Wyden's Flat Tax


P

Paul Thomas, CPA

Bob B. said:
Geez, you're both right depending on how you look at it, no?



No. There is no "zero tax rate" applied. Those wages or earnings are
exempt from the tax.




The rate is single since no person ever pays anything
other than the stated rate on any income that legally
falls under the tax. The rate is not single in that it is not
a continuous function of income from zero to infinity.


Does it have to be to be considerd "flat"?




I have more sympathy for Randall's position, because you're arguing that
certain types of income are exempt.

They are. Exempting income doesn't mean there is a tax rate or "0%" on the
exempt income.


When someone says "types of income", they usually mean
something like the difference between wages earned and
capital gains, not between the 97,500th dollar and the 97,501st dollar
earned in exactly the same fashion.

"Types of income" is not an issue here. The fact that there is some of the
same type of income that is exempt is irrelevent to the matter of the tax
rate being flat on that income that is taxed.





So the distinction does seem disingenuous and very
much like a tax weighted to fall disproportionally on
those earning less than the cap.

At very small incomes from wages and/or self-employment there is a negative
tax as it relates to the Earned Income Tax Credit, which is effectively a
refund of FICA paid or withheld.
 
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B

Bob B.

No. There is no "zero tax rate" applied. Those wages or earnings are
exempt from the tax.
So you keep repeating.
Does it have to be to be considerd "flat"?
By my definition, yes. Graph your tax rate as a function of income out
to $1million dollars.

Does it look flat to you?

You have a different definition. Why should I respect it as superior?
They are. Exempting income doesn't mean there is a tax rate or "0%" on the
exempt income.
So you keep repeating. Perform the integration of annual income times
flat tax for all incomes out to $1million dollars. Is there a
difference in tax owed?

The two ways of eyeballing the problem are operationally
indistinguishable. For the zillionth time, why should I prefer your
definition?

If you have some authority to which you can appeal for your definition
of a flat tax, by all means make that appeal. Otherwise, I prefer
Randall's as more intuitive and mathematically correct.

In case it isn't clear, I'm challenging your claim to get to define what
constitutes a flat tax. You may prove me wrong at your leisure.
Wouldn't even surprise me if you do, but your-say-so is insufficient.
 
P

Paul Maffia

Sorry Bob, but the moron definition fits you and the other dufass.
Bob B. said:
Aw, don't be so hard on yourself. I'm sure you have some redeeming
qualities. Somewhere.

The folks who are advocates for a True Flat Tax generally mean exactly
that. One rate. All income. No exemptions.
And you are absolutely and completely wrong. The flat taxers all propose
exempting substantial amounts of income before it gets taxed. All of the
flat tax schemes proposed in the last 10 years have exempted specified
amounts based on family size. Most talked about exempting approximatly the
first $32,000 + for a family of 4 and taxing everrything beyond that at the
single rate.
Good. At least you understand the basic argument. You even got it right.
I have had it right from the beginning. You are the one lost in moronic
gibberish.
He's gotta run for something. Group prick apparently has been sewn up for
some time now.
You are making a mighty run for that title as well.
 
S

Steven

What Steven was implying was that when we were 14 (like you) and had a
whole summer, we spent a lot of it trying to get laid. Not wasting time
wondering about health care. Well, except for where to get rubbers.
Or girls that would actually show us their tits, more or less.
 
P

Paul Thomas, CPA

Bob B. said:
So you keep repeating.


http://caselaw.lp.findlaw.com/casecode/uscodes/26/subtitles/a/chapters/2/sections/section_1402.html

United States Code
TITLE 26 - INTERNAL REVENUE CODE
SUBTITLE A - INCOME TAXES
CHAPTER 2 - TAX ON SELF-EMPLOYMENT INCOME
Section 1402(b) Self-employment income
The term "self-employment income" means the net earnings from
self-employment derived by an individual (other than a nonresident
alien individual, except as provided by an agreement under section
233 of the Social Security Act) during any taxable year; except
that such term shall not include -
(1) in the case of the tax imposed by section 1401(a), that
part of the net earnings from self-employment which is in excess
of (i) an amount equal to the contribution and benefit base (as
determined under section 230 of the Social Security Act) which is
effective for the calendar year in which such taxable year
begins, minus (ii) the amount of the wages paid to such
individual during such taxable years; or
(2) the net earnings from self-employment, if such net earnings
for the taxable year are less than $400.





The law does not impose a tax of "zero", it exempts those wages and earnings
above a statutory amount, and for self-employment income, below $400.

Again, please make every effort to find where the law imposes a "0%" tax
rate on anything.





By my definition, yes.


Then there will never be any pure flat tax.



You have a different definition. Why should I respect it as superior?


I'm not defining a flat tax, nor am I arguing that it's a pure flat tax.

But there is only one tax rate and it applies to a limited amount of income.
It's what the law says. It's not a guess, or some "alternative" explanation
that doesn't make sense in the light of the written words of the law.




The two ways of eyeballing the problem
are operationally indistinguishable. For
the zillionth time, why should I prefer your definition?


This isn't a "the glass is half full -v- the glass is half empty" type of
matter. There is not a "0%" tax rate applied - that income is exempt from
that tax, period.

It's not my opinion, it's what the law says....."shall not include".

Terminology is specific here, and as with all things legal, words are
crucial to the matter at hand.




If you have some authority to which you can appeal for your definition of
a flat tax, by all means make that appeal. Otherwise, I prefer Randall's
as more intuitive and mathematically correct.

In case it isn't clear, I'm challenging your claim to get to define what
constitutes a flat tax. You may prove me wrong at your leisure. Wouldn't
even surprise me if you do, but your-say-so is insufficient.



There isn't any "flat tax" by any pure definition of a flat tax, and there
probably won't ever be one. We are an advanced "civilized" society and
we've learned that a pure flat tax is regressive in it's imposition.

My point is that certain income is exempt from the tax, not that the rate
drops to "0%" as claimed by others.

While exempting certain income from the tax may not make it a "flat tax" by
definition, it is closer to a flat tax than proclaiming that there are two
rates, 15.3% and "0%", as the facts just don't prove there's any logic to
that claim.

In adition to that twist, there are maybe a half dozen other types of
earners that are exempt regardless of their earnings. Namely clergy,
newspaper delivery kids (under 18), if you're employed by a foreign
government, fishermen on boats with less than 10 crew, sharecropers, certain
state and local government employees. Those wages or earnings are not
"taxed at a 0% rate", they are exempt from that tax and the rate.

There is a difference in terminology, and it does matter.
 
B

Bob B.

The law does not impose a tax of "zero", it exempts those wages and earnings
above a statutory amount, and for self-employment income, below $400.

Again, please make every effort to find where the law imposes a "0%" tax
rate on anything.
I never made that claim. I said it is operationally equivalent to a 0%
tax rate on income. I said it violates the common layman's definition
of a flat tax.
Then there will never be any pure flat tax.
Why? Where is it prohibited in the Constitution?
This isn't a "the glass is half full -v- the glass is half empty" type of
matter. There is not a "0%" tax rate applied - that income is exempt from
that tax, period.

It's not my opinion, it's what the law says....."shall not include".

Terminology is specific here, and as with all things legal, words are
crucial to the matter at hand.
Then by all means, please provide the legal definition of a flat tax.

I'll even allow that certain types of income are exempt. But an
arbitrary threshold on income that is otherwise qualified as "ordinary"
on your tax form creates a system where the more you make above the
threshold, the lower your individual tax rate as a percentage of your
ordinary income. Whatever that is, it does not qualify as a flat tax.

By my definition, a flat tax would have two persons paying the same
percentage in taxes on all income of the same type.

Every year, my paycheck gets bigger in the fall, but nothing about my
income or its source has changed except that some of it has been whisked
away as exempt.
There isn't any "flat tax" by any pure definition of a flat tax, and there
probably won't ever be one. We are an advanced "civilized" society and
we've learned that a pure flat tax is regressive in it's imposition.

My point is that certain income is exempt from the tax, not that the rate
drops to "0%" as claimed by others.
Probably time to just drop the issue.

While exempting certain income from the tax may not make it a "flat tax" by
definition, it is closer to a flat tax than proclaiming that there are two
rates, 15.3% and "0%", as the facts just don't prove there's any logic to
that claim.
I agree. It is closer to a flat tax.

But do not say that there is no logic to the claim. Show the graph of
the tax rate vs. income to a mathematician and don't tell him the
source. See what he says about the step function defined by the
relationship.

Or plot the relationship between income and percentage of income paid in
taxes under the current law. It's not constant. It's not FLAT.

There is a difference in terminology, and it does matter.
You're right it matters. It allows a non-flat task to masquerade as one
through a sleight of hand by defining away the non-flat portion.

Operationally, there is no difference at all. An exemption of a portion
of income from a tax is equivalent to a 0% rate on that income. It is,
from a measure of taxes collected, indistinguishable, regardless of how
the law is written. In math, when two functions are indistinguishable,
we call them equivalent.

Everyone understands instinctively what the flat tax proposal implies.
By your definition, we could replace the current tax structure with a
tax on the first $20k of annual income at 50%, and exempt all income
above that amount, yet still call it a flat tax. Everyone within
hearing distance would laugh you out of the building.

So what we have may be the closest thing to a flat tax we will ever see.
Yet it still favors the high wage earner.
 
P

Paul Thomas, CPA

Bob B. said:
I never made that claim.

Yet you support that assertion made by others.


I said it is operationally equivalent to a 0% tax rate on income.


If it was, then the law would read as such. It reads that certain income is
~exempt~ from the tax.




I said it violates the common layman's definition of a flat tax.

No doubt it does, but it also violates the common layman's definition of a
dual rate tax. There is clearly one tax rate, and it applies to certain
income, but not all income.




Why? Where is it prohibited in the Constitution?

It's not prohibited, but you'll never get a democraticaly elected person to
impose a tax on all incomes without some amount of exemptions somewhere, for
someone, at some age, or some disability.

They are, after all, politicians, and being such, know how their bread gets
buttered.





Then by all means, please provide the legal definition of a flat tax.

There isn't a legal definition of a flat tax, as none exist in the US at
least.



Every year, my paycheck gets bigger in the fall, but
nothing about my income or its source has changed
except that some of it has been whisked away as exempt.


Good for you.



But do not say that there is no logic to the claim. Show the graph of the
tax rate vs. income to a
mathematician and don't tell him the source. See what he says about the
step function
defined by the relationship.


He'll say that income above a certain amount is exempt, as is income below a
certain amount.




You're right it matters. It allows a non-flat task to masquerade as one
through a sleight of hand by defining away the non-flat portion.


I've never claimed that payroll taxes, or self-employment tax is flat, but
it does have ~one~ tax rate that applies to a certain type and amount of
income. As such it's as flat as we got at this time.



Operationally, there is no difference at all.

Well geeez. So you want to claim that someone with tax-exempt income (like
muni bonds) has an effective tax rate of 0% applied toward that tax exempt
income? That IS what you are implying.

It's "tax exempt" - - - - - - not "muni-bond income x 0% tax rate".



An exemption of a portion of income from a
tax is equivalent to a 0% rate on that income.

If it were, then the law would make that point. It does not. It exempts
certain income. It does not apply a rate of 0%.

If that were the intent, it would clearly state the rate is X% up to the
doillar limit and then the rate is 0% above that.



It is, from a measure of taxes collected, indistinguishable,
regardless of how the law is written. In math, when two
functions are indistinguishable, we call them equivalent.

so 6 x 8 is indistinguishable from 50 - 2 ???????

The end result might be the same, but they are not indistinguishable.


Everyone understands instinctively what the flat tax proposal implies.

I don't. Explain it to me.



By your definition, we could replace the current tax structure
with a tax on the first $20k of annual income at 50%, and
exempt all income above that amount, yet still call it a flat tax.


Sure. A politician can even call it "fair" if they like.

But if such a beast were ever enacted, there would be just one rate, on a
fixed amount of income.




So what we have may be the closest thing to a flat tax we will ever see.

It may be.

Yet it still favors the high wage earner.


What a goal to strive for eh?



There are dozens of tax laws that favor the low income folks, turn-about is
fair play.
 
D

(David P.)

Steven said:
I'll be dead and I suspect you will also.
It would be much more equitable having each individual fight the
flu on his own, rather than waste resources having armies fight each
other over resources. By stopping the suppression of influenza,
everyone could be on the front lines, instead of just a few good men.
..
..
--
 
L

Lobby Dosser

Steven said:
Or girls that would actually show us their tits, more or less.
Kick the Can on a hot summer night. Hiding in the woods with Jo ...
 
L

Lobby Dosser

(David P.) said:
Why do you want to inflict a 50%-greater
world population on your descendants?
.
.
If it wasn't for descendants, the population wouldn't get that high.
 
D

(David P.)

Lobby Dosser said:
If it wasn't for descendants, the population wouldn't get that high.
Birth control isn't enough.
Gotta have death control, too.
..
..
--
 
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