From A Business POV...

[earendel]

I'm pretty sure the numbers don't come close to working that way. In other words, if the flat tax rate were only 7%, I don't think we'd come close to matching the revenue now derived from income tax. And the shortfall would need to come from somewhere.

That's the basic problem with the flat tax. For the numbers to work, the rate needs to be high enough to impose a real burden on the bottom end of society. That's why I'm glad we have a progressive tax system. --Bob

There's also the matter of the impact that this might have on charitable giving - like it or not people give in order to get the tax deduction. Take that away and the incentive for giving goes down and less money is given to those organizations that need it.

SteelersFan gives what I consider to be a ton of money to Ducks Unlimited, Elk Unlimited, Trout Unlimited, and National Wild Turkey Federation, and I give what he considers to be a ton of money to the American Red Cross, the local homeless shelter, the American Cancer Society, and the alumni foundation of my alma mater. We don't benefit one penny from all that on our income tax; we do it because we believe in it. I just wonder how many people are in our boat and how many in Ear's.

I have no idea, but I can give you this anecdotal evidence - our church collects more money during the month of December than in any other month of the year, and usually in large amounts. It would be nice to say that they are doing it to catch up on the pledges they made but in truth it's because the givers want to be sure to get the credit for tax purposes.

[peacock2121]

I'm pretty sure the numbers don't come close to working that way. In other words, if the flat tax rate were only 7%, I don't think we'd come close to matching the revenue now derived from income tax. And the shortfall would need to come from somewhere.

That's the basic problem with the flat tax. For the numbers to work, the rate needs to be high enough to impose a real burden on the bottom end of society. That's why I'm glad we have a progressive tax system. --Bob

There's also the matter of the impact that this might have on charitable giving - like it or not people give in order to get the tax deduction. Take that away and the incentive for giving goes down and less money is given to those organizations that need it.

SteelersFan gives what I consider to be a ton of money to Ducks Unlimited, Elk Unlimited, Trout Unlimited, and National Wild Turkey Federation, and I give what he considers to be a ton of money to the American Red Cross, the local homeless shelter, the American Cancer Society, and the alumni foundation of my alma mater. We don't benefit one penny from all that on our income tax; we do it because we believe in it. I just wonder how many people are in our boat and how many in Ear's.

In 2007, 3/4 of what I catagorized as 'charitable contributions' in QuickBooks was not to places I could deduct. I didn't care - they were to people I wanted to contribute to.

Going back to the article Uday posted, the happiness I get (or got) from giving to a family whose teenager has a condition that now has him in a wheelchair and will kill him way before his time far out weighs the deduction I would get if I gave to a 'real' charity.