Ironically, if there was ever a time for the flat tax, this is it. Consider:
1. The most violent opponent to a flat tax, the mortgage lobby, hooked on the mortgage interest deduction like a long-time junkie on heroin, is at the nadir of its political power, as should be the very concept of stimulating a second housing bubble with government incentives like tax breaks. Now is the time to pull the rug out from under these people.
2. Given the inability of Obama’s Economic Superfriends to properly pay their taxes (and considering their genius is supposed to be substantial enough to save the financial world from imminent ruin) there has never been a stronger case for tax simplification. If the Secretary of the Treasury can’t (won’t) figure out what he owes, how can Joe Sixpack be expected to? Simplification never had a more obvious set of poster children than the current cabinet. If nothing else, it would be amusing to hear them argue against the idea.
3. One of the little appreciated benefits of a flat tax is that a massively complex set of deductions and exceptions inevitably serves those with the wherewithal to retain expensive tax preparation services. Read: the rich. In a time of hyperactive class warfare, and where a chief complaint of the anti-rich is that wealthy Americans have an effective tax burden below 20%, it would seem that a nice, deduction-free flat tax would actually increase average tax rate. Certainly, it would for Corporations, which have even greater means to use clever tax planning to pay fractions of their actual marginal rate.
4. The GAO claims that between $240 billion and $600 billion is spent on tax preparation every year. This is up to 20% of the total amount of tax collected. Think about that. The second most violent opponent to a flat tax, the tax preparation lobby, along with white collar professionals at large, is also near its political nadir. Further, putting $240-$600 billion to more efficient and productive use cannot be other than a good thing. Accountants presently have few friends in the country.
5. IRS auditing and enforcement would be vastly less costly in terms of time, personnel and capital. A portion of these professional and accounting-familiar resources could easily be sent where they are now badly needed: The SEC’s enforcement division. The rest could simply be let go, to find more productive endeavors.
We tend to think that the best approach is actually not a totally flat-tax, but a flat tax with a credit for the first, say, $25,000 in income. This is really a two-tier progressive tax, but we won’t tell anyone if you won’t.
Finally, it seems rather silly to give Congress a lever this big without some checks and balances. We think a three-fifths majority requirement to raise taxes might be a good one. Since there will be no escape from a tax raise, we need to be very careful how easy it is to adopt one.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
too logical, won’t happen
btw, bess must hate you.
Resisting TLDR.
Nadir? I would have chosen perigee. I guess the question is whether there be a slingback?
Here’s to wishing it’ll come true… along with term limits for Congress. Who says we can’t dream big?
too flat, didn’t tax…
Current tax laws benefit the wealthy and indigent with many dependents. Do we really want to upset the top and bottom of society with a voice?
Giddy up, give Neil Bortz a buzz today, he is awaiting your call.
hello,
my income is $263 million a year. i’m ok with the flat tax as long as I pay less than 17% percent of my income on fed taxes, like i do today. (that’s my effective tax rate today, thanks to congresscritters and bush.)
so lets make it a 14% flat tax and i’ll buy you dinner, since i’ll get to keep almost $8 million a year more than today. k?
tia
ps. it should be obvious to you that i’m not supporting the flat tax until you tell me what the flat rate is going to be.
@1- how do you figure?
I say tax rate is (200-IQ)/2
dumb people have so many negative externalities..
@9, its’already in place>i.e lottery and the lieks of Madoff and co.
I’d like to go a step further and suggest a flat set fee. First and second estates exempted, of course.
http://www.nytimes.com/2009/02/08/fashion/08halfmill.html
taxes now are such you cant survive on 500k in nyc..
Better idea: National Sales Tax of 25%
The more you spend, the more you pay in taxes. If you want to save, God bless you. If you want a new M3, you’ve got to choke up for it.
Problem solved.
@13 they sell m3′s outside the us as well dumbass
@13 the national sales tax is coming. And its not going to replace the income tax. Get ready for a 2 or 3% national sales tax on top of income and social security tax. Someone has to pay for all these baby boomers
@12 – please see “opening bell”
http://dealbreaker.com/2009/02/opening-bell-020909.php
thanks for playing…
@15
they only thing babyboners could do to wash theselves of their financial sins is a collective suicide..
@14, are you really that retarded? When you register the car, they make you pay the sales tax. The only way of getting around the sales tax is to not register the car. Not a very viable alternative, is it?
How about we just cut spending?
@18 great thinking einstein – what about all other expenses? you need t register you coffeemachine in your brave new world?
@8
logic vs. emotion
@12
supply/demand: you want to live in the center of the universe, ya gotta pay up.
M3′s suck anyway
14- you’re a jackass. When was the last time you personally imported a car? You’re missing the point of the argument.
@15, @17
Thanks for playing. Now you can go back to Yahoo Finance.
There are wiser methods to tax simplification than implantation of a flat tax. See:
http://www.brookings.edu/papers/2006/07useconomics_goolsbee.aspx
M3′s do not suck. They are beautiful machines.
Me thinks that there is an idiot among us. Rest assured, he is around here somewhere.
@19
Who did all the art school grads just elect to the White House?
EP…logical and well reasoned arguments. Unfortunately Congress will NEVER give up tinkering with the tax code. Congress views taxes not only as a revenue generating mechanism, but also a way to implement social and political policies. They love using taxes to reward their favored groups and to punish the unfavored far too much to institute anything resembling a flat tax.
A flat tax is nice in theory – and it would simplify taxes for the vast majority of taxpayers. But there are still huge problems with a flat taxes:
1) the time at which income is recognized
2) valuing non-cash income.
Should Daschle’s car and driver be taxed as income? How would that be valued? Just because it’s taxed a flat rate doesn’t make it easy to comply or police.
If they can get it done in most of Eastern Europe, we should be able to get it done here.
25 – i refuse to even click on that link, noticing it was written by Austin Goolsbee. anything that ignorant slut writes is pure and simple rubbish. he is the most asinine member of the BHO administration.
Great idea. Socializing Wall Streets’ losses (and paying for boomer entitlements) is going to mean a huge increase in the tax burden for years to come. There’s no way to cope with this without also making the tax code way more regressive. Why not also further cut capital gains taxes just to make the point extra clear?
@29 has it nailed. Congress uses the tax code to justify its existence every day of the week. I wish it weren’t this way, but it is. It’s like asking Zeus to give up his thunderbolts because of global warming. I think.
@ 29 — Well said.
Taxes are a great means of control. Of course they’re voluntary, but that is beside the point.
28, wishful thinking on my part… we need to decrease the number of art school grads.
-19
Amen, but then what will the Congress do? How will Rangle usurp power?
Great idea, will never happen.
No way in hell I’d go down without a fight. I’m a CPA, mother fucker!
@29
Well, Congresscritters need money for their campaigns. Nothing better than a complex tax code to get money from lobbyists shopping for new tax breaks.
Lobbyists rule as long as they don’t lobby for a flat tax! (Not that I think the flat tax is a good idea by itself.)
29 39 Good points. But like EP, I believe there’s something in the air that just might encourage change. It was articulated well by Gail Collins (I believe) in yesterday’s NYT. In short, the Daschle episode got both the left and the right united in disgust over the complex patronage system that goes on in Washington.
@33
@7 here. i do like cutting capital gains taxes further while someone figures out what the flat tax rate is going to be. how in the world do you think that i only pay 17% of my income in fed taxes today even though i make $263 million a year? capital gains baby!
bring those capital gains tax rates down and then we’ll talk about flat tax rates, k?
tia
You forget that the cost of government is how much it spends, not taxes, as long as it controls the currency and the ability to issue more debt.
Obama is not able to get a stimulus pork bill passed, so what makes you think that he would be able to skewer Congress’ coveted tax loopholes? However, I would like to see him do it, in the remote chance that it passes.
100% correct. Kudos again to EP for getting to the root cause of a issue (a tax code that is so large and ambiguous that NOBODY could ever understand it). This would possibly the single greatest thing that could ever be done for our country. The current tax code is nothing but a jobs program for accountants and lawyers. Get rid of it.
41 Very good points. An exercise for all of you: drop income and payroll taxes and adjusted gross income for the past 10 years onto a spreadsheet. As you become an adult (that is with significant capital gains, dividends, salary far in excess of the soc sec limit), you’ll be amazed at how surprisingly low your tax rate is.
@43 Hence that is the problem. Imagine all of the people out of work. We are a service based economy it could never happen
@40
Call out the instigators
Because there’s something in the air
We’ve got to get together sooner or later
Because the revolution’s here, and you know it’s right
And you know that it’s right
– Thunderclap Newman
Congress never wants to give up it’s source of power and money.Hence, it exists to pit taxpayers against each other and collect the vig.
None of the points you raise is addressed by a flat tax. They are eliminated by a tax code without deductions and credits, but it is no more work to look up a required tax payment for a given taxable income in a table computed from, say, 30 different brackets/marginal rates than a table based on one or two rates.
Under this new tax regime would the cap on income subject to social security taxes stay in place? Or would that bit of class warfare stay in place?
49 here – wtf is up with those fucking artists? Making art? Fuck you! Get the fuck out da way for my new condo development! Cha-ching!
@48
@7 here. hey, get on with the program. the fewer the tax brackets (and 2 is too many) the greater the chance i end up at less than 17%.
cheez!
tia
I agree with the flat tax. CPAs and tax lawyers should find another line of work. Steve Forbes is a genius.
On another note, I am so psyched! I won an eBay auction for a Phish ticket to see the boys at Post-Gazette Pavillion in Burgettstown, PA. I can’t wait.
My two purposes are to see Phish and find a future wife. If you think I am the only 30+ year-old guy doing this, I am not. We had a discussion in a chat room, and we all agreed on this point. Why in the HELL get married to someone our own age, when we darn know well we will want someone later who is younger?? Thus, we are going to be hitting on the college-age hippies.
And if it all works out and I get married in the near future, the name of my first daughter will be Erin Callan Powell. :D Phish is back, and if you want to get hooked up with a hippie girl, go to a Phish show. And trust me, they are of lower maintenance than a Wall Street babe. Does anyone have any Jones Beach extra tickets to sell at face value?????
@52 – all hippies smell, and I’d guess that hippie chicks don’t shave. That’s just nasty. But hey, have fun with the “low maintenance” girl whose B.O. smell you’ll wake up to! Also, hippie chicks don’t produce babies that look like E to the C. They produce babies that look like Rosy O’Donnell.
52, aren’t you a chick?
@52 grow up! DB
@52 is one of those guys that is going to never be happy in life because he always has something to complain about. He’s probably a big f– a– that can’t get laid.
@52 is one of those guys that is going to never be happy in life because he always has something to complain about. He’s probably a big f– a– that can’t get laid. And one of those creepy guys that are hitting on the young chicks just because he thinks he’s all that and a bucket of clams because he has some dough. Chicks do notice that you’re ugly.
No, the hippies we like do shower, and are very well educated. And this is another song in honor of Erin M. Callan, who is taking a five month leave from CS, and will not be missed at all…she is preparing her legal defense in rehab, most likely.
“Wilson” by Phish
Wilson
Wilson
Wilson
Wilson
Oh out near stonehenge, I lived alone
Oh out near gamehendge, I chafed a bone
Wilson, king of prussia, I lay this hate on you
Wilson, duke of lizards, I beg it all trune for you
Talk my duke a mountain, helping friendly book
Inasfar as fiefdom, I think you bad crook
Wilson, king of prussia, I lay this hate on you
Wilson, duke of lizards, I beg it all trune for you
Wilson
Wilson
Wilson
Wilson
I talked to mike christian, rog and pete the same
When we had that meeting, over down near game(henge)
Wilson, king of prussia, I lay this hate on you
Wilson, duke of lizards, I beg it all trune for you
You got me back thinkin that youre the worst one
I must inquire, wilson, can you still have fun?
Wilson, can you still have fun?
Wilson, can you still have fun?
Wilson
@58, brilliant, no real defense and you post a stupid song….
you have to get an uneducated hippie because the smart ones see right through you.
Uneducated and smelly. Almost puts you in the homeless people category. Gotta love it.
Yeah, you are the same guys who need to rely on the US taxpayer to bail out the financial institutions that most likely employ you, and paid for your “bonus.”
Go back to your cubicles, as I must likely have equity in you as a shareholder… :p
And PHUCK Erin M. Callan…she is a liar and helped destroy LEH. I can’t wait to see what she’ll be wearing for her “perp walk.”
Hey ugly girls need lovin too (Even if it is from a trustafarian)!
you wish @61 you sound like a megalomaniac. And in case you are not educated enough to know what that means:
behavior characterized by delusional fantasies of wealth, power, genius, or omnipotence — often generally termed as delusions of grandeur or grandiose delusions.
Wall Street mentality: let’s package subprime/Alt-A loans into CDOs, have Moody’s and S&P rate them AAA, and spread the risk to others…
WOW, talk about intelligent!! No common sense at all…and to think that the lower tranches defaulting wouldn’t effect the quality of the CDOs.
You come up with things so complex you don’t even know what you were selling…how INTELLIGENT.
That is why I stick to PRIVATE EQUITY. :)
I ain’t no megalomaniac, I just love to STIR THE POT. :D Easy to get a rise from people here…
Here, have a stress ball!
this is nice stuff EP. flat tax revolution. led by the fiscal pez mechanics in peru.
45 best MFing stories out there. for today monday. in one friggin link.
including word that THC slows small cell lung cancer tumour growth. serious as the girdle bess wears.
the fed is insolvent. we got that story.
2 of Dealbreaker stories made the cut. 1 for EP and 1 for Bess.
http://bit.ly/IoYJ
Conceptually, I have no problem with a flat tax, with one exception. We should retain an interest deduction for a single homestead (perhaps with a cap) so that home ownership is encouraged.