<p>OK I gave my recent graduate a History of Finances 101 assignment on the Flat Tax, and now I’m realizing I’m ignorant on the subject. Can anyone point me to a primer on the subject? I’m particularly interested in how the Flat Tax would be applied to the different legal entities: Corporation, S-corporation, partnership, limited partnership, sole proprietorship, and the various categories of personal taxation: Single, Married (Joint and Separate), Head of Household, etc.</p>
<p>Thank you.</p>
<p>I don’t have the pointer you want but I do have the opinion that ‘flat tax’ or not, I’ll somehow end up paying the same or more in taxes and the minute a ‘flat tax’ is proposed it’ll start to get ‘warped’ with different rates, exceptions, etc. and no longer be flat until it morphs back into something like we have today.</p>
<p>No one less than Warren Buffet pointed out the he and his company’s receptionist both pay the same percentage of their income in payroll taxes. But only if you consider ALL payroll taxes, which Flat Taxers are loathe to do. And that willful deception by omission that is the essence of the “Flat Tax Scam”.</p>
<p>Reference to Steve Forbes, of Forbes magazine. He wrote a book and campaigned for the the R nomination in 2000.</p>
<p>No offense to Steve Forbes, but I was really hoping to find something more in-depth – something by an Economics Professor perhaps?</p>
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<p>Warren Buffet said that his tax rate was lower than his secretary’s tax rate. He is being misleading. His tax rate is lower because he does not take a salary from his companies. He receives dividends and capital gains which are taxed at a lower rate than salary. If Buffet would take an appropriate salary, his income tax rate would be gigantic when compared to his secretary’s tax rate. It’s just more nonsense from Buffet.</p>
<p>But if there was a flat tax, wouldn’t Buffet’s income from dividends and capital gains be taxed at the same rate as income?</p>
<p>Why is Buffet’s statement nonsense? I believe he deliberately set out to highlight the fact that income from working (salary and wages) is taxed differently from income from dividends and capital gains. There may be a good argument to be made for taxing them differently, but I don’t think that Buffet’s argument can be so summarily dismissed.</p>
<p>Anyway, I have the suspicion that under a flat tax system, we would probably see a lot of fees for service.</p>
<p>You are wrong. </p>
<p>He was referring to the percentage of ALL PAYROLL taxes on both of their earned incomes. In his example Buffet was referring to the totality of his payroll taxes on his (then) 10 million dollars a year of earned income (excluding his capital gains), against her totality of taxes she paid on her earned income of 60 thousand dollars a year, expressed as a comparison rate of what they they both paid. </p>
<p>To make it simple: **Both of them paid the same percentage in taxes on their earned incomes. **</p>