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photo by Sheri Dixon

Friday, April 13, 2012

Why the Flat Tax Falls Flat

I thought we'd be done having to deal with this once Herman 9-9-9 Cain dropped out of the race after it was found out that he was really referring to how many women he was messing around with, how many times, and what level of Dante's Hell he was aspiring to.

"The flat tax is the most fair of all- if you make $100 you pay 10%. If you make $1,000,000,000 you pay 10%. Across the board- fair. AND it would eliminate the IRS completely- think how much money THAT would save!"

*Cheers from the crowd*

Not so fast.

If all anyone had to worry about was income and being taxed, yes. A flat tax is fair. But it totally ignores the messy, chaotic stuff of what it takes to exist in this human world.

Things like...rent and food and wheels and utilities and clothing and whatnot.

The flat tax does not take into consideration that even if a poor person lives very frugally and a rich person very extravagantly, you will be hard-pressed to prove that the percentage of a person's income that they spend on living is the same for a poor person than a rich person. Very. Hard. Pressed.

Hey! It's first thing in the morning and I've got like 10 minutes to do this and I haven't had coffee- LETS DO MATH!!!

Lets use for fun a person making minimum wage- $15,600 per year at 40 hours a week if they don't take any time off. Gross. (by both definitions of the word), and a person making $500,000 per year. Both are taxed at 10% to be fair, and that leaves person MW (minimum wage) with $14,040 to live on and person HM (half a mil) with $450,000.

We'll use imaginary numbers here, assuming MW will live frugally and HM will be a little more extravagant.

monthly expense/ Minimum Wage/ Half a Mil

rent/ $500/ $5,000
food/ $400/ $4,000
wheels/ $200/ $2,000
entertainment/ $100/ $1,000
clothing/ $100/ $1,000
vacation/ $LOL/ $5,000
utilities/ $500/ $5,000
insurances/ $500/ $5,000

TOTALS PER MONTH/ $2,300/ $28,000

TOTALS PER YEAR/ $27,600/ $336,000

NET LEFT TO SAVE
FOR RETIREMENT/ -$13,560/ $114,000

See? Fair as the day is long.

And the above numbers don't even reflect the much higher interest rates MW will be paying IF he/she can even get financed at all.

If your core beliefs are that ANYONE ANYWHERE can work hard and get good grades and (get a big damn loan and) go to college and end up being HM instead of MW you are being very very simple-minded and unrealistic, probably one reason you love the Flat Tax and think it's fair in the first place.

Because life isn't fair.

But it's our duty as humans to make it at least less awful for those who ARE working hard and ARE doing their best and still end up in the financial crapper.

One thing us bleeding heart liberals are always being accused of is forging ahead without thinking about the real monetary cost of the "touchy feely soft-hearted things" we wanna provide for people- those pie in the sky luxuries like health care, and living wages, and food.

We're accused of not looking at the numbers and thinking clearly and rationally.

Well, look at the above numbers and tell me the Flat Tax is still fair.

*PS- adding in tax credits and exemptions for Minimum Wage sort of takes the wind out of both the "Flat" and the "Simple" sails, so don't even go there. That would mean you're actually NOT for a Flat Tax, after all.








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