The Flat-Tax is not necessarily flat

Montag, 21. Oktober 2013 - 12:26
(2011-10-22, by Mark Thoma, Department of Economics, University of Oregon)

“The Flat-Tax Fraud”

Robert Reich does not like the flat tax (I don’t either):

The Flat-Tax Fraud, and the Necessity of a Truly Progressive Tax, by Robert Reich: Herman Cain’s bizarre 9-9-9 plan would replace much of the current tax code with a 9 percent individual income tax and a 9 percent sales tax. He calls it a “flat tax.” Next week Rick Perry is set to announce his own version of a flat tax. …

The flat tax is a fraud. It raises taxes on the poor and lowers them on the rich. … The rich usually pay a higher percent of their incomes in income taxes than do the poor. A flat tax would eliminate that slight progressivity. [...]

That is not necessarily so as it depends on how the flat-tax is implemented. With a negative income tax you get progressivity back. The implementation is very simple and saves cost caused by the management of social welfare payments: (sorry, the headers are in German).

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