Posted on Thursday, 23rd October 2008 by Maritzia
Every election year I come across someone supporting a flat tax plan. The way a flat tax works is everyone pays a flat tax on their gross income without any deductions, usually around 10%.
On the surface, it sounds really nice. It simplifies the tax code, makes filing really easy, and everyone pays their fair share. No loop holes to get out of taxes. Sounds good, doesn’t it?
Well, here’s the reality of that plan. Let’s look at two families of four. Family 1makes $30,000 per year, and Family 2 makes $250,000 per year. Family 1 would pay $3,000 per year in taxes, and Family 2, $25,000 per year. Does that sound fair? On the surface it may seem so.
But Family 1 pretty much requires all $30,000 of their money just to put a roof over their head, food on the table, and clothes on their back. The $25,000 that Family 2 pays pretty much comes from discretionary cash. It’s money they don’t have to have to survive.
Family 1 is shouldering a disproportionately larger burden because they have to juggle necessities to pay their taxes. Family 2 has to pay less for their luxury vacation or their expensive car. The money they are paying in taxes doesn’t come close to the money they need to live.
And, of course, Family 1 also had several thousand dollars of out of pocket medical expenses because they can’t afford to pay for health insurance, so their burden is even more disproportionate than we first saw.
And that, my friends, is the Myth of the Flat Tax. Of course the rich support it. The taxes they’ll have to pay will hardly put a dent in their lifestyle while at the same time they can take pride in paying “their fair share”.
Don’t give in to the Myth of the Flat Tax.
Posted in Activism, Political | Comments (2)
October 25th, 2008 at 9:08 am
I find the Fair Tax to be a more interesting proposal. I’m not well educated on the issue, though.
Details are at fairtax.org if you want to know more than I do. : )
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October 31st, 2008 at 4:49 pm
As I said, on the outside, it looks good. But it does disproportionately affect the poor and middle classes. That’s the reason a graduated tax was started in the first place.
FYI, sales taxes also disproportionately affect the poor.