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I prefer our graduated tax bracket instead of a flat tax. I don’t plan on staying at this high of W2 income for the majority of my life. I see the majority of my life being at a lower income, technically where I can control based off of sales from the stock in real estate market and withdrawals from retirement accounts. With my 1099 income, I am able to have significant expenses to deduct from my income.
Some current tax rules promote long-term investing. I’m worried if some of those are removed, people are more likely to day trade or have less financial savings in the future.
I also know a flat tax would be harder for those with a lower income. I’m thinking about teenagers, students, interns, elderly who are trying to make a little extra money. They may be in the current 10%/12% income tax bracket and it would increase for them.
I’m really interested to hear other people’s perspectives. I know a flat tax would generate more income if it also applies to long-term capital gains. It would also help a lot of people in their income tax withholding calculation and the simplicity of filing a return.
Pro
I am still torn on which tax system is more advantageous for middle and lower income people. The flat tax makes filing easier, but the graduated brackets can be manipulated to reduce the tax liability.