Debate Club

Flat Tax Will Benefit Only the Rich

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Conservative politicians support tax increases. Not for their wealthy donors, but for the poor and middle-class Americans who would pay more under the so-called "flat tax" proposals that were touted by Dick Army and Steve Forbes in the 1990s and are gaining currency again.

America has a progressive personal income tax, meaning it applies higher tax rates to the well-off and lower tax rates to the less well-off. Any proposal to adopt a single tax rate somewhere in between the existing highest and lowest rates would result in tax cuts for the rich and tax increases for the poor.

It gets worse. Flat tax proposals would exempt investment income, which largely goes to the rich. Our personal income tax already taxes capital gains and stock dividends at lower rates than wages, which mostly benefits the richest 1 percent of taxpayers. Rather than eliminating these and other special breaks, the flat tax proposals would expand them into one big exemption for investment income.

[Vote: Do the Rich Pay Enough in Taxes?]

Some wealthy people already disguise their income as capital gains in order to benefit from the lower tax rates. These shenanigans would be even more common if the tax rate on capital gains and dividends was reduced to zero percent.

Flat tax proposals also include a business flat tax that would expand the existing tax breaks for capital investments (most of which companies would make even if there was no tax incentive) into an immediate deduction for all capital investments. Businesses would also pay taxes—which they would ultimately pass on to employees—on fringe benefits like employer-provided healthcare.

My organization analyzed the last halfway serious flat tax bill in Congress, which was proposed by former Sen. Arlen Specter of Pennsylvania, in 2010. We concluded his 20 percent flat tax plan would cut taxes for the richest 1 percent of taxpayers by over $200,000 on average, cut taxes for the next richest 4 percent by $5,800 on average, and raise taxes for everyone else by thousands of dollars each.

Don't believe us? Then read the 1983 book, Low Tax, Simple Tax, Flat Tax, which is the basis for all these proposals. Authors Robert Hall and Alvin Rabushka wrote that the flat tax "will be a tremendous boon to the economic elite" and that "it is an obvious mathematical law that lower taxes on the successful will have to be made up by higher taxes on average people."

Steve Wamhoff

About Steve Wamhoff Legislative Director of Citizens for Tax Justice

federal taxes

Other Arguments

120 Pts
Current Tax Code Is Confusing
59 Pts
Flat Tax Unites Americans

Yes – Flat Tax Unites Americans

Grover Norquist President of Americans for Tax Reform

52 Pts
Flat Tax Unleashes Economic Growth

Yes – Flat Tax Unleashes Economic Growth

Rick Perry Texas Governor and Presidential Candidate

26 Pts
Flat Tax Would Eliminate 'Crony Capitalism'

Yes – Flat Tax Would Eliminate 'Crony Capitalism'

Mary Kate Cary Former White House Speechwriter for President George H.W. Bush

1 Pts
Cutting Taxes for the Rich Never Ends Well

No – Cutting Taxes for the Rich Never Ends Well

John Irons Research and Policy Director at the Economic Policy Institute

-14 Pts
Secret of the Flat Tax: Middle Class Pays More So Rich Pay Less

No – Secret of the Flat Tax: Middle Class Pays More So Rich Pay Less

Dean Baker Author of 'The End of Loser Liberalism: Making Markets Progressive'

-37 Pts
Flat Tax Would Introduce New Problems

No – Flat Tax Would Introduce New Problems

Kelly Phillips Erb Author of Taxgirl Blog at

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