to 28%. How will the flat tax affect poor people? The flat tax would especially help lower-income workers. Millions of families would not have to pay taxes at all under the plan. Remember, a family of four making up to $46,165 a year would pay no federal income taxes under the flat tax. And 42 percent of all returns â some 65 million â would be non-taxable by the year 2010. Low-income people will also benefit from the planâs generous exemptions â a $13,200 exemption for each adult in a family, compared with the $3,100 exemption under the current system. A married couple would receive exemptions totaling $26,400. Low-income earners would get meaningful refunds without going through a tortuous rebate process like the one required to get the Earned Income Tax Credit. Right now more than 58 million Americans have no income tax bills each year, but they still have to go through the hassle â or expense â of filing complex income tax returns. A simpler flat tax system allowing them to send in their information on a postcard would let them save their time and money. Finally, the economic boom created by flat tax relief would help the poor by generating more jobs and higher wages. How will the Flat Tax affect charitable giving? Contrary to what the flat tax naysayers would have you believe, a flat tax would actually encourage charitable giving. The naysayers claim that eliminating tax deductions for charitable donations would discourage Americans from making them. But in fact, only 31.5 percent of all taxpayers are eligible to deduct their charitable donations under our current system. The rest simply take the standard deduction. In 2003, 20 percent of total individual giving, some $39 billion in donations, came from non-itemizers. Whatâs more, Americans donate some $239 billion in volunteer hours for which they received no deductions. In other words, Americans donât choose the amount they give based on tax breaks. Further, past reductions in tax rates that decreased Americans ability to take charitable deductions had no effect on giving. What does affect giving, however, is economic growth. Studies show that the strongest predictor of individual giving is actually the strength of the stock market. In other words, the economic boom generated by a flat tax would spur charitable giving by aiding the economy. What happens to tax-free municipal bonds? By eliminating interest taxes, the flat tax essentially renders all bonds tax-free. Flat tax critics allege that in such a market lower-interest municipal bonds would become a less attractive investment. With less money going into munis, states, cities and towns would be unable to build new schools, roads or other infrastructure projects. Nonsense. Many munis offer yields that almost match the interest rates on taxable bonds. In a total tax-free environment, people would still buy municipal bonds. Their value would not be affected. However, a flat tax would increase the value of the corporate and Treasury bonds in your portfolio because youâd be able to keep your interest payments. Why is the flat tax better for Americans than a national retail sales tax? Supporters of the national retail sales tax (NRST) have their hearts in the right place. They too believe that Americans are overtaxed. The problem is that the national retail sales tax will not provide the tax relief the nation desperately needs. And it may end up raising taxes. The NRST would be a 30 percent tax on most consumer purchases of goods and services levied at the national level, intended to replace the federal income tax and the payroll tax. This 30% tax poses many challenges: First and foremost, instituting the tax requires that we first repeal the Sixteenth Amendment to the U.S. Constitution, which allows Washington to impose the income tax â a lengthy, onerous process. Yet if we donât go through it, weâd likely end up with both an income tax and a sales tax as has happened in most states and indeed in most countries. The national retail sales tax would dramatically raise prices of many goods and servicesâ which would jump 30 percent because of the tax. The cost of college tuition, already soaring, would go out of sight. I imagine struggling parents seeing Johnnyâs or Sallyâs tuition suddenly soar 30%! And thatâs only one example. A new, dedicated bureaucracy would be necessary to implement and collect the tax and to disburse rebates from Uncle Sam to tens of millions of Americans every month to repay them for a portion of the sales taxes they pay on food and clothing. The Pentagon isnât about to pony up a 30% tax when it purchases an aircraft carrier; nor are states and municipalities when they buy goods and services, including the building of highways; and local property taxpayers will object to paying a 30% levy on school supplies, equipment and buildings â a 30% levy would adversely impact property taxes. Weâd end up with more government, not less. A system based on a national sales tax would encourage tax evasion, which is common when sales taxes go above 10%. And those are just a few of the hassles. have good weekend everybody.
Asking America's unrelentingly greedy semi-socialist government to create an efficient, simple, and fair tax system is like asking them to run over their own genitals with a Mack truck, drive a 10" nail repeatedly into their faces, and then drink fresh pig urine until they black out. It is against everything they believe in and everything they have been working for. Every minute of their history proves that they will never do it unless forced by voters who are A) not chronically apathetic and B) not voting out of manufactured fear. Which means it will never happen the the U S of A.
Our biggest advantage is that we can be like a camaleon I rembember the socialist goverment in the 70' and the Reagan's years 1460 days later (1985)... remember something kid, when people emigrate to America, they just want Money, Nothing Else... A plan like This will bring war to washington, its true, but sooner or later will happen.. Almost happen 20 years ago, we're getting closer (even de semi-socialist Bill Clinton understood that, and his welfare reform = One step closer) PD: IM talking about tax reform, I agree that our goverment found a new horrendous way to be Big (religion) and its a shame.
compassionate conservatism make the non-super-rich pay for the rich..... makes sence, in a Texas sort of way....