rmh wrote:Problem with a flat tax is that it's regressive. Lower income folks pay a higher percentage of their income for necessities, a loaf of bread is the same price for someone making $30K/year as it is for someone making $230K. A flat tax works the same way. The guy at 30 has less left over.
Would you get rid of the interest and taxes deduction for your residence?
I'm not sure what your point is. Of course, the guy with $30k has less left over. He makes less. Should he have the same left over as the guy making $100k. I don't get your point. You don't think someone can survive on $30k that is income tax free (still pay social security because we don't want to make that a bigger welfare program then it already is).
If you are talking about the fair tax (consumption tax) plan that is fairly popular. Everybody is rebated the tax they pay on the minimum necessities, so they are effectively paying no tax below a certain income level. I like this plan as well. It's probably a much better plan. However, I think the headache of transitioning would be greater and if the will to change the system actually existed, we could more easily radically simplify the income tax system. Of course, that wouldn't prevent it from evolving back into the current mess.
I would get rid of virtually ever deduction. That includes for your house. However, as I said, you could continue to file under the old code, if that was to your benefit. Therefore, nobody would be worse off as a result of going to the new system. You figure it out the old way and the new way and which ever one is less that is what you owe. The caveat being that once you file under the new simple code, you must use that code forever. Eventually, the old code would go away.