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Financial Planning / Tax Strategies


Subject:  Re: Investment Income Surtax Date:  12/3/2012  12:25 PM
Author:  katiewa Number:  117053 of 130016

From one perspective, I'd love a 10% flat tax--just charge my husband and me 10% on ALL our income (wages, investments, capital gains--no deductions for anything) and I'd save a huge amount of time that I currently spend doing our taxes AND we'd save about 36% on 2012 taxes.

However, after I graduated in 1981, I taught at a small, private school in Fremont, California, and earned $10K/year. To have paid $1000 in federal income taxes would have been challenging--and I was single with almost no debt, rode my bike to work (and showered at work), house-sat for deployed military personnel (and still paid rent), ate no meat or cheese (eggs were a much cheaper source of protein), had no cable or satellite TV, no internet.

According to US Census data, in 2009, 13% of US households had income of under $15K/year. Yes, with a flat tax, the percentage is the same for everyone, which, on the surface, appears to be fairer than the convuluted mess we have now. Yes, social engineering certainly has the opportunity to cause as much damage as it fixes. But assuming a flat rate tax, the difference between my after-tax funds just out of college and our after-tax funds now is substantial: the one was barely liveable WITHOUT a 10% flat-tax; our current allows considerable luxury even with the current tax system.

I'd LOVE to keep more of my money. But someone has to pay for our government, and I am much more able to afford the 17% that I currently pay on my adjusted gross than some would be able to pay a 10% flat tax.

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