<div style='font: 10pt "EngraversGothic BT", "Copperplate Gothic Light", "Century Gothic"; text-align: left; '><i>In another forum, we were having a rather long discussion on a flat tax system. I am against a standard flat tax (income-based) system, but I realized that there's a better way with a wealth-based system. This is sort of a continuation of Flip's tax/wealth discussion, and I used the same figures here:</i>
Okay, let's get into a wealth-based flat tax. I still don't agree that it's as fair as a wealth-based bracket system, but it should be much better than the current one. First, the current tax/wealth figures from my first post:
Top 1% (above $ 292,913) - 33.9% / 38.1% (1998 figure from WR)
Top 5% (above $ 127,904) - 53.3% / 59.4% (1998 figure from WR)
Top 10% (above $ 92,754) - 64.9% / 67.4% (2001 figure from FR)
Top 25% (above $ 56,085) - 82.9% / 89.7% (2001 figure from FR)
Top 50% (above $ 28,528) - 96.1% / 97.8% (2001 figure from FR)
Middle 25/75-50% (between $ 28,528 and $ 56,085) - 13.1% / 8.1% (2001 figure from FR)
Bottom 50% (below $ 28,528) - 3.9% / 2.2% (2001 figure from FR)
Okay, let's get the "wealth tax rate", based on the amount of taxes collected and current wealth: $887,682,000,000 (887 billion) divided by $27,000,000,000,000 (27 trillion) is 3.2%. A 3.2% wealth tax rate. (Notice how much lower than is to the 14-16% flat income rate, because there is sooooo much wealth around.)
Now, combine the two, using billion dollar figures to analyze it better (old taxes paid / new taxes):
Top 1% (above $ 292,913) - B$300.898 / B$329.184
Top 5% (above $ 127,904) - B$472.823 / B$513.216
Top 10% (above $ 92,754) - B$576.163 / B$582.336
Top 25% (above $ 56,085) - B$736.053 / B$775.008
Top 50% (above $ 28,528) - B$852.642 / B$844.992
Middle 25/75-50% (between $ 28,528 and $ 56,085) - B$116.286 / B$69.984
Bottom 50% (below $ 28,528) - B$35.040 / B$19.008
<i>(Note, those are dots, not commas...billions of dollars, not trillions.)</i>
Hey, I might actually like this system. I dunno. Taxes for the poor/middle-class get cut in half, and taxes only go up in marginal amount for the rich.
This is my definition of "fair". If you're going to put up a "fair" flat tax, you tax everything, not just income. The poor/middle class live off of income. The rich don't. They can take or leave their income and still be wealthy. Hell, we've had a few presidents forego their usual income as a courtesy, but really they don't need it anyway. They weren't poor. They had plenty of money in stocks, houses, businesses, etc.
Now, let's go into an individual point-of-view, and look at potential downsides. For one, not only do rich have more wealth than income, but so does everybody else. Most reports have been measuring wealth by adding up all of the assets and subtracting all of the debts. Therefore, you can actually get money from the government for the debts, if you're really deep in debt (like a house). Let's look at a few test cases:
<b>Poor, but no real debt</b>
Income: $15,000
Credit Card Debt: $500
Car: Blue Book of $1000, but owes $2000
House: none (rents apt)
Stocks: none
Total Wealth: $13,500
Total Taxes Paid: $432 (2.88% of income)
<b>Middle-class with good house, no stocks</b>
Income: $25,000 x 2 (married)
Credit Card Debt: $2000
Car: Blue Book of $8000, but owes $10,000
House: $120,000 (owes in full; just got it; joint ownership)
Stocks: none
Total Wealth: $-99,000
Total Taxes <u>Earned</u> (not paid): $2,368 (total for couple)
<b>Higher Middle-class with no debts, some stocks</b>
Income: $35,000 x 2 (married)
Credit Card Debt: none
Car: Blue Book of $10,000, plus truck with BB of $5,000
House: $175,000 (paid in full; joint ownership)
Stocks: $5,000
Total Wealth: $265,000
Total Taxes Paid: $8,480 ($4,240 each; 12.11% of income per)
<i>Hmmm...a lot less scary than I thought. That's actually still under what we pay now.</i>
<b>CEO with plenty of stocks</b>
Income: $250,000
Credit Card Debt: none
Car: BB of $25,000 x 3
House: $500,000
Stocks: $500,000
Total Wealth: $1,325,000
Total Taxes Paid: $42,400 (16.96% of income)
Hmmm...the more I analyze this system, the more I like it. Even a CEO with a fair amount of stocks, cars, etc. pays his fair share of taxes. The only ones penalized are the bastards that horde money like crazy.
I wonder if anybody else has thought of this idea.</div>
Okay, let's get into a wealth-based flat tax. I still don't agree that it's as fair as a wealth-based bracket system, but it should be much better than the current one. First, the current tax/wealth figures from my first post:
Top 1% (above $ 292,913) - 33.9% / 38.1% (1998 figure from WR)
Top 5% (above $ 127,904) - 53.3% / 59.4% (1998 figure from WR)
Top 10% (above $ 92,754) - 64.9% / 67.4% (2001 figure from FR)
Top 25% (above $ 56,085) - 82.9% / 89.7% (2001 figure from FR)
Top 50% (above $ 28,528) - 96.1% / 97.8% (2001 figure from FR)
Middle 25/75-50% (between $ 28,528 and $ 56,085) - 13.1% / 8.1% (2001 figure from FR)
Bottom 50% (below $ 28,528) - 3.9% / 2.2% (2001 figure from FR)
Okay, let's get the "wealth tax rate", based on the amount of taxes collected and current wealth: $887,682,000,000 (887 billion) divided by $27,000,000,000,000 (27 trillion) is 3.2%. A 3.2% wealth tax rate. (Notice how much lower than is to the 14-16% flat income rate, because there is sooooo much wealth around.)
Now, combine the two, using billion dollar figures to analyze it better (old taxes paid / new taxes):
Top 1% (above $ 292,913) - B$300.898 / B$329.184
Top 5% (above $ 127,904) - B$472.823 / B$513.216
Top 10% (above $ 92,754) - B$576.163 / B$582.336
Top 25% (above $ 56,085) - B$736.053 / B$775.008
Top 50% (above $ 28,528) - B$852.642 / B$844.992
Middle 25/75-50% (between $ 28,528 and $ 56,085) - B$116.286 / B$69.984
Bottom 50% (below $ 28,528) - B$35.040 / B$19.008
<i>(Note, those are dots, not commas...billions of dollars, not trillions.)</i>
Hey, I might actually like this system. I dunno. Taxes for the poor/middle-class get cut in half, and taxes only go up in marginal amount for the rich.
This is my definition of "fair". If you're going to put up a "fair" flat tax, you tax everything, not just income. The poor/middle class live off of income. The rich don't. They can take or leave their income and still be wealthy. Hell, we've had a few presidents forego their usual income as a courtesy, but really they don't need it anyway. They weren't poor. They had plenty of money in stocks, houses, businesses, etc.
Now, let's go into an individual point-of-view, and look at potential downsides. For one, not only do rich have more wealth than income, but so does everybody else. Most reports have been measuring wealth by adding up all of the assets and subtracting all of the debts. Therefore, you can actually get money from the government for the debts, if you're really deep in debt (like a house). Let's look at a few test cases:
<b>Poor, but no real debt</b>
Income: $15,000
Credit Card Debt: $500
Car: Blue Book of $1000, but owes $2000
House: none (rents apt)
Stocks: none
Total Wealth: $13,500
Total Taxes Paid: $432 (2.88% of income)
<b>Middle-class with good house, no stocks</b>
Income: $25,000 x 2 (married)
Credit Card Debt: $2000
Car: Blue Book of $8000, but owes $10,000
House: $120,000 (owes in full; just got it; joint ownership)
Stocks: none
Total Wealth: $-99,000
Total Taxes <u>Earned</u> (not paid): $2,368 (total for couple)
<b>Higher Middle-class with no debts, some stocks</b>
Income: $35,000 x 2 (married)
Credit Card Debt: none
Car: Blue Book of $10,000, plus truck with BB of $5,000
House: $175,000 (paid in full; joint ownership)
Stocks: $5,000
Total Wealth: $265,000
Total Taxes Paid: $8,480 ($4,240 each; 12.11% of income per)
<i>Hmmm...a lot less scary than I thought. That's actually still under what we pay now.</i>
<b>CEO with plenty of stocks</b>
Income: $250,000
Credit Card Debt: none
Car: BB of $25,000 x 3
House: $500,000
Stocks: $500,000
Total Wealth: $1,325,000
Total Taxes Paid: $42,400 (16.96% of income)
Hmmm...the more I analyze this system, the more I like it. Even a CEO with a fair amount of stocks, cars, etc. pays his fair share of taxes. The only ones penalized are the bastards that horde money like crazy.
I wonder if anybody else has thought of this idea.</div>
Rosalina: But you didn't.
Robert: But I DON'T.
Rosalina: You sure that's right?
Robert: I was going to HAVE told you they'd come?
Rosalina: No.
Robert: The subjunctive?
Rosalina: That's not the subjunctive.
Robert: I don't think the syntax has been invented yet.
Rosalina: It would have had to have had been.
Robert: Had to have...had...been? That can't be right.
Robert: But I DON'T.
Rosalina: You sure that's right?
Robert: I was going to HAVE told you they'd come?
Rosalina: No.
Robert: The subjunctive?
Rosalina: That's not the subjunctive.
Robert: I don't think the syntax has been invented yet.
Rosalina: It would have had to have had been.
Robert: Had to have...had...been? That can't be right.
