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Originally Posted by MikeSTI
no because in the worse case I would end up spending more with a flat tax
12,000*.10% = 13,200*2=26,400> 12,000*2=24,000-2,000=22,000
and it kind of works that way up the scale like haveing a mortgage gets me into the next tax index down so I save 3% or so on my taxable income
IRA's are also another good tax shealter its just knowing how the system works and trying to get the most out of it instead of the many people that just fill out the EZ forum
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I'm having problems understanding your math.
12,000*.10% = 12,000 * (.10/100) = 12. What's the 13,200*2?
And even if you meant 10%, not .10%
12,000 * 10% = 12,000 * (10/100) = 1200
So let me try to illustrate my pointwith my own math:
Let's say you make $50,000/yr. With the current tax scheme, most people end up paying between 15% and 20% in that tax bracket after all their finagling with deductions, etc, right? On average, that's $8,750. (50,000 * 0.175)
Now let's look at a flat 10% tax: 50,000 * 0.1 = $5000.
That's $3750 per year right back into your pocket.
Now let's look at a giant corperation. Let's say they make $100 million a year. After all their finagling they probably end up paying a whopping 4% in taxes. That's $100,000,000 * .04 = $4 million. With a flat tax they no longer get to put their money in tax shelters, and get exemptions and all that crap. They pay the 10% just like everone else, that's $10 million.
Of course the corperations will have to pass this additional cost on to the public as increased prices, but it's not a massive increase... only 6% compared to the 7.5% more money you've got in your pocket.
The real benefit comes from not having a complicated tax system. No complicated filing, your employer just sends off 10% of your money, or you write a check once a year. Fewer audits, and fewer people cheating on their taxes.
Now I don't claim that the numbers above are really accurate. I don't have real data on how much people make/pay, but they should illustrate my point. Will there be people paying more under a flat tax? Probably, but I'll bet the majority of people paying more will be in the upper-middle to filthy-rich classes... and that's like what 5% of Americans? Most people will feel tax relief, and many in the middle-class like you and I will end up paying just about the same as we're paying right now.