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  • From: Diana Duncan <dianaduncan AT contentdb.net>
  • To: "Internetworkers: http://www.ibiblio.org/internetworkers/" <internetworkers AT lists.ibiblio.org>
  • Subject: Re: [internetworkers] Tax reform
  • Date: Wed, 23 Feb 2005 12:47:11 -0500


On Feb 23, 2005, at 12:20 PM, Greg Cox wrote:


Flat rates shift the tax burden from the rich to the middle and the poor.



I completely agree, which is why I didn't advocate a flat tax rate for wage income, just for "other" income. I suppose that also would be a boon to trust-fund kiddies who derive their entire income from investments...I'm not at all sure what the numbers are there. It would, of course, be nice for retirees for the same reason. Philosophically, I tend to think that money used for investments has already been taxed at income point.

3) Enact a SIMPLE, progressive tax on wage income, where the first x
dollars are taxed at 0%, the next x dollars taxed at y%, the next at
z%, etc. Require the payer of the wage to do all the
filing/withholding.

We have that now. You'd still want to file at the end of they year,
though. Say I work at HugeCorp, making HugeSalary. They withhold
taxes at a high rate that'll be correct if I'm there all year. Then they
lay me off in July and I can't find work. Suddenly, I've paid too much
tax for what I made, and I want it back. HugeCorp has no reason to go
to bat for me; the government won't pay me back right then: they have
no way of knowing I won't have a job tomorrow, same salary, and be
back on pace for owing what I've paid in.

Filing is a reconciliation and it's Not That Hard. I don't get why
it kicks so many peoples' asses. The hard part is planning in advance,
at hiring time, and mid-year, when you can do something about your
liability for the year.

If there are NO deductions, NO exemptions, no joint filing, no nothing else, then the rate at which your employer withholds will actually be correct, which it isn't now - I've never found W-4's to be very accurate. The only situation I can think of for reconciliation is if you hold more than one job, in which case the company(s) don't know how much you really make and may be withholding incorrectly. I guess people who were paid mostly in cash (tip-earners) would have to file as well. It would be the exception rather than the rule, though.

I don't think filing is that hard, but I do think it's a huge waste of time and money (and paper), both for the aggregate of individuals doing it and for the government. Think of the money the government would save!

Thanks for the comments, I hope mine clarified what I was thinking. Remember, I didn't sleep last night. :)

Diana





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