They need to mandate hourly w/ OT after 40

A flat income tax would only work if the existence of individual states would be eliminated. No fifty states, just one state for all.


If the tax is the same for all Americans then the exact same laws would also have to be the same for all Americans down to the smallest municipal level.

 

This notion of "being the same" for everyone or 'equity' is so far from what the founders of the United States envisioned.

Thomas Jefferson said all men are created equal, he did not say that all men are equal.

We as Americans are created equal; after that, may the best man win.

 

That is so wrong.

Collection mechanism is already in place. Enforcement is at the state level, not the federal level and both are already being done in all the states.

The idea that someone under $100k is going to see their effective skyrocket is wrong, their tax rate will be lower because it is based on consumption, someone making above $100k plus spends more money than does someone who makes $30k, it is a consumption tax.

A family who is making over $300k is consuming a lot more than one making $30k and this is where the revenue is being made. For someone like my family, we would be paying nothing on income but that would release the money to make more money which will go into more consumption of products and services.

We have had for the last 4 administrations a move to maintain or increase consumption, we have a government that has given away trillions to keep our economy going by getting us to buy more, with no means to collect any of that money back and we have been led to an economy that is marginally alive.

 

If "investment income" is taxed much lower than "earned income" could someone not open a company, be the sole investor, hire a driver, pay the driver $1 a year, and the rest of the profit is paid to the investor?

I asked this of my accountant up here if I could setup my company inside my TFSA, got told it wouldn't fly.

 

Bet if you had 5000 employees they'd let you get away with it lol.

 

Care to share the data that shows state and local government cost to collect and enforce sales tax and cost of compliance for companies compared to the same costs for income based taxes? If possible please include evasion numbers.

Collection is done at the state level, but only 45 states have sales taxes. Of the 45 that do use sales tax, each does it differently. Imposing a federal tax would by necessity impose some kind of standardization. For example some states tax parking fees and some don't.

Which leads to the question "what consumption gets taxed?". Is it all sales, or just sales to the end user, or only products? What about non retail sales? Does rent get taxed? Do some products get taxed at higher rates?

As to the regressiveness of a sales tax - every person has a minimum they must "consume " to survive. That number is the same whether a person makes $40,000 or $400,000. Say the basic needs are met with $30,000. For basic needs the person earning $40k is paying tax on 75% of their income while the $400k earner is only paying tax on 10%. Even tripling their spending they will only pay tax on 30% of their income.

Again, if you'd care to share scholarly evidence where going to a sales tax based system did not end up being regressive, please do.

 

You can't do it within a tax free account or (most) trust setups, but you can do it. The income would need to be large enough to justify the extra work, but it is a common way to avoid/evade taxes.

A farmer I know has his farm separated into several different legal entities. The fields are all sperate companies, as is his field equipment and his semi trucks. The employees are spread around the various "businesses" and each business "pays" the other for services. Expenses are inflated, profits look lower than they are. His sons get paid minimum wage plus "dividends", which means no fica tax and no state income taxes for them. Their "income" is low enough they still qualify for the eitc, while their houses, cars, and utilities are paid for by the farm.

Yes, what he is doing is illegal, but it's pretty hard to prove. If you have enough money, you can scam the system with no repercussions. Meanwhile a guy making $50,000 doesn't report $5 of interest payments and gets hit with a $1,000 fine.

 

If no one was covered by the FSLA then I might agree with you. The problem is that some workers are covered under the FSLA umbrella and others are not. So whenever someone encounters a delay and needs to decide whose time to waist they will always pick the guy they don't have to pay.

 

I think more likely it would cause an increase in independent owner operators, and may even run the megas out of the spot market altogether. OO's don't get paid by the hour so they wouldn't be affected, giving them a big market advantage over companies that rely on company drivers.