Liberals really like taxes because they can fool their recipients into the line of thinking that they are the ones who is giving it to them. All the while they get a self-righteous attitude from this self deception and they demonize the people that truly fund their taxes. When you look at it that they earned that money then they should have the right to keep most of it and not be demonized for keeping more than you want them too. That is the meaning of private property. To demonize someone for their greed is to betray the idea that they earned anything, even if they refuse to loan you 20 bucks.

This is why the Fair Tax is so appealing. http://www.fairtax.org

It doesn’t take from those who can barely cover the necessities of life.

Actually, when you say that 95% of Americans make under 100K per year, this is a bit ambiguous. The average individual worker makes something like 45K, so yes, 100K earners are probably in the top decile, for sure. However, what is more relevant is HHI (Household income) which is much higher, particularly for two incomes.

http://en.wikipedia.org/wiki/Household_income_in_the_United_States

This link will prove that basically, the more you work, the more you earn! (shocker, I know). So two income households earn quite a bit of money.

In high cost areas like CA, the average income (for one wage earner) are very high. 90K/yr in San Francisco, for example.

But that is more than offset by the high costs. So people who make 200K a year in SF are no better off than a family in Des Moines making 50K, I’d guess. Since a house in SF is at least 4x the price of the Des Moines house. So, it all evens out.

In any case, I realize this “thread” is now about 2 years old. And that since that time, the Fair Tax has gained national attention. I urge everyone to examine its details. I think you will find it much more compelling (and of course, much more fair), than the current system.

http://www.fairtax.org

What has happened though, is that the Left has sought to demonize people who earn more than the national average, when in fact these are not the people who are concentrating all the wealth in this country. There is a HUGE gulf between a 250K/yr household and a 2M/yr household. There is simply no comparison to be made: the 250K/year household is typically working class (we’ll assume the income is active not passive, or at least the passive part is enabled by the active part), middle class or upper middle class in lifestyle, and is certainly not in the “capital” class.

It is one thing to ask people who have so much “excess” income that even a 10% tax doesn’t cut into any necessities of a life lived with dignity (housing, food, clothing, insurance, energy, college savings, vacations, retirement savings, charitable giving, etc).

It is another thing completely to ask people who cannot even fund the above fully, to sacrifice their incomes.

It scares me when the government starts to make judgment calls like that about what’s poor and that’s essential, etc. It should just be simple and basic percentage if you want to be a law abiding tax payer living in the US. In a practical sense you make a good point as well that if people have to choose between food or paying the tax, they will choose food and become law breakers. But that’s fine and is basically how it works now too…if you don’t pay taxes but are so poor as to not be worth auditing by the IRS then you just fly under the radar. This is fine…but ultimately people have an incentive to become real taxpayers if they ever want to get loans or buy a house, etc. So the system still works.

The cigarette tax is a “sin tax”…equally ridiculous for the government to try and legislate morality. They don’t have any business telling you how to spend your own money, as long as you aren’t hurting anyone else.

Anyway, I’m certainly not suggesting we eliminate taxation. We need a government. But really only for about 3 things: protect the border from invasion (military), keep the peace (police), protect property rights (courts). By the way, environmental issues would fall under property rights. There are a few others which I think we could make a case for, but probably about 80% of the government is unnecessary. By eliminating the rest of the government we could get away with probably a 10% tax rate or less.

Glenn, regarding the “flow of money in the system slows and the functioning of the economy is impaired”, I’d challenge you to find a single piece of evidence to back that up (done by an economist).

It’s actually the exact opposite. Successful entrepreneurs are one of the most important drivers of the economy. They are highly compensated because they took huge risks (where 99% of people failed) to create new products and services which offer value to the world.

With a consumption or transaction tax Warren Buffet would pay a tax on everything that he spends. And sooner or later he (or his heirs) will spend every dime he has made. With a flat tax or a progressive tax the money is not collected until it is considered income. As long as Buffet keeps moving it around in the stock market and keeps it from being declared income there is no tax. With a transaction tax there would be money collected on every trade, unlike today where you can declare a loss and not pay any tax.

If I’m not mistaken, I think they call the current tax system a “Progressive Tax System” where those that make more money are taxed more. However, like you said, a simple flat percentage works the same way. Therefore, I think the same “Progressive Tax” should apply for a fixed percentage. It actually might, I’m not sure.

As per your argument on having a fixed percentage tax…I do see the merit in the argument, however I feel like the extremely wealthy (like Warren Buffet, as Kevin pointed out) can afford to pay a higher tax bracket. A professor of mine told me a story about a hedge fund manager who had made $300 million dollars and was taxed $100 million of it. My professor was against it, but I felt as if, well if he still has $200 million, he can certainly afford a $100 million tax.

So I can’t say I entirely disagree with your idea of a flat percentage, but I believe that in at least some extreme circumstances, certain individuals with a LOT of money can afford the high tax bracket anyway, and it certainly wont seem that punitive. After all, the $100 million in tax wont seem to be nearly as much to the individual netting $200m in take-home pay as $10k in tax would be to someone netting $20k.