Amen !!
R
biochem wrote:A flat tax sounds simple, but there must be some disadvantages to it. not an economist, but there must be more besides the disadvantages it heaps on the poorest compared to the richest.
Most serious flat tax proposals I have seen have a floor. The actual numbers vary but are usually something like $20,000 per person and a 20% tax rate above that.
- a couple earning $25,000 would pay nothing
- a couple earning $50,000 would pay tax on $10,000
- a couple earning $1 million would pay tax on $960,000
That sort of scheme would make it fair to the poor, especially when most proposals also include few or no exemptions. Right now the highest earners have all sorts of exemptions, loopholes etc buried in the 1000s of pages of current tax laws that they can use to pay much less than the nominal rate. And currently the really rich: the corporate CEOs, the hedge fund managers, the trust fund babies etc have the vast majority of their income as investment income which is only taxed at 14%.
The biggest disadvantage (and the reason why it will never be passed) is political. Politicians love money and power and control of the tax code gives them both. The rich donate LOTs of money to campaigns to ensure that their favorite loopholes remain. Plus playing with the tax code gives politicians a way to control people for good or ill and they love that power. If you favor green energy - put in a tax credit for it etc etc.