Soap Box:  The Flat Tax Plan

April 23, 2001

Let me get the ball rolling by stating that I am against a flat tax plan.  I also don't mind paying taxes (if they are needed) and I definitely think the rich should be paying more in taxes than the common man.

Now, let me explain myself.  Let's consider the flat tax plan for a moment.  In its simplicity, it means that everyone pays the same percentage.  On the surface that sounds like a good, fair thing.  The poor could pay 10% and the rich could pay 10%.  Since the rich make more money, their 10% would be more money.  Sound fair?  I say no.  Let's consider what that 10% might mean to a poor person.

The less money you make, the more that tax percentage can hurt.  Poor (or lower and middle class families) often live from paycheck to paycheck and have to constantly worry about making ends meet.  They have rent or house payments to make and food to buy.  Let's say they are right on the edge and the tax rate is 10%.  After paying their rent and buying food, they have just enough money left at the end of the month to do something fun like the movies and dinner.  Now let's imagine that the tax rate increases to 15%.  Now something has got to give since they have less money.  I doubt they can do anything about rent so they will have to cut back on either the food or the fun.  Maybe they can buy cheaper food.  Maybe they skip a meal.  Maybe they can have less fun, maybe just go to dinner instead of the movies.  My point is that the lifestyle of lower income people can be really affected by the amount of taxes they pay.

Now let's consider the rich people.  They also pay house payments and have to buy food.  Since they are rich, they live in much nicer houses.  They buy better quality food.  At 10% tax, they not only could pay for their houses and food, but since they make so much money to begin with, they still have plenty left over for movies, dinner, sports cars, swimming pools, second house, yacht, savings account, etc.  They have so much extra to begin with, they don't really have to concern themselves with making ends meet unless they are really living well beyond their means.  Now let's imagine the tax goes up to 15%.  That means that the rich has to pay more in taxes, just like the poor.  What changes for them?  Absolutely nothing!  They make so much more to begin with, that they can still pay the extra tax, pay for the house, and pay for their food without having to change any other aspect of their lives.  They'll still have plenty left over for all the extras in life like their yachts, swimming pools, etc.  The only thing that really changes in their lifestyle is that they will probably complain more about having to pay more taxes.

The point I'm trying to make is that you just can't look at a certain tax percentage and consider it fair.  Although the rich actually pay more money in taxes (i.e. 10% of more money), they are still not as affected by the tax as poor people.  In other words, you need to apply taxes in respect to how much of a burden it imposes.  To be fair, we should all share the same tax burden, not the same tax percentage.  If paying taxes makes poor people alter their lifestyles then paying taxes should also make rich people alter their lifestyles.  They doesn't happen with a flat tax.  The rich need to be paying a higher percentage.  It's not fair that the rich can continue to live a lavish lifestyle while their fellow man struggles just to survive.

Now I'm not saying we should tax the rich out of existence.  Although a lot of wealth is inheritance, some do actually work very hard to become wealthy.  And they do deserve that wealth for their work (though I'm not sure about doctors and lawyers).  They shouldn't be taxed to a point to where they are no longer wealthy.  But they should remember that they are privileged to live in a nation that let's them obtain such wealth.  And they do need to share the same tax burden as their fellow man and that means paying a higher percentage in tax.

I could even envision a system where only the wealthy pay taxes.  After a certain point, more money doesn't affect their lifestyles.  If they could pay the taxes that the nation needs, yet still maintain their lavish lifestyle and with plenty left over to leave their heirs, then why not support the county that let them obtain the wealth in the first place.  That means that poor families would have a better standard of living and might even have enough to at least help their heirs.  And if the poor families are able to keep more of their money, that means that they will be spending more of their money which is good for the economy.  The nation as a whole would be better.

Jeff Polston

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