Why tax 'loopholes' can be good:  Many of the so-called 'loopholes' which a flat tax would close, by ending the exemptions given when you engage in certain kinds of expenditure under the current income tax system, are actually positive features which incentivize 'good' economic behaviour. One of the great advantages from owning a home, for example, is the resulting ability to deduct mortgage interest payments from taxes. This makes owning a home more expensive, meaning a greater number of people will be able unable or unwilling to buy homes, and will thus be forced to rent instead. This harms their long-term economic prospects, as their mortgage payments would result in them eventually owning an asset whereas rent payments bring them no return, and as self-owned homes become in less demand, the value of the homes which hundreds of thousands of people have already spent decades paying mortgages for will plummet. This would also cause great harm to the construction industry as fewer people can afford to buy new houses. Another example of a useful 'loophole' is that profits and capital gains are currently taxed differently. Under a flat tax they would both be taxed equally, representing a kind of 'double taxation' which would hit most heavily new, young venture capitalists going into high-risk industries, and so will stifle investment and innovation. Finally, the current income tax deductions we allow for charitable giving would be 'closed' with a flat tax, and hence charitable giving would become less affordable and less attractive to most taxpayers. [1] Thus, the closing of these 'loopholes' will in fact disincentivize what we consider to be beneficial economic behaviour, leading to a worse economic state for everyone.  [1] Rothbard, Murray. “The Case Against the Flat Tax”, The Free Market Reader. Auburn. Mises Institute. 1988