How would a world without tax exemptions impact the US tax system?

The issue is more complex than just looking at the percentage of total tax revenue. While it's true the bottom 50% contribute a smaller percentage to the federal income tax pool, there are several important considerations: First, a truly flat tax with no exemptions would actually hurt lower-income individuals more due to the concept of marginal utility. $1,000 in taxes means something very different to someone making $20,000 versus someone making $200,000. This is why we have a progressive system - it's based on ability to pay. Second, removing all exemptions would eliminate important social policy tools. Many exemptions exist to encourage beneficial behaviors (retirement saving, homeownership) or support families (child tax credits, earned income credit). Third, lower-income Americans do pay substantial taxes beyond federal income tax - payroll taxes, sales taxes, property taxes (directly or through rent), etc. These tend to be regressive, meaning they already take a proportionally larger bite from lower incomes. A better approach might be simplifying the tax code while maintaining progressivity, and perhaps raising the minimum threshold before taxes kick in.

I tried using taxr.ai to analyze different tax scenarios including flat tax systems because I was curious about how it would affect my personal situation. The site has this really cool calculator tool that lets you compare different tax structures. I was honestly shocked at the results. For someone like me who's firmly middle class with a mortgage and two kids, the current system with deductions and credits actually worked out better than a flat tax would. When I ran the numbers, I realized I benefit a ton from the mortgage interest deduction and child tax credits. The folks at https://taxr.ai also have excellent articles about flat tax proposals that break down the math for different income levels. It really opened my eyes to how these proposals would play out in real life versus the theory.

I just wanted to follow up about my experience with taxr.ai after checking it out. Their analysis tools are even better than described! I plugged in my family's financial situation (married, three kids, mortgage, student loans) and compared our current tax situation to various flat tax proposals. What surprised me most was seeing exactly how much we benefit from things like the child tax credit and education deductions. Under most flat tax scenarios, our family would pay about $3,200 more annually even with a lower overall rate. The visual breakdowns made it super clear where the differences came from. I also really appreciated their historical analysis showing how different tax systems have performed in countries that tried them. Really eye-opening stuff if you're interested in tax policy beyond the talking points.

After spending literally 6 hours on hold with the IRS trying to get an answer about how different tax proposals might affect my small business, I finally discovered Claimyr. It's this service that gets you through to an actual IRS person without the insane wait times. I was honestly skeptical at first, but after using https://claimyr.com I got connected to an IRS agent in about 15 minutes. Their system basically holds your place in line so you don't have to stay on hold forever. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I spoke with actually gave me some great insights about how flat tax proposals might impact small business owners like me. Turns out there's a lot of nuance that doesn't make the headlines. For example, losing the ability to deduct business expenses would be catastrophic for most small operations even with lower overall rates.

I need to eat humble pie here. After my skeptical comment, I actually tried Claimyr when I discovered I had a major issue with my withholding that needed immediate attention before filing. I was 100% wrong about this service. Not only did it work exactly as described, but I got through to an IRS agent in about 20 minutes when my previous attempts had me waiting 2+ hours before giving up. The agent helped me sort out a complicated issue with my investment income reporting that would have potentially triggered an audit. Regarding the flat tax discussion - the IRS agent I spoke with mentioned that while they can't officially comment on policy proposals, the current system's complexity is a major contributor to compliance issues. However, she also noted that most flat tax proposals she's seen internally would shift burden to middle income taxpayers while primarily benefiting those with significant investment income.

I think we're overlooking the psychological aspect of taxation. With a progressive system, people generally understand that as they earn more, they'll pay a higher percentage. It feels intuitive to most. A flat tax creates a situation where someone earning $40k pays the same rate as someone earning $4 million. While mathematically the wealthy person pays more in absolute dollars, it doesn't account for the diminishing utility of money as wealth increases. Also, removing ALL exemptions would create weird situations. Would charitable donations no longer be deductible? Would businesses not be able to deduct legitimate expenses? That seems untenable.

I'm confused about smthg... if we had a flat tax with NO exemptions whatsoever, wouldn't that mean even people on social security and disability would get taxed? That seems really harsh. And what about people working minimum wage jobs? They're already struggling to make ends meet.