Yay, I have a nickname! I HAVE ARRIVED.

Okay, I should back up why a flat tax would exacerbate the situation - it amounts to a tax break for the wealthiest. A progressive tax essentially redistributes wealth, by taxing the haves more than the have-nots and using that money (hopefully) for programs that benefit the general good.

Taxing everyone at the same percentage either amounts to a tax hike for the poor or a tax break for the rich. You can try to counter this with deductions, but then you're ending up both with loopholes (as Gunfighter06 pointed out) or some version of a progressive tax again.

Either way, the government that was siphoning off some of the wealth accumulating at the top won't be doing it as much any more.

Without the government, what is to stop the upper 0.1% from accumulating almost all of the wealth?

@ SergeantCitrus

I am in favor of a flat tax system with different levels for different brackets, but I would still favor keeping taxes as low as possible for everyone (not just the rich or poor). One thing we must do is keep taxes as low as reasonably possible on businesses and make their tax rates permanent so that particular uncertainty is eliminated from the market.

"Without the government, what is to stop the upper 0.1% from accumulating almost all of the wealth?"

With the government, what is to stop the government from redistributing all of the wealth? Seriously, the upper 0.1% wouldn't accumulate all of the wealth even in the freest of markets because there would still be money to be made. Someone has to manufacture their private jets, yachts, and Cadillacs. That *someone* is an ordinary blue-collar worker at Cessna, Lear, or Cadillac. Trickle down economics is not perfect at all, but it is far better than any sort of redistribution system. Until someone invents a better system, we should stick with the free market system.

@Fasces - My 35-40% was assuming that the initial deductions were sufficient for any household to cover the neccessities of life and all we would tax would be true disposable income.

Also, I think if the deductions were fixed and locked into the tax code as far as what was and wasn't a deduction (spell it out, one for residence and one for each individual, no more) then there wouldn't be any loopholes. You define a residence as the location where no fewer than 6 months of the year is spent. You define a dependent as someone who lives in the same residence (same 6 month rule applies). Students in college are no longer dependents, but they get to claim themselves and their campus quarters on their tax form.

But I can already see where this could become troublesome. A shared dorm room - who gets to claim the room? Or do they both get to claim it?

OK, I admit, there are some issues with it. But the idea of a higher flat tax as long as we had a clear cut way of determining disposable income and not allowing any other loophole deductions beyond the obvious ones would make things fair, fund the country, and keep the bottom 50-60% from being overburdened.

Who's talking about redistributing all of the wealth? I'm defending a progressive tax system, not advocating for 100% or even 70% tax rates on anyone. Why can't government just soften some of the harder edges of a free market?

The upper 0.1% might not accumulate ALL of the wealth, but they can have such a huge portion that it is a detriment to the rest of the world. Scarcity is real (and it's about to get even more real when we run out of cheap energy), and there is a finite limit to wealth no matter how advanced our technology becomes.

A flat tax with different levels for different brackets is a progressive tax system. A simplified one perhaps, but still progressive.

Run out of cheap energy? Since when did wind and solar become so expensive? They make combo systems that will run your home and pay for themselves twice over in their lifetime, freeing you from the electric company. I'm seriously considering a combo system at the new house, although I'll still keep gas heat for the winter time, I can sell the excess electric *back* to the electric company.

"Without the government, what is to stop the upper 0.1% from accumulating almost all of the wealth?"
When have the ever done that in history?

http://en.wikipedia.org/wiki/Flat_tax#Eastern_Europe

It has seen wages in the lower class sky rocket as a result of adopting more absolute capitalist ideals including a flat tax rate.

@Draug: However your not taking one thing into account. Every single country that has introduced a flat tax rate has resulted in MASSIVE tax revenue increases and lower then the traditional middle class income tax rates.

They have seen increases in wages in the lower class and higher disposable incomes in the middle and upper classes.

They benefit the economy because the prevent income evasion, encourage consumer spending and result in higher government revenues, allowing for either more spending or less taxes.

"Since when did wind and solar become so expensive?"
The cost per Kilowatt of energy from Nuclear is 2.7 cents,
From Clean Coal it is 3.1 cents
From Wind it is 7 cents
From Solar it is 12 cents
Coal and Nuclear are WAY cheaper and easier to profit on then wind or solar, and that is why we use them. Once we run out of coal and oil energy prices will probably quadruple or something along those lines.

However that will happen regardless of a strong upper class or not...

*Those stats about cost of energy I read 2 years ago so those numbers are out of date and might be a little wrong since I don't have a perfect memory, but they are ball park.

Fasces, that's completelly false, you should inform you better before posting

I'm not disagreeing, Fasces. Quite the opposite. I'm *for* a flat tax.

@Fasces - Re: Energy. The UK has been using landfill metahne for years and they have recently started using it here in the US. Right here in greater Cinci, Rumpke pipes the methane out to a refinery which in trun sells it to BP or someone who Rumpke uses to fuel their grabage trucks. There are alterniatves that are renewable like solar and wind, but cheap like oil and coal. We produce methane out the ass (literally :-) ).

http://www.nrdc.org/energy/renewables/solar.asp

Five cents per kilowatt hour by 2020.

You don't even have the right unit of measurement, how could you have the right cost?

The cost of energy for wind depends on the site. It can be some of the cheapest in the world, or it can be prohibitively expensive. I've also never seen the CoE for nuclear so low.

But even if we maximize our use of wind, it won't produce as much electricity as we need. It takes a lot of space, and the resources aren't always where we want. Solar's great, but the cost of energy is still pretty high. It's only economically feasible when you factor in government and utility incentives.

I'm studying wind and solar power in grad school right now, so I'm not against it nor am I talkin' out my butt here.

Besides, we have nothing to really replace oil. Batteries are great - and they're getting greater - but they are still heavy and they still require energy to charge.

This matters because the increase in our standard of living in the West is largely due to the availability of cheap energy (see - the job growth from the 50's to the 70's). When that runs out, our capacity to manufacture is diminished and resource scarcity becomes more stark.

Then it will make more sense for the welfare of all to NOT have such inequality that the top 1% of households have almost 35% of the wealth ( source - http://bit.ly/11TnJU).

I have not heard of countries having such dramatic success with the flat tax but I am interested. Anyone have any sources they could point me towards on that?

Oh, good Lord did I have typos in that last post... Geez.

Fasces, There is no such thing as kilowatt of energy.

"Fasces, that's completelly false, you should inform you better before posting"
Give a counter example

"@Fasces - Re: Energy. The UK has been using landfill metahne for years and they have recently started using it here in the US. Right here in greater Cinci, Rumpke pipes the methane out to a refinery which in trun sells it to BP or someone who Rumpke uses to fuel their grabage trucks. There are alterniatves that are renewable like solar and wind, but cheap like oil and coal. We produce methane out the ass (literally :-) )."
However can they be massed produced?

"Five cents per kilowatt hour by 2020.

You don't even have the right unit of measurement, how could you have the right cost?"
Typo, Kilowatt hour is what I meant.

"Generation costs for solar-power plants slated for construction in the Southwest are expected to fall to about 5 cents per kilowatt-hour by 2020, a price competitive with those at new coal- or gas-fired plants"
expect to fall meaning they are currently higher...

Renewable energy is currently more expensive the non, that is why they are rarely used at the moment.

Also out of interest, am I the only person the world who supports Nuclear energy?

@Yonni - Most people don't get that Energy is measured over time, i.e. a Kilowatt Hour. They barely know that Volts * Amps = Watts and don't realize that the consumption of energy has to be measured over time. It's a forgivable mistake.

Methane *is* mass produced and can be forcibly mass produced with the right crops as well. Certain grasses grow and die rapidly and we have areas of the country (the Bayou) where methane is abundant in the decaying vegetation of the swamps.

Most people don't realize it because methane is nearly odorless and what odor it carries is not unpleasant. It's what travels with it that smells (i.e. particulate fesces when we have flatulence).

And I'm a full supporter of nuclear energy, but it's costs you quote do not include the cost of disposal of the spent fuel rods nor does it take into account the government subsidies for building nuclear plants. If a company didn't get the subsidies for building the plants and disposing of the spent fuel rods, you would see that number increase dramatically.

And perhaps if we hooked methane collectors up to the pigs and cows... :-)

Solar costs are already cost-efficient, they gave a few examples in that link including the hotel in Hawaii that paid off their solar investment in 5 years with savings on the energy bill. The big savings on solar is that in a lot of cases it can eliminate the middle man: with solar cells, you make your own energy and don't have to rely on a contractor to produce it for you.

Draug, if you consider that disposal is 50+ years in the future then the cost of disposal is a relatively small proportion of the cost of nuclear power. The vast majority is capital cost to build the damn thing.

Gunfighter +1 for this one
"One thing we must do is keep taxes as low as reasonably possible on businesses and make their tax rates permanent so that particular uncertainty is eliminated from the market."

"Solar costs are already cost-efficient, they gave a few examples in that link including the hotel in Hawaii that paid off their solar investment in 5 years with savings on the energy bill. The big savings on solar is that in a lot of cases it can eliminate the middle man: with solar cells, you make your own energy and don't have to rely on a contractor to produce it for you."
But its still not as profitable as Nuclear or Coal.

Solar is cost-efficient? What does that mean? You recoup your costs over the life of the solar panel "if" nothing goes wrong.
I want to make a "profit" on my capital and until solar returns more than my investment in it I have a lot better things to do with my capital than make a 25-year outlay for an investment in solar.
No wonder so many people aren't wealthy. They think pay tens of thousands for solar panels that won't return anything on investment over a 2+ decade time frame is wise.

I guess the fact I used to be involved in the Fernald cleanup (one of the Superfund sites of the late 80s and 90s) and I've seen first hand the damage that even depleted uranium can do, I consider the cost of disposal to be mroe than just the dollars. If Japan taught us anything, there is risk and potentially associated soft costs (in lives) with nuclear power.

Not saying we shouldn't do it. I'm very much for it. But saying we should be certain to take extra care in the building, maintenance, and eventual disposal of the depleted uranium.

agree, however most people are now heavily anti-nuclear because of the mess in Japan.

Right, of course. Fukushima definitely taught us something about the need for safe storage of spent fuel. I just thought you talking strictly dollars.

And, TC, I think an argument can be made that solar can be a cost-efficient way to decrease carbon emissions. It's not true in all cases and probably isn't a motivation when you choose your investments but I think that's often what is meant by solar being 'cost-efficient.'
There are even some cases where solar returns more than your investment. However, as you said, there are better ways to make money.