gbaji wrote:
Are you assuming this would only hurt rich people? Because you'd also be taxing 3% of your... everything.
Technically it hurts people who are drags on the economy, but yes it hurts the rich more.
Taxing 3% of my net worth would result in a significant tax decrease for me. And unless you're terrible at generating income on your assets, I suspect it'd result in a tax savings for you as well. For a median income of $52,000 one would need more than $208,000 in net worth before it would cost more in federal taxes (that's including the standard and personal deduction, it goes up much higher without those).
The primary value of taxing net worth over net income is that it encourages efficient use of resources. People who acquire assets that don't generate value at punished while people who acquire assets that do generate value are rewarded. It's entirely superior to taxing income in relation to incentives. They key problem is that it's difficult to objectively assess net worth, and difficult to verify. Income requires a transaction, which both parties involved generally have incentive to document accurately. No one else is directly involved in assessing my net worth, and I have reason to lie to the state were it taxed.
gbaji wrote:
For the record, I'm talking just about changing the current income tax system to a flat tax (everyone pays the same percent on every dollar earned). I'll even toss in the idea of eliminating all deductions and tax credits as well. Why not? You know, if you think you're getting a raw deal on taxes or something. Let's see who's in favor of such a thing.
You've been suckered here. A flat tax by definition is entirely, well, flat. You're throwing deductions and tax credits in because when Republicans have floated the idea of a flat tax they tend to disingenuously remove those items. They're handing out free axes, but the head and the handle will cost extra.
Anyway, sure I'd support it, but Republicans would never let a flat tax pass.
gbaji wrote:
Capital gains should not be taxed at all. The capital was already taxed when I earned it the first time. But that's honestly beside the point here.
Wrong, it's new income. When you buy $100,000 worth of stock (using capital that has already been taxed) and sell it for $150,000, the extra $50,000 above your basis is new income and consequently taxed. This is entirely consistent with our general method of taxing income. If I spend 100 dollars worth of labor and parts to build a bike, which I then sell for $150, then $50 in net income I earned is taxed.
gbaji wrote:
It's easy to shout for more government benefits when you're not the one footing the bill. I'm just curious how many people would be so on board with this sort of thing if they were actually paying their fair share.
It's easy to show the wealthy pay a greater percent of the nation's taxes than the percent of revenue they collect, but that's a fundamentally flawed measurement method.
It's flawed to compare direct income by someone making $10k a year and someone making $10 million a year. If we taxed businesses like we did people, airports would be bankrupt. We tax net income for businesses rather than income, because some industries have high proportional expenses.
The same metric should be applied to individuals, which is really what the standard deduction is about. There is a certain cost associated with me being able to work and generate revenue. I need to eat food and sleep somewhere. These costs are the same as expenses for businesses. Net income for me is what I earn beyond basic living costs.
If you remove the standard deduction by considering it as an expense to generate income rather than a arbitrary benefit, then it becomes much more evident how regressive the tax system is.