Fat tax and other nonsence

The more I read about some of the things our elected officials are doing or trying to do to raise revenue for government, the more the flat tax makes sense. It's bad enough to pay tax on what we make and then have to pay tax on what we spend, but now there are proposals we will have to pay an extra tax based on how much we weigh. An example is the proposal that diet soda be taxed higher than regular soda because fat people drink diet soda.

Under the flat tax proposal, all taxes will be eliminated: no income taxes, no sales taxes, no hidden taxes, or taxes disguised as fees, or invisible taxes or value added taxes. It has been determined that we pay around 22% of our income on taxes of one kind or another so the proposed tax rate under the flat tax proposal is 22 %. The way this tax is designed, the value added tax paid by manufacturing is eliminated, the tax we pay on our income is eliminated, and all the other little taxes are done away with so all we are left with when we go to purchase an item is the actual cost of that item plus the suppliers profit. The item will retail for about 22% less than it does under our current tax system.

Under the flat tax system, we do not pay tax on what we earn. We only pay tax on what we spend.

I can see other advantages to this system that even the most ardent supporters of this tax system has not ever mentioned. The advantage has to do with percentages.

For example, lets say you earn $200.00 a week and want to purchase a widget that retails for $100.00. You earn your $200.00 and pay 15 % in income tax so you have $170.00 to spend. You buy the widget for the $100.00 plus 7% sales tax. That leaves you with $63.00.

Under the flat tax proposal, that $100.00 item would retail for 22% less, or $78.00You get your $200.00 pay check (no taxes, remember) and buy the widget for $78.00 plus tax at 22%. You pay a little over %95.00 for the item and have a little over $104.00 left.

Now lets say that inflation is at 4% and you receive a 3% pay increase. You now make $206.00 per week and the widget cost $104.00 You now have $175 to spend after taxes and the widget cost $111.00 including tax. You now have $64.00 left.

Under the flat tax, the widget retail would have increased to $81.00 so with tax the item costs you $99.00 You have $107.00 left.

Under the present system you net savings increased by $1.00. Under the flat tax, your savings increased by $3.00. Under the old system, the cost of the item went up by $4.00 but only $3.00 under the flat tax system. The reason is that cost and retail are figured on a percentage bases.

An example, if an item cost 65 cents to make and retails for $1.50, has a cost to make increase to 75 cents the retail doesn't increase by 10 cents, but by 22 cents. 75 is 15% larger than 65 and $1.72 is 15% larger than %1.50.

Under the present tax system, when a supply cost increases we not only have to pay for the cost of the supply, we have to pay that cost as a percentage increase plus we have to pay the value added tax as a percentage increase. Under the flat tax proposal, we would not be paying a percentage increase on the tax like we do under the current system.

I like the idea.