Let's take a closer look. All income is taxed. Surprisingly, the amount of revenue the federal government collects from the personal income tax is only 9.5 percent of total personal income. If corporate income is included, federal income taxes take only 11 percent of income. Today's deductions, exemptions and loopholes result in more than half of all personal income not being taxed at all.
All income is taxed at the same rate.
Under the current tax system, a housewife can enter the labor market in a minimum-wage job and be taxed at a 40 percent marginal tax rate because of her husband's earnings. Because of the tax on Social Security benefits and the Social Security earnings penalty, some elderly workers face marginal tax rates in excess of 100 percent. A dollar of corporate income is taxed at the same rate as a dollar of personal income. All income is taxed only once. Under the current system, investment income can be taxed two, three or even four times.