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Are the Republicans implementing the "flat tax" through the back door?
Republicans are pushing income tax "reform" that will eliminate many tax deductions like the mortgage interest deduction, the deduction of state and local taxes, and the deduction for employer paid health insurance (but not the 15% capital gains rate) in exchange for reducing the top marginal rate by 10%. By my calculations, the loss of these deductions is going to put a lot of people who consider themselves middle class earners into the top tax bracket paying the same tax rates as those at the top income levels. Is this a stealth "flat tax"?
Lowering all of the marginal rates is meaningless unless you change the income levels for each bracket. If you take away deductions like the mortgage interest and health-care insurance deductible and leave the income brackets the same, the higher taxable incomes that result will push middle class earners into the top tax bracket, essentially raising their taxes. Someone making $130,000 a year will jump to the top 25% marginal rate, the same rate a million dollar earner pays. The lost deductions are not as important to higher income earners. A million dollar earner is not paying ten times more for health insurance than a $100,000 earner, thus the effective marginal rate for high earners would decrease.
Capital gains, or unearned income, is part of the income tax. The current top 15% rate on long term capital gains is why warren Buffet talks about paying a lower income tax marginal rate than his secretary.
3 Answers
- ?Lv 710 years agoFavorite Answer
They aren't implementing ANYTHING. They CAN'T. That's the problem.
Now a little fact-correcting:
Republicans are pushing INCOME tax reform that will eliminate many tax deductions and reduce the top THREE brackets. (there are 5 - unless you want to count "0%" as a bracket) By definition, that includes REDUCING rates for the middle-class you claim you care about.
AS IS, millions of working class families, most of whom no-doubt consider themselves middle class, ARE in the top bracket and therefore the TARGETS of every piece of Democrat "tax the billionaires" propaganda.
By the way, INCOME tax and capital gains tax are TWO SEPARATE THINGS and the GOP plan still has three separate brackets (4 if you want to count the 0% "bracket") so isn't all that flat, really.
The key is that their plan leaves the BOTTOM 2 (or 3) brackets at their historically LOW rates and moves the rest closer to the LONG-PROVED revenue optimum rate thus guaranteeing* a dramatic INCREASE in revenue to the Treasury.
*Sure "past performance does not guarantee future results." That being said, we have literally thousands of years of human history across which this has NEVER failed - anywhere - ever.
- Anonymous10 years ago
I can't freely answer to your question
because the people of the free world
decide the freedom of speech is inapplicable in Y!A
so I keep my political & religious opinions for myself
in order to avoid too get reported or blocked or insulted
from my goodfellas US Citizen Brothers and Sisters
who love so much our Constitution and our Freedom
- Smarter Then YouLv 610 years ago
It's not even close to being a flat tax. THE FACT IS, Republicans are clearly angling for a middle-class tax since their major donors are in the upper class.
