Smasharoo wrote:
Treating all earnings the same is a separate issue which has absolutely nothing to do with whether a given tax is flat.
Not really. All "earnings" are "income". Different rules for income from different sources means a non flat income tax by definition. What you want, apparently, is "a flat tax rate on certain income, retaining the existing exemptions that are beneficial almost exclusively to high income groups" Which is a defensible position, but not in any way related to a "flat tax".
Not really. All "earnings" are "income". Different rules for income from different sources means a non flat income tax by definition. What you want, apparently, is "a flat tax rate on certain income, retaining the existing exemptions that are beneficial almost exclusively to high income groups" Which is a defensible position, but not in any way related to a "flat tax".
No. I was interpreting the phrase "flat tax" within the context it's overwhelmingly and commonly used. You know, common language and all that. Bring up the subject of a flat tax and 99.9% of all people (who have an opinion about it in the first place) will respond as though you're talking about taking the current progressive tax brackets applied to federal tax on regular income and replace them with a single tax rate applied to every dollar that the tax itself applies to. If wanted to talk about consolidating income, capital gains, and payroll taxes into one single tax, you'd say that's what you wanted to do. You wouldn't say "I think we should implement a flat tax".
It's somewhat important to make a distinction between tax rates that differ based on the type of economic activity versus tax rates that differ based on the volume of economic activity. What makes a tax "flat" is that when you graph the rate against the volume, the line is "flat". Hence the name. You pay the same rate regardless of how many dollars you earned. That's a flat tax. Again, you're free to argue for consolidating taxes applied to different economic activities into one tax and *then* making the rate flat, but it's the making the rate flat that makes it a "flat tax". The consolidation is a wholly different thing.