Greece to offer flat tax

[Bruce Wayne]

Greece is set to become the next European nation to introduce a flat rate of income tax, according to speculation in Athens triggered by the finance minister, Giorgios Alogoskoufis.

The prime minister, Costas Karamanlis could announce the proposal at next month's Thessaloniki International Fair. A flat rate of income tax, which abolishes all bands and exemptions and replaces them with a single rate and a high personal allowance, is all the rage among free-market thinkers and the idea is sweeping across eastern Europe.

Full story

What do you think of flat taxes?

[terry1156]

Re: Greece to offer flat tax

This is a difficult question. I do believe that a flat tax unfairly hurts those with low incomes, but then I think the current system has a lot of problems. Mainly it is so complicated that most people have to spend a lot of money to figure out their taxes. I am becomming more and more of a fan of the flat tax as long as it can remain simple which I'm not sure is a word in the US government's language.

[pennywise]

Re: Greece to offer flat tax

The flat tax is a good idea. Low income residents will have their deductions making it fairer to all. However, low income persons have the option of sacrificing and going to school to increase their income, work two jobs, have the SAHM work, etc. No excuses in America today as opportunity exists for all to advance, the government is even telling you they want you to advance. The national sales tax brought out the unfairness to those whose incomes have been saved and taxed as income and then the double taxation of spending. I didn't think of that, so I cannot support a national sales tax. The flat tax seems best. If you earn 10,000 pay 15% then you will pay 1500; if you earn 100,000 you will pay 15000. Both get the same services, so what is unfair?

[Bruce Wayne]

Re: Greece to offer flat tax

It seems very fair to me and actually offers those who hover between welfare and employment the real incentive to get out and work rather than sit in the comfort zone of a state funded life.

[jmjj215]

Re: Greece to offer flat tax

It seems very fair to me and actually offers those who hover between welfare and employment the real incentive to get out and work rather than sit in the comfort zone of a state funded life.

Could you expand on this a bit? I'm not following (but I'd like to).

[pennywise]

Re: Greece to offer flat tax

I believe the point is, and the writer is free to explain his opinion, we do not believe in welfare. Charity is a temporary assistance through a hard time, not a living. We resent working hard, sacrificing, giving up time with our families to pay for those who use those as excuses. There should be no welfare beyond a certain time. Michigan is currently working on no extra payments for extra children. Come on, your not married, don't work, yet you reproduce? Reproduction is a choice today, and abstinence is the best policy. Sex never nutured a relationship, talking being together does. So we do not respect Welfare people.

[Bruce Wayne]

Re: Greece to offer flat tax

In Britain welfare is such that many people find it as rewarding to stay on welfare as going to work and so it is very easy to either find yourself stuck on welfare because working isn't economically worthwhile or staying on welfare because the extra work vs extra money isn't worth their effort.

To my mind neither is right at all and every incentive possible should be given to get people working and supporting themselves.

[jmjj215]

Re: Greece to offer flat tax

I agree with you Bruce - just wanted to get some clarification. We give men fish instead of teaching them to fish far too often.

[VJW]

Re: Greece to offer flat tax

Greece is set to become the next European nation to introduce a flat rate of income tax, according to speculation in Athens triggered by the finance minister, Giorgios Alogoskoufis.

Actually, the RightWing ND party merely wishes to PROPOSE this change in taxes, which has little to do with whether or not it will be enacted. Just as here in America, where the RightWing party proposed scrapping Social Security, it does not mean it will happen.

The ND party has already reduced corporate taxes, gone after people’s pensions, and now they want to cut taxes for the wealthy with this scheme. Is this sounding familiar to anyone in America ? It certainly didn’t work here, as throwing money at the Rich & Corporate has never worked economically.

The prime minister, Costas Karamanlis could announce the proposal at next month's Thessaloniki International Fair. A flat rate of income tax, which abolishes all bands and exemptions and replaces them with a single rate and a high personal allowance, is all the rage among free-market thinkers and the idea is sweeping across eastern Europe.

Which are non-industrialized countries.



From your link:

Mr Alogoskoufis believes a flat tax rate, by discouraging evasion and corruption and also boosting incentives for high earners, would help narrow the deficit.

Reducing taxes on the wealthy has never narrowed a deficit.

The flat tax idea was first proposed in America, notably by former presidential candidate Steve Forbes.

The "Flat Tax idea" was first proposed by Professors Robert Hall and Alvin Rabushka back in the 1970s.

What do you think of flat taxes?

As I’ve posted elsewhere in this forum:

The originators of the misleadingly termed 'Flat Tax' plan, Professors Robert Hall and Alvin Rabushka, freely admitted in the 1983 edition of their book, that a Flat Tax would be “a tremendous boon to the economic elite from the start”.

Not to mention that a Flat Tax would not be revenue neutral. The '17% Flat Tax' that was proposed years ago by then Congressman Dick Armey was scored by the U.S. Treasury as coming up hundreds of billions of dollars short annually. In order to be revenue neutral, the rate of a Flat Tax would need to be 35% - 40%, which would devastate the Middle-class, as almost 80% of taxpayers currently only pay about 5% of their income in federal personal income taxes.

It seems very fair to me and actually offers those who hover between welfare and employment the real incentive to get out and work rather than sit in the comfort zone of a state funded life.

That might be an excellent tactic to attack Corporate Welfare.

#

[VJW]

Re: Greece to offer flat tax

This is a difficult question. I do believe that a flat tax unfairly hurts those with low incomes, but then I think the current system has a lot of problems. Mainly it is so complicated that most people have to spend a lot of money to figure out their taxes.

There’s no reason we could not have a flat, multi-rate, progressive income tax (other than the Rich & Corporate would object to it).

#

[VJW]

Re: Greece to offer flat tax

The flat tax is a good idea. Low income residents will have their deductions making it fairer to all.

No, actually, it would be far less fair. In an appendix to their 1983 book, Hall and Rabushka estimated that their flat tax proposal would increase the tax bill for the lowest income families by 78 percent, and decrease the tax bill for the very richest families by 41 percent.

Hardly what I would call fairer.

#

[VJW]

Re: Greece to offer flat tax

I must admit, I am continuously amazed as to why so many otherwise sensible people are so easily swayed by thinly-veiled economic arguments that are against their own interests. The 'Flat Tax', or a 'National Sales Tax', or the so-called 'Supply-side Tax Cuts' for the Rich & Corporate, are all merely different fronts in the same effort to continue the shift of the burden of taxation from the wealthy and the corporations onto working people.

This concept is fairly well described in the book, “What's the Matter with Kansas?” but I still find it a mystery.

#

[Bruce Wayne]

Re: Greece to offer flat tax

and now they want to cut taxes for the wealthy with this scheme.

I'm not Greek so can only speak for Britain but the top rate tax band is triggered here when people start earning £31,400. Do you think this qualifies someone as being wealthy?

Which are non-industrialized countries.

What's your point?

Reducing taxes on the wealthy has never narrowed a deficit.

As I highlighted earlier top rate rax payers in Britain include teachers, doctors, police officers etc. All of these professionals would benefit from a flat tax.

Not to mention that a Flat Tax would not be revenue neutral. The '17% Flat Tax' that was proposed years ago by then Congressman Dick Armey was scored by the U.S. Treasury as coming up hundreds of billions of dollars short annually. In order to be revenue neutral, the rate of a Flat Tax would need to be 35% - 40%

I dare say that advocates of the flat tax would also advocate a large drop in services provided by the state and allow market forces to provide benefits to areas such as health and education.

which would devastate the Middle-class, as almost 80% of taxpayers currently only pay about 5% of their income in federal personal income taxes.

I'm not quite sure where you get this figure from. In Britain the average wage is around £18,000 per year and a person earning this sum per year would pay £4,133 in income tax, or 23% of their income. This percentage rises the more someone earns.

[VJW]

Re: Greece to offer flat tax

I'm not Greek so can only speak for Britain but the top rate tax band is triggered here when people start earning £31,400. Do you think this qualifies someone as being wealthy?

I wouldn’t.

Our top tax rate used to kick in at income over $250,000 (139,000 pounds).

What's your point?

Only that one cannot contrast a tax system in a non-industrialized country with a tax system in an industrialized country.

As I highlighted earlier top rate rax payers in Britain include teachers, doctors, police officers etc. All of these professionals would benefit from a flat tax.

Indeed they would, but the claim was that it “would help narrow the deficit”. In other than short-term, or other extraordinary circumstances, reducing tax rates has never produced more revenue. When you cut taxes, revenue declines, and when you increase taxes, revenue increases.

I dare say that advocates of the flat tax would also advocate a large drop in services provided by the state and allow market forces to provide benefits to areas such as health and education.

Except those “advocates” never seem to be able to detail where those massive cuts would be located, or if they do, they are wildly unpopular, and therefore politically impossible.

I'm not quite sure where you get this figure from.

The Internal Revenue Service, the U.S. Treasury Department, and the Congressional Budget Office.

In Britain the average wage is around £18,000 per year and a person earning this sum per year would pay £4,133 in income tax, or 23% of their income. This percentage rises the more someone earns.

Unfortunately, an “average wage” is not very informative, as if you earned a $1 per year and I earned $999,999 per year, our average wage would be $500,000 annually, which would not be accurately reflective of either of our real circumstances.

The substantive number would be the MEDIAN wage (inflation-adjusted of course).

In America, almost 80% of households are in the lower tax brackets, 15% and a virtual 10%, but with exemptions, deductions, and credits, the effective rate of federal income tax is about 5%.
.

[Bruce Wayne]

Re: Greece to offer flat tax

Indeed they would, but the claim was that it “would help narrow the deficit”. In other than short-term, or other extraordinary circumstances, reducing tax rates has never produced more revenue. When you cut taxes, revenue declines, and when you increase taxes, revenue increases.

You're assuming that the more a government spends the better this is for society. The evidence suggests the opposite as government spending is so inefficient because there is no competition and therefore no market forces encouraging (forcing) government spending to be as efficient as possible. Milton Friedman identified four different classes of spending, beginning with the most efficient:

Class 1 - Spending your own money on yourself
Class 2 - Spending your own money on someone else
Class 3 - Spending other peoples money on yourself
Class 4 - Spending other peoples money on other people

Most of the time government spending falls into classes 3 and 4 so I would say that flat rate advocates are suggesting that a flat rate will boost revenue for society as a whole (GDP) and not boost revenue for government, which is surely something we should all aim for.

Except those “advocates” never seem to be able to detail where those massive cuts would be located, or if they do, they are wildly unpopular, and therefore politically impossible.

Many people have suggested that governments should provide law and order, ie police/judiciary and armed forces, and nothing else. Health, education etc. would all be opened up to market forces. In such a scenario it is plain what people pay for and the system is very transparent.

The Internal Revenue Service, the U.S. Treasury Department, and the Congressional Budget Office.

This merely emphasises how low taxation is for middle class people in America at the moment. I only wish Mr Blair would adopt similar policies in Britain.

Unfortunately, an “average wage” is not very informative, as if you earned a $1 per year and I earned $999,999 per year, our average wage would be $500,000 annually, which would not be accurately reflective of either of our real circumstances.

The substantive number would be the MEDIAN wage (inflation-adjusted of course).

In America, almost 80% of households are in the lower tax brackets, 15% and a virtual 10%, but with exemptions, deductions, and credits, the effective rate of federal income tax is about 5%.

Ok, the median wage in Britain is higher still at 21,944. Of this they will lose £5434.70 in income tax, or 24.77% of their annual salary. Of course this doesn't include the many other forms of taxation in Britain but it gives you an idea of what each person loses direct from their salary on average.