Flat Tax

That's very nice of you to say, Con. Here we go... 1. While "pay according to your ability" sounds just, a flat tax is more fair. A progressive tax rate penalizes people for success, as higher income means higher tax rates. Sometimes this creates circumstances where one is actually rewarded for a pay cut. For example, suppose everyone who earns less than $100 a year is taxed at a rate of 5 percent, and if you make between $100-200, you are taxed at a rate of 10 percent. If I earned $98 a year, being taxed at just 5 percent I would walk away with $93.10. But if I earned a $4 raise and received $102 per year, and was taxed at a rate of 10 percent, I would wind up leaving with less than I started with before my raise - just $91.80. As such, it behooves some people to earn less just to stay in a lower tax bracket. That does not reward progress but instead punishes productivity. 2. Every year, corporations spend millions on accountants to try and beat the tax code. With a flat tax, businesses can make decisions designed to better serve the marketplace and their shareholders, rather than worry about ways to cheat the system. 3. Similarly, shifting away from a progressive tax rate would make filing for taxes easy, and the rules easier to comply with. This would reduce both errors and tax fraud. As a result, professional tax advisers would not be needed, thereby saving money for the average tax payer.4. Another reason a flat tax makes sense is that this system would make it hard for lawmakers to create tax loopholes in exchange for campaign contributions and other personal favors. This would do wonders for the world of politics, and make politicians more accountable to their constituents rather than their biggest donors. 5. A flat tax rate could likely encourage investment and expansion, as additional profit is not taxed at a higher rate.6. Under a flat tax system, instead of taxed income, much of the tax revenue collected is done so via purchases of goods and services. It can be assumed that people with more wealth will make more frequent and more expensive purchases anyway. As such, they will still be paying the majority of taxes. 7. Right now, the top 10% of earners pay over 70% of the nation's taxes. As a result, high-worth individuals hide their money in offshore accounts to try and lessen their tax burden. They also choose to relocate their citizenship and places of business to tax havens or locations that are more tax friendly. We have "evidence that tax receipts from the rich rise when the rate they're asked to pay goes down. When the top rate of tax was slashed from 73 percent to 25 percent in the 1920s, the share of taxes paid by those who made more than $100,000 a year - more than $1 million in today's money - increased from 28 percent to 51 percent, according to The Wall Street Journal" [1]. Therefore, if the argument is that the wealthy need to continue footing the bill for America's debt, then it would make sense to transition to a flat tax -- considering we have proof that lower tax rates lead to higher shares of taxes being paid! 8. Proponents of a progressive tax rate claim that those who "can afford to do so" bear the highest tax burden - but why? Just because someone can afford something doesn't mean they should be forced to pay for something. I can afford to buy my neighbor dinner, but my neighbor nor anyone else should demand that I do so just because I might have more money than him. 9. People with money invest in other ventures to encourage market growth and create jobs, which is good for the economy as a whole. It's also good for the advancement of technology and other things they invest in such as biomedical research. If wealthy people have to pay for other people instead of invest, it will inhibit progress. Meanwhile we have reason to believe that people can/will find a way to get by even without significantly taxing incomes at progressive rates. 10. Up until 1913 Americans kept all of their earnings. Despite this, we still had schools, colleges, roads, railroads, subways, the Army, Navy and Marines Corps (who happened to win 8 wars). We can afford to scale back on taxes and assume society would not fall into ruin. We could also afford a flat tax and not significantly burden the lower class by eliminating a lot of what we spend unnecessarily, i.e. pork spending and excessive military affairs for example. Estimates of around a 15% income tax rate are considered the flat tax rate status quo which is reasonable. The highest typical proposed rate is around 20% which is a lot more fair than the highest rate, who pay almost 40% in the U.S. today [2]. 11. Despite the fact that the majority of taxes are paid by a small minority, a whopping 62% of Americans favor a flat tax. Amazingly this breaches party lines with 66% of Republicans, 68% of Independents and 52% of Democrats in agreement, which is a big feat in bipartisan support compared to most economic proposals [3]. 12. The flat tax removes the section of the tax code that is biased against the formation of capital. It eliminates the death tax, capital gains tax and double taxation of savings and dividends [4]. 13. A flat tax would eliminate the bias against saving an investment, which would translate to productive economic behavior and boost the economy's long term rate [5]. Instant wealth creation for people who would have otherwise paid taxes would allow them to compete and put America in a better position in the global market. Countries with higher tax rates are worse off than those with lower tax rates [6] Conclusion In conclusion, a flat tax offers simplicity, fairness and opportunities for significant and immediate growth. It would put an end to cronyism and political favoritism in politics, minimizing corruption and fostering integrity among politicians to represent their constituents rather than make deals pertaining to corporate tax loopholes. The rich would still pay the majority of taxes, as they would likely spend more money, more frequently (and pay sales tax). However they would also have access to income they would have otherwise been taxed, giving them the freedom to invest in research, technology and job growth. The majority of Americans across party lines support the flat tax, because it's the better tax policy. [1] http://money.cnn.com...[2] http://www.forbes.com...[3] http://reason.com...[4] http://smallbusiness.chron.com...[5] http://www.heritage.org...[6] http://www.heritage.org...