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Message: <blockquote data-quote="Fatboy Joe" data-source="post: 1965491" data-attributes="member: 13212">I believe he wanted a 30% flat tax on purchased goods.  I know there are some different factors but the thought of higher tax on middle/lower income is based on this:1. Family makes 3,000,000 a year, they spend 1,500,000 on purchases and invest the rest.  Their effective federal rate income tax rate is 35%, sales tax rate is 8%.  Under the current income tax method total tax is = $1,120,000 under the flat tax = $450,000.2. Family makes 100,000 a year and spends 90,000 on purchases and invest the rest.  Their effective federal rate income tax rate is 20%, sales tax rate is 8%.  Under the current income tax method total tax is = $27,200 under the flat tax = $27,000.3. Family makes 50,000 a year and spends 50,000 on purchases, none to invest.  Their effective federal rate income tax rate is 15%, sales tax rate is 8%.  Under the current income tax method total tax is = $11,500 under the flat tax = $15,000.So people see this as a signficant tax break for the upper class.  Now the more money they spend the less they will save.  On the other hand for low income families under the scenario above they are able to use $38,500 ($3,208.33 a month) under the income tax method and it would be $35,000 ($2,916.66 a month) under the flat tax.  Therefore, the high income individuals to invest $1,5 mil which will continue to accumulate annually plus interest and the lower income individuals will be getting poorer because they are seeing $300 less a month to spend.</blockquote>

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