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Originally Posted by GenuineRisk
I agree the tax code could be simplified and many loopholes should be closed (most having to do with corporate welfare), but how would you handle taxing dividends? The big problem with the flat tax proposals (besides the fact that it would effectively raise taxes on the poor and middle class because the wealthy would be the ones most benefiting from a flat tax) is that dividends are excluded from taxation. Which would permit the super-rich to live tax-free.
In my opinion, one needs to look at who is proposing a tax reform to figure out who would most benefit. Flat tax seems to be a pet of the super-rich. Wonder why? Because it will cost them less money and shift the burden onto the poor and middle-class.
Interestingly, the Earned Income Tax Credit is pretty popular with both parties because it's an efficient, inexpensive way to get a little extra money into the hands of working families. More effective than raising the minimum wage, because most minimum wage workers are teenagers.
The main reform that urgently needs fixing is the alternative minimum tax. Raise the threshold, already! (not that I'm anywhere near the threshold. Sigh...)
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I don't think the super-wealthy would be the ones to benefit from a flat-tax. In fact, I think they are totally against it. I think they would actually have to pay much more in taxes if all the current loopholes were closed.
If there was a flat tax, I would be in favor of stock dividends being treated as regular income.