ELI5 What would happen short term if the US got rid of income taxes and went to a flat rate? What would be the long term outcome?
ELI5 What would happen short term if the US got rid of income taxes and went to a flat rate? What would be the long term outcome?
You're viewing a single thread.
Flat taxes impact the poor dramatically more than the rich. I think that's the last thing we need right now.
Explain
If you make $50k annually and are taxed at a flat 25%, you're paying $12,500, leaving you with $37,500.
If you make $500k annually are are taxed at a flat 25%, you're paying $125,000, leaving you with $375,000.
It's a hell of a lot more difficult to support yourself and your family on $37,500 than it is on $375,000.
If one earns $10,000 per year, a $2,000 annual tax is 20% of annualized income.
If one earns $100,000 per year, it’s 2%.
The less one earns, taxes are a greater proportion of total income.
Often, flat tax concepts come (or should come with) tax exemptions for actual low-income folks.
A flat tax would be a set percentage of total income. It would cause the rich to pay more since they wouldn't have their deductions and loopholes, that's why there's so much bullshit propaganda against it.
The rich also have a hell of a lot more to tax. They SHOULD be paying a higher percentage of their wealth in taxes because they've gotten a much greater benefit out of the services those taxes pay for than a poor person.
Even if it works exactly like that, let's say you are poor and barely make enough to live, you still have to give 20% (as an example) to the government, even if you are fucked after and can't pay rent or buy food. If you make 20% more than you need, you end up with nothing left after. Rich people may end up paying more, sure, but a flat tax still screws over the poor as a rule unless there is some provision that it only starts after X income, and you know that threshold will always be set too low.