Flat Tax Rate essays

Flat Tax Rate essays Implementing a flat rate tax would greatly improve the economy in the United States. A flat tax rate would increase savings, discretionary spending, and prosperous investments largely by reducing marginal tax rates and simplifying compliance costs. In addition, any negative impact on lower income Americans would be balanced by the increased gains in efficiency from the flat tax rate. Taken together, these arguments suggest that a flat tax rate would be hugely beneficial to the American economy. Perhaps one of the most important steps in understanding the economic benefits of a flat rate tax is in creating a solid working definition of such a tax. Intuitively, a flat rate tax can be defined simply as a tax that is proportionally applied on total income. For example, a 10 percent flat rate tax would be $5,000 for a person who earns $50,000. Similarly the flat tax rate of 10 percent would be $2,000 for an individual who earns a mere $20,000 per year. Browning rate income tax has two important and defining characteristics. They note, " first, the tax base is a comprehensive measure of income with no preferential treatment given to specific sources or uses of in come, and second, a single tax rate is applied to that base" (629). While the definition of a flat rate tax seems simple, the actual flat taxes that have been proposed in the United States are usually modified forms, and as such are not "true" flat taxes. They use a more restrictive definition of taxable income than the true definition of a flat tax, and they also often apply some small graduated tax rates to the income base. Browning complex, more inefficient, and more horizontally inequitable than a true Historically, federal income tax in the United States has been a graduated system of taxat...