06-19-2015, 02:59 PM
I have a tough time seeing how this is only going to cost $200B a year, most likely that's net of additional revenues from the projected 1% growth.
For starters, everyone pays 7.65% FICA, so already we're down an incremental 7% on the flat tax. And corporations are going to cover SS? I thought the average effective rate of corporations, even after all the deductions, is @ 22%.
You don't eliminate the two biggest deductions - charity and mortgage (which would not be wise to do so). You're also cutting out estate taxes (which aren't that significant).
You're effectively reducing dividends from 20% to 14.5%. The exemption for family of four on $50k...you're LOSING their 7.65% FICA, which is huge when talking almost half the country.
The main advantages of a flat tax are simplicity, but most people favor a progressive tax system. And this evolves into something of a bait-and-switch, which is you go to a flat tax but then end-up with a bunch of credits to make it progressive...really just a mirror image of a progressive tax rate with deductions and exemptions.
The only way you're going to significantly increase revenues (as a % of GDP) over the long-run is implementing a VAT. That is the inevitable consequence if we don't reduce or slow spending increases.
For starters, everyone pays 7.65% FICA, so already we're down an incremental 7% on the flat tax. And corporations are going to cover SS? I thought the average effective rate of corporations, even after all the deductions, is @ 22%.
You don't eliminate the two biggest deductions - charity and mortgage (which would not be wise to do so). You're also cutting out estate taxes (which aren't that significant).
You're effectively reducing dividends from 20% to 14.5%. The exemption for family of four on $50k...you're LOSING their 7.65% FICA, which is huge when talking almost half the country.
The main advantages of a flat tax are simplicity, but most people favor a progressive tax system. And this evolves into something of a bait-and-switch, which is you go to a flat tax but then end-up with a bunch of credits to make it progressive...really just a mirror image of a progressive tax rate with deductions and exemptions.
The only way you're going to significantly increase revenues (as a % of GDP) over the long-run is implementing a VAT. That is the inevitable consequence if we don't reduce or slow spending increases.
