I will be interesting to see how this works out.
http://www.forbes.com/feeds...lat-tax_8374937.html

quote A "flat tax" bill to rewrite the state individual income tax is nearing the finish line at the Legislature, setting the stage for changes that would have the Arizona's wealthiest taxpayers paying less while nearly nine of every 10 Arizonans pay more. The Senate Finance Committee approved the Republican-sponsored bill on a 4-2 party line vote Thursday. The House has already approved a version of the bill. Major changes in the bill include eliminating the standard deduction, dependent exemptions and most other state deductions while flattening the current five rates into one lower rate of 2.13 percent. Current rates range from 2.59 percent to 4.454 percent depending on income levels. The changes would be phased in over three years starting in 2013. It would not affect federal income tax paid by Arizonans. As passed by the House, the bill would have produced an additional $50 million of annual revenue for the state. However, the Senate committee amended the bill so that it would not significantly add or subtract from total state revenue, according to an analysis by the legislative budget staff. A legislative budget staff analysis indicated that taxpayers with federal adjusted gross incomes below $100,000 generally would pay more state income tax under the bill while those with higher incomes would save money. Taxpayers with incomes below $100,000 account for 88 percent of state income tax filers, according to the analysis. Sen. Paula Aboud, D-Tucson, said $200 "to some people is the decider between food, medicine and a whole lot of things." - maybe she should call Gov. Quinn up in Illinois and tell him that. "There are winners and losers in this proposal," said Sen. Jack Jackson, D-Window Rock. Republican Rep. Steve Court of Mesa said average tax increases under his bill wouldn't exceed $200. "There's not going to be an excessive tax increase," Court said. The goal is to simplify the tax system "so the government is not incentivizing how you spend your money," Court said. "It's a policy bill. It's not a revenue bill." Sen. Paula Aboud, D-Tucson, said $200 "to some people is the decider between food, medicine and a whole lot of things." "This bill is insulting to the people that are struggling when they're losing jobs and they're losing their homes ... and it's just another $200," she said dismissively. The committee heard words of cautions from tax accountants who said the implications of the changes hadn't been adequately studied but support from the Goldwater Institute's chief economist, Byron Schlomach. "These various deductions and such all have very often hard to see but profound economic effects," Schlomach told the committee. "The best thing to do is keep things as flat and even as possible and not distort people's decision-making with tax policy." The Children's Action Alliance's president Dana Naimark earlier Thursday denounced the bill as "a shift in taxes from the rich to the middle masquerading as tax simplification."

Yes, taxing those who cant afford it the most even more, that will get this economy pumping. Funny how politicians, from their cushy berth, can tell others with worse or no health care and jobs that don't pay squat they need to contribute more in the way of taxes.

[This message has been edited by tbone42 (edited 03-26-2011).]

How is anyone complaing about this bill? IL just increased our taxes 67% . The people that are using and abusing the welfare system just have to pay a little more.

How much money to people pay a tax preparer every year because our taxes are too complex to do on your own? If the Feds would do the same thing, then we could put unproductive manpower and money that is used only to service the tax code into doing something productive for our nation.

quote Originally posted by Doug85GT: How much money to people pay a tax preparer every year because our taxes are too complex to do on your own?

Can't speak for anyone else, but I pay $0. Its not as complicated as many make it out to be, its like a choose your own adventure book. Fill out this worksheet and go to page 13, etc. I think many just dont have the will to try. I would hate to think its the ability to understand.. its not hard.

Now if you are trying to take advantage of tax breaks and shelters that get you beyond a standardized or simple deduction, you are probably doing so to save enough money and more to pay your accountant to do the heavy lifting.

You mean like this: http://chicago.cbslocal.com...approve-66-tax-hike/

IL income tax was raised %67. http://www.foxnews.com/poli...income-tax-increase/
I'm not sure about the flat tax. I think people who make more can afford to pay a little more. But I don't think it should be punitive.

quote Originally posted by tbone42: Can't speak for anyone else, but I pay $0. Its not as complicated as many make it out to be, its like a choose your own adventure book. Fill out this worksheet and go to page 13, etc. I think many just dont have the will to try. I would hate to think its the ability to understand.. its not hard. Now if you are trying to take advantage of tax breaks and shelters that get you beyond a standardized or simple deduction, you are probably doing so to save enough money and more to pay your accountant to do the heavy lifting.

I do my own taxes as well with home owners deductions and such. I also took a tax preparation course through Jackson Hewitt a few years ago. If I didn't take that class then I would not know half of the deductions that I take.

The majority of people in this country pay a tax preparer. Also just about every business pay a tax accountant and the big ones hire tax lawyers. This is a multi-billion dollar industry who's only purpose is to service the convoluted socially engineered tax code.

I would challenge anyone to pick 10 random families, hand them the 1040 form with all schedules, instructions, 1099s and a W2 for a fictional family. Have all 10 do their best to fill out the tax forms. I'll bet you get 10 different answers and it would take the person doing the taxes hours to do it. For any law to be so confusing to the average person who is supposed to follow such a law IMO is a crime in itself.

How is this for an example: A family of 4 with the father making $45,000, mother making $50,000, Jr makes $600 from his paper route and the mother and father file jointly. The father is part of a union with $800 in union dues paid. The family has $4,000 in medical expenses and donated $2,500 to charities. They also own a home and paid $15,000 in mortgage interest. They live in New York so the father paid $6,000 in state income tax and the mother paid $6,600 in state income tax. The daughter is in college and the family paid $16,000 in tuition.

Could anyone that is not a professional tax preparer do that family's taxes without violating tax code and taking advantage of all of the deductions that they are legally eligible?

quote Originally posted by Doug85GT: Could anyone that is not a professional tax preparer do that family's taxes without violating tax code and taking advantage of all of the deductions that they are legally eligible?

Yes...turbo tax federal free edition

quote Originally posted by Scottzilla79: IL income tax was raised %67. http://www.foxnews.com/poli...income-tax-increase/ I'm not sure about the flat tax. I think people who make more can afford to pay a little more. But I don't think it should be punitive.

Fair enough, that I had not heard. Illinois's elected officials probably just earned themselves a ticket out in the next election with that, but it really is up to the people in that state to push back. And they should. I plan on getting the word out this nov. when SD taxes come back up to squash the ones we have locally.. our county is so depressed nobody can afford an additional 1% of their income to go out the door.

Still waiting on that link from rich on 9 out of 10 taxpayers in AZ are on welfare. I won't hold my breath.

quote Originally posted by Scottzilla79: IL income tax was raised %67. http://www.foxnews.com/poli...income-tax-increase/ I'm not sure about the flat tax. I think people who make more can afford to pay a little more. But I don't think it should be punitive.

In a flat tax system people who make more do pay more, that's how percentages wwork. 2% of 100 is 2, 2% of 1000 is 20. 20 is more than 2, but is an equal portion of the person's income. It is as fair as legal theft gets. Having the wealthier person pay a higher percentage due to the wealth...that is punishing wealth.

A flat tax (like sales tax) is considered to be regressive while one based on ability to pay is progressive. When the Federal income tax was first enacted, only the super rich paid any at all.

The most regressive Federal tax we have is Social Security. It isn’t even a flat tax because it is capped. The rich actually pay less of a percentage of their income to it than do the poor.

Some investors already effectively have a Federal flat tax (capital gains) and other ways to reduce their taxable income while wage earners do not.

I can see why a flat tax might be attractive to a State since it would make their revenue stream more stable and immune from changes in Federal tax law. A few States don’t even have an income tax so those may already have a “flat” tax system.

We've had a flat tax in Texas for as long as i have been around.

quote Originally posted by Doug85GT: I would challenge anyone to pick 10 random families, hand them the 1040 form with all schedules, instructions, 1099s and a W2 for a fictional family. Have all 10 do their best to fill out the tax forms. I'll bet you get 10 different answers and it would take the person doing the taxes hours to do it.

Well, to be honest, I would hope you get 10 different answers considering you chose 10 random families. Now had you chosen 10 families with identical pay, benefits and deductions and gotten 10 different answers, well that would be bad.

I for the most part do my taxes myself. Out of the 23 years I've been filing I only had another person prepare them 3 times. Once because I was going through a divorce, once because we had a son that passed away during the year and then one other time because I just didn't feel like doing it that year. However, lately (the last 4 years) I've been using Turbotax. It's really not all that different then doing them yourself except it asks for the information, puts it in the right boxes, applies it to all the forms and does the math for you.

quote Originally posted by WBailey1041: Yes...turbo tax federal free edition

Which just goes to prove my point. That is software from an industry who's sole purpose is to service the tax code.

As for the free status of it, as Milton Friedman used to say, "There is no such thing as a free lunch." Turbo tax makes their money buy upselling people to their other offerings which is easy to do since most people have to file state taxes as well.

"I would challenge anyone to pick 10 random families, hand them the 1040 form with all schedules, instructions, 1099s and a W2 for a fictional family."

Doug85GT,

Truely sorry on that. Uhg, to early in the morning and my brain just didn't read right.

quote Originally posted by tbone42: So do you think 9 out of 10 taxpayers in Arizona are on welfare? Do you have some links or something to support your claim? I d also like to see where Illinois increased everyone's taxes by that much, got a link or a story for that?

Well to be fair you took my bait! I only said people on welfare would have to pay a little bit more; I did not say that every one that has to pay more is on welfare.
I do not like income tax at all so I would also be mad that I would have to pay more taxes. I think it’s only fair that everyone has the same rules and pays the same %. The Idea of rich people having to pay more % per dollar is a punishment for making lots of money.
What they should do is pass a law that if you do not make 20,000$ within a year we are going to tax you more. I bet most ppl will find a way to make 20 grand then.

quote Originally posted by richfiero: Well to be fair you took my bait! I only said people on welfare would have to pay a little bit more; I did not say that every one that has to pay more is on welfare.

I may be mistaken, but I think those on welfare are probably not paying ANY income tax. Their deductions most likely are more then the income they take in, and considering money they receive from welfare is not taxable income I'd place a wager that I am correct. (I say, willing to place a wager, because I don't have any links to support my conclusion, just gut instinct.)

Now if deductions are also eliminated, then that changes the game.

[This message has been edited by Khw (edited 03-27-2011).]