The flat tax system will remove distortion of the current tax system because all income is taxed once since there will no other exemptions, deductions, and loopholes. (Gaddy, and Gale, 2005, Larsen, Thomas, (2006)
There is argument among tax theorists and economist that the best tax system is one that will strike optimum between equity and economic efficiency. (Hagopian, 2011)
"Double taxation dramatically reduces the incentive to create new businesses in risky lines where debt financing is not available." (Hall, & Rabushka,2007, p 5)
Moreover, the current tax policy does not encourage marginal propensity to invest which consequently discourage economic growth. (Martinez-Vazque, & Timofee, 2011)
A simple tax system takes only a few easy calculations, as opposed to the complexity of today's progressive income taxes. The flat tax would reduce the negative twist in the progressive tax system (Auerbach, 1997)
Paying taxes is not considered a pleasurable activity for most, but it could become somewhat less painful for many citizens if flatter income tax systems are implemented. Benefits of the Flat Tax System There are many types of proposals for tax reform and one of the strongest is the flat tax reform proposal, which promises to simplify income tax preparation and reduce the opportunity for cheating (Bradley, 1984)
It would also transfer billions of dollars from investments that reduce taxes to those that produce goods and services. An effective flat tax could have many benefits (Branch, 2004)
2. Like that of many other countries, the United States' federal income tax system needs a great deal of improvement (Carroll et al
The flat tax system would accomplish the same goal without any forms or record keeping. Conclusion progressive tax, or graduated tax, is a tax that is larger as a percentage of income for those with larger incomes (Drache, 2000)
And many countries have even higher maintenance costs. According to Hall and Rabushka (1995), the flat tax would save taxpayers hundreds of billions in direct and indirect compliance costs (Hall and Rabushka, 1995)
And many countries have even higher maintenance costs. According to Hall and Rabushka (1995), the flat tax would save taxpayers hundreds of billions in direct and indirect compliance costs (Hall and Rabushka, 1995)
And many countries have even higher maintenance costs. According to Hall and Rabushka (1995), the flat tax would save taxpayers hundreds of billions in direct and indirect compliance costs (Hall and Rabushka, 1995)
The flat tax eliminates political lobbying on the part of special interest groups." Case for the Flat Tax System The majority of citizens in various areas across the world accept that they must contribute to the cost of public goods and services, such as the police and social services (Kerr, 2004)
The term progressive describes the way the rate progresses from low to high. Proponents have two main arguments for a progressive tax system (Kesselman, 1998)
A person making just enough money to pay for food and housing cannot afford to pay any taxes without it hurting their basic lifestyle, while someone making twice as much can afford to pay up to half their income to taxes. Opponents of the progressive tax system argue that too progressive a tax rate acts as a disincentive to work (Mitchell, 1997)
This paper offers an in-depth look at the flat tax system, in an effort to present a clear argument as to why this system could be very beneficial to countries around the world. Explaining the Flat Tax When implementing a flat tax, it is best to have two separate tax forms -- one for business income (which includes corporate income and income from the ownership of unincorporated businesses) and the other for wages and salaries (Rabushka, 1997)
The Hall-Rabushka system is often called the 'flat tax'." (Gale, 1999, p
THREE MAIN BENEFITS OF FLAT TAX SYSTEMS Three main benefits are reported to be associated with flat tax systems and these include those of: (1) Flat taxes enhance labor supply incentives; (2) A flat tax rate can increase tax compliance and reduce tax evasion; and (3) A flat tax rate is often part of more fundamental tax reform, it can simplify income taxation significantly. (Paulus and Peichl, 2008, p
Instead it would institute a national sales tax that would pull in enough to cover all government programs -- taking revenue from what is spent rather than what is earned." (McGrath, 2009, p