Quote:
Originally posted by odduc
I believe in smaller government and lower taxes (flat tax is the only fair way).
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I've been waiting for this one to come up. I'm not convinced a flat tax is fair. Example below (and please do find holes in this theory. I *want* to be convinced of fairest way to deal with this issue)
A tax law in nation Z is passed. Everyone is given a flat tax of 25% of the montly income.
Family X of three people lives below the poverty level. They make $100.00 a month. Their flat tax is $25.00. Total food cost for the family is $50.00 a month. Rent is $25.00 per month, the cheapest rent the can find. They have no money left for savings, medical bills, etc.
Family Y of three people is loaded. The make $100,000 per month. Their flat tax is $25,000. They consume the exact same amount of food per month as family X, so the they spend $50.00. Because of their income, they had the privlege of choosing a really nice house to live in. They pay $1,000.00 a month in mortgage payments. They have a ton of money left over to spend on whatever the hell they feel like.
In theory, is the flat tax fair in this example? I say yes. Is it fair in reality? I say no. The reason why is that the factor of living expenses is not also assesed on a flat-fee in propotion to income. To make a flat-tax fair, it would seem that things like rent, food, etc shoud also be flat-fee's based on a proprtion of income. To do so otherwise, would be to make the shackles of poverty that much harder to overcome.