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Monday, July 2, 2012

Why a Flat Tax could be more "equitable" if it also included ObamaCare instead of what the Supreme Court just agreed to.

Justice Robert's majority shifting Health Care Vote may have created an unintended consequence. A flat tax paid for by all americans has usually been pooh pooh'd by the democrats as being unfair to the poor.

But now that everybody must pay for healthcare, those who make less money will see a higher percentage loss on spendable income than those who make more money.

If one makes 40,000 dollars in a year, and agrees to pay for ObamaCare, they just got hit with as much as a 10% gross income tax  if their yearly healthcare premium is 4,000 dollars.

If one makes 200,000 dollars in a year, a 4,000 dollar premium works out to only a 2% gross income tax. There are other complexities that readjust these numbers in terms of tax deductions and tax brackets, but it sure looks like those who make less will be hit with more of a burden than those who make more.

If the person does NOT want ObamaCare, the IRS will still assess an earnings adjustment equal to what ObamaCare would cost them if they had paid. So the person making 40,000 who does not pay for Obama Care would be hit with 4,000 dollar additional income assessment by the IRS, raising their "income" 44,000 dollars.

The person the same age as the 40,000 dollar income person, but making 200,000 would be assessed the same 4,000 additional income assessment by the IRS. Raising income from 40,000 dollars to an inflated figure of 44,000 is more of a hit than raising 200,000 dollars to 204,000.

It's starting to look like a flat tax that includes Obama Care would more fairly distribute the healthcare load. Somebody making 40,000 dollars would pay the same flat rate percentage tax as someone making 200,000 dollars, but they would clearly get Obama Care at a huge discount since they would be spending less overall money every year.

Is it time for a flat tax, especially if it includes Obama Care coverage? 

A Flat Tax might be a way to stop all the hidden taxes, fees and penalties americans pay if suddenly there was a one size fits all flat tax, and then perhaps a much much smaller state tax, and then perhaps an energy tax covering the use of all energy.

It is much easier for consumers to add up three separate taxes and decide if it is too much taxation versus the current IRS system that hides annoying micro taxes amidst the taxes that are well known. Plus the ultra wealthy have tax shelter opportunities which can allow them to avoid taxes that poorer people actually pay.   
How about a 22% Flat Tax, 6% state tax, and 2% energy tax? And for that 30% total in taxation, the taxpayer also gets health care coverage at no additional cost. 
A Flat Rate Tax would effectively help the lower income wage earners that make enough to be taxed, but may be additionally burdened with the new healthcare payment penalty for non-coverage, or burdened by the cost of mandatory healthcare versus what they earn.

If the government would leave me alone for 30%, and cover my health care as well, that's not such a bad deal.

Please Download the Chase Bank Protest Flyer for FREE, and then all that needs to be done is just give a few copies out, it is really that simple.


Anonymous said...

Yeah, a person making $40,000 per year hit with a 30% tax is obviously the same as one making $200,000 hit with the same tax. Are you kidding me? Where does this "reason" come from?

Alessandro Machi said...

Because that 40,000 dollar salary includes health insurance coverage and ALL taxes as well. Is your point that someone making 200,000 dollars should end up keeping as much as someone earning 40,000 dollars?

The further point is isn't it better to know exactly where one stands at the beginning of the year than at the end, when they may have overextended themselves thinking their tax rebate would help them, only it turns out it is a lot smaller than they thought and now they have cascading credit card debt?

For a small business owner, tax simplicity would be a godsend. For a family of four, it could mean finding a job because the small business owner has saved a ton of time not having to deal with so many tax related issues.

upyernoz said...

For a small business owner, tax simplicity would be a godsend.

the thing that makes the tax code complex is not the graduated income tax, it's all the deductions. the idea that a flat tax would simplify tax filings for ordinary people is simply wrong. unless we were to also eliminate deductions and tax credits (which includes popular ones, like the existence of 401(k)s, the mortgage deduction, the child credit, etc), the simplification argument is just a fig leaf for giving rich people a massive tax cut.

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