American Solution: The Flat Tax

Today our tax system is an outdated and flawed tax system; the tax code alone has more than 9000 pages filled with numerous loopholes. The best solution for our nation would be to pass a one paged, low flat rate income tax which would increase revenues while keeping the tax burden low. With a flat rate tax, all means of tax evasion would be eliminated. Since 45% of Americans pay no income taxes¹, you would see an instant increase in revenues. This would lead to a vastly increased tax base. If you set the flat rate tax to be 13%, then you would effectively lower tax rates across the board. For those who say a flat tax is “regressive”, let me remind you that any tax on the poor is regressive. A flat rate, or proportional tax, is the fairest you can get when it comes to taxes. I personally do not like the progressive tax system we have here in America, because it forces the wealthy minority to pay for the benefits of the vast majority. It is a well known fact that our government collects more than 49% of its tax revenue from the top 10% of American society². A tax system should not be based on an “ability to pay” concept, where the wealthy minority pays more than the majority. A good tax system ensures that everyone pays the same burden. With that said, a flat rate income tax of 13% would still be a 2% tax cut for the lower class in America. This tax cut would benefit the middle class and the upper class the most, since the tax cut would effectively be more than a 10% cut. The economy would bounce out of the recession and it would begin to expand and boom. Then one can increase the flat rate tax, moderately, to 15% (Which would be back to the original rate for the lower class.). The result would be economic recovery and a massive increase in revenues. It’s simple tax theory 101; a good tax system has a large tax base and a low tax rate. The flat tax has worked in Russia, where it increased revenues by 25% with a tax rate of 13%³. Other countries like Bulgaria and Macedonia have implemented flat taxes with great success. The success of the flat tax is all about eliminating tax evasion. Who needs higher and more taxes, when you can get more tax payers? Not only has the flat tax worked in several nations, it truly is the fairest tax system we can have. Everyone pays the same rate, no matter what. With a larger tax base, we can afford to keep current tax rates lower, thus improving economic conditions. So it truly is simple; if you want to maximize revenues, and cure our economy, just issue a simple, one paged, low, flat rate income tax!

Sources:

1. Hodge, Scott, and J. Scott Mody. “The Growing Class of Americans Who Pay No
Federal Income Taxes.” The Tax Foundation. N.p., n.d. Web. 10 July 2011.
http://www.taxfoundation.org/research/show/206.html

2. Hodge, Scott. “Tax Burden of Top 1% Now Exceeds That of Bottom 95%.” The Tax
Foundation. N.p., n.d. Web. 10 July 2011.
http://www.taxfoundation.org/blog/show/24944.html

3. Stacey, Kevin. “Study separates russian flat tax myth and fact.” EurekAlert!
N.p., n.d. Web. 10 July 2011. http://www.eurekalert.org/pub_releases/2009-06/uocp-ssr061609.php

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