Schwarzenegger suggests state consider flat tax
Could the flat tax come to California?
Gov. Arnold Schwarzenegger said today that he would like to see such “radical” proposals come out of a commission now studying an overhaul of the state’s tax system. The governor told the editorial board of the Sacramento Bee that he hoped the commission would not be afraid to propose something like “a 15% straight tax.”
“That’s the kind of radical, daring kind of a proposal that I want to see on the table so we can look at it and say, ‘Oh, let’s study this, maybe that is the way to go,’ ” Schwarzenegger said during the discussion, which was webcast.
The current system, based on highly unstable income tax revenue that fluctuates with the economy, “doesn’t work,” Schwarzenegger said.
Advocates of a flat tax, which applies a single tax rate to all income, say it increases compliance with the tax codes because it is so simple and easy to understand. But opponents dislike that it taxes the wealthy at the same rates as the poor.
I am a strong proponent of the flat tax.
It would simplify the tax code. We literally could change tax forms to postcards.
It would cut down significantly on tax cheats. It would eliminate the convoluted tax code that is used by Obama's cabinet members to hide income.
It would be hard to come up with a more fair system for taxation.
One of the big arguments against it is that it taxes the poor at the same rate as everyone else. In the interest of fairness we do have to recognize that the money the poor makes does not go as far as someone from a higher tax bracket.
Someone making less than $10,000 simply would be unable to give up $1,500 and still survive. The simple answer to this is shield the first portion of income from taxes. Maybe we have a personal and child exemption like we do now. After that, everyone pays the same rate. This will keep the poorest of people from paying taxes.
The other side of the argument is that the wealthy shield income from paying taxes. Again there is a simple solution, do away with all write offs. No writing off mortgage interest, business lunches, etc. All income is taxed at the same rate. No capital gains tax, no tax shelters, etc.
You make $40,000 your tax is 15% of $40,000, you make $40 million your tax is 15% of $40 million. I'm not sure why this is a problem.