It's something I've been trying to understand why it's ok. I wasn't sure where to post this question but since taxes are in the news I thought I'd post it here.

Maybe I'm missing something but aren't flat taxes only fair? Someone please enlighten me. What happened to capitalism and free enterprise?

With a flat tax, the poor pay a much higher proportion of their income than the rich. If you make $20,000 and have to pay $3,000 in taxes, that hurts, but someone making $200,000 and only paying in $3,000 would get off pretty easy.

Maybe I'm confused. I thought a flat tax was a set percentage---everyone pays maybe 5% (instead of a progressive tax). So a person making $20,000 would end up paying $1000 while a person making $200,000 would pay $10,000. That just seems only fair to me but what do I know---I'm only 'goodnightmoon-the-SAHM'.

I'm no expert on taxes but I'm pretty sure that's not how a flat tax rate would work. How I understand it is that If someone made 10x the amount of money I made then they would pay 10x the amount of taxes I would.

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Let us be silent that we may hear the whisper of God. - Ralph Waldo Emerson

Yes, this is my understanding too. With a flat tax everyone would pay a flat percentage, not a flat dollar amount.

I don't understand why we can't do this either. Seems perfectly logical to me.

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The way I understand a flat tax is that it's a set percentage of your income (not a set amount)...so if you make $20K a year, obviously, you pay less than someone making $200K.

I'm all for a flat tax!

I like the flat tax idea as well. Now, maybe it doesn't reap as much money and that is why the government doesn't go for it. I really don't know. But I do think that is the most fair.

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I like the idea too, and I think calimari is right, if it brings in less for them, the gov't will most likely not go for it!

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married 8 years to a crazy Brit, mommy to a banana, she is 4 and a pineapple who is 1 year, mommy to 3 ~angel~ babies

I've always been in favor of it. And before someone asks, there would still be people too poor to pay any taxes, just as there is now. Income with be taxed starting at a certain level. But it will never happen. As Obama says, "We need to spread the wealth around."

Whoohoo! Another reason to pull out my econ books!

Flat taxes are called "regressive taxes" because they hurt the poor because while taxing them at the same percentage as everyone else it is on a lower amount of income so it will hurt them. The system we have now is called a "progressive tax" because it taxes the more weathy (or at least supposed to) at a higher percentage.

Here is an example: Suppose we have a flat tax started at 10% (to make the math easier more than any other reason). If you make $30,000 a year you will be taxed $3,000, which, obviously, would only leave you with $27,000 to live on the rest of the year. If you make $100,000 you will be taxed at $10,000 and will have $90,000 to make ends meet the rest of the year. Obviously, the person at $100K will not be as affected by the tax.

Suppose you have the current tax system (and I am really pulling numbers out randomly and for ease here as well). The lower income person may be taxed at 5% so that would be $1500 and they would be left with $28,500 for the remaining part of the year. The $100K person would be taxed at 25% and would have $75,000 to live on the rest of the year. The idea behind progressive taxes are to make the wealthy pay more of a proportion to not hurt the poor as much. Plus, usually, the government will get more money with progressive taxes as well. (In this example, the government got $13K in a flat tax and $26,500 in a progressive tax system. Again, the numbers were picked for ease more than any other reason.)

Personally, I do not care for the flat tax system because it will hurt the poor. It will be a WHOLE lot easier, sure, but it will not benefit those who need help the most. I do think the IRS needs to be totally rehauled to get rid of a lot of the loopholes we have in the system now. JMO