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  1.    #1  
    I heard this interview yesterday on my sat radio while driving. This is an interesting idea that has been catching more politicians eyes lately. This is also an idea that has many resisting it.

    What do you think? Would you rather pay your taxes on a postcard at a flat 17% or keep the current complex tax system?

    HERE IS THE FULL INTERVIEW: Steve Forbes' Flat Tax Solution, and I incourage you read the whole thing as it is not very long.

    CAVUTO: But those same people are going to say, but what about my mortgage deduction? Steve won't allow it.

    FORBES: Well, that's why I think what you have to do, what I propose in the book is, give people a choice, sort of turn the alternative minimum tax on its head.

    Put in a flat tax and let you decide. Do you want to go with the flat tax or stay with the old code? Ninety-nine percent of the people would say, go with the new. But, this way, you can say to people, don't take our word for it. See for yourself which one is better. And so, that way, people don't get hung up. Am I going to lose this? Am I going to lose that?

    .............

    CAVUTO: All right.

    Let's talk about fat cats. They end up doing very well, because, if the end result is pay 17 percent on your income, fine. It's a fixed rate across the board. The rich end off getting off jack-free.

    FORBES: The rich actually end up paying more money.

    We've seen in the past, when you lower tax rates, people at the top pay a higher percentage of income tax receipts. We first saw that 20 years ago, Neil. The top 1 percent, before Reagan took over — I hate to use numbers — but they paid 18 percent of federal income tax revenues. Today, that top 1 percent pay 30 percent. You want to collect more from the rich, make the code simple, so you can't hide the income. Make it flat and simple and you'll get more money from those at the top.

    CAVUTO: I'm going to give you one liberal line after another. One liberal line says, 17 percent for a guy earning $10 million a year has got to hurt a lot more than the guy who is getting 17 percent on $50,000 a year.

    FORBES: The nice thing about the way I proposed it is, there are generous exemptions for adults and for children. A family of four, mom, dad, two kids, would pay no federal income tax on the first $46,000 of income. And I don't tax their interest. I don't double tax their dividends. So, that way, salaried people can have a chance to put real capital together, keep more of what they earn, not get punished for succeeding. That's the American way.
    Last edited by HobbesIsReal; 07/20/2005 at 04:29 PM.
  2. santas's Avatar
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    #2  
    I'm a Democrat.

    I think Bush is pretty pitiful President.

    I like this idea. Always have. The current system wastes untold dollars.
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  3. santas's Avatar
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    Now I might be inclined to make it 18% or 19% instead of 17% to help close the defecit (I'd rather pay off my debt than give it to my children)
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  4. #4  
    I love the idea. It will NEVER HAPPEN, though. Politicians live by selling tax breaks for campaign dollars. That's the way it has always been. Furthermore, all those people who have bid up real estate to crazy levels will have no place to hide when they can't deduct their mortgage interest any more.

    I love the idea, but it's really a non starter.
  5.    #5  
    Quote Originally Posted by santa
    Now I might be inclined to make it 18% or 19% instead of 17% to help close the defecit (I'd rather pay off my debt than give it to my children)
    It is interesting that after the tax cuts that were suppose to raise the deficit.....it actually was reduced way ahead of schedule, due mainly to the increase in spending that helps to spur the economy. Now, with that in mind here is an interesting article 2 years ago about a successful flat tax in Russia that is at only 13%:

    Russia's Flat-Tax Miracle
    http://www.heritage.org/Press/Commentary/ed032403.cfm

    Yet in Russia, President Vladimir Putin -- the former head of the Soviet KGB -- implemented a flat tax in 2001. Not only a flat tax, but a flat tax with a 13 percent rate, four percentage points lower than the supposedly “radical” plan espoused by Steve Forbes and former House Majority Leader **** Armey. And it’s been a big success.

    ..........

    Yet every year, our tax code gets bigger and more complicated. In Russia, by contrast, the flat tax has been in place for more than two years now. And this reform took place in a nation still trying to overcome the legacy of more than 70 years of communist dictatorship.

    It also appears, conventional wisdom aside, that a low tax rate doesn’t mean less money for government. Over the last two years, inflation-adjusted income tax revenue in Russia has grown 50 percent. Why? Because people are willing to produce more and pay their taxes when the system if fair and tax rates are low -- exactly what Ronald Reagan predicted when he triggered America’s economic boom with lower tax rates 20 years ago. Ironically, the former communists in Moscow now understand supply-side economics, yet liberals in Congress are still relying on the politics of hate-and-envy.

    Interestingly, the flat tax is just one of several positive reforms enacted by President Putin. Russia also has reduced the corporate rate of tax from 35 percent to 24 percent. (U.S.-based companies still pay 35 percent, the second-highest corporate tax among industrialized nations). Small businesses also get better treatment. The old system with high tax rates has been replaced by a new system where companies can choose either a 6 percent tax on gross revenue or a 15 percent tax on profits.

    ..............

    The success of Russia’s flat tax shouldn’t surprise anyone. Hong Kong has had a flat tax for a long time, and it’s been the world’s fastest-growing economy over some 50 years. Indeed, there are growing signs that China may implement a flat tax in the near future. Talk about a man-bites-dog story! One of the few remaining communist nations may get a flat tax before America. At this rate, the United States may wind up in the same category as France, Cuba and North Korea.
  6. #6  
    Im for a flat tax but if you do it, then everyone is on it with no exemptions. Plus I would lower it to 10% or less. I think if you took 10% of EVERY income...we would have plenty of money to fund everything (health care, SS, the War, education, etc).

    It won't happen because we influence a lot of policies by modifying the tax code every year that we wouldn't be able to do if we flatten it. (housing, bus. develop., marriage, energy cars, etc.)
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  7. #7  
    Should the Tax World be Flat Or Not?

    Yes it should be.
  8. #8  
    Count me in as a vote for a simple flat tax.

    That being said, I don't think it'll happen in my lifetime. There's just way too many people making tons of money on the current complicated system. Not just the wealthy and their loopholes, but think of all the unemployed CPA's that we'll have.
    Never argue with an *****; people watching may not be able to tell the difference. - Author unknown

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