Debating the Pros and Cons of a Flat Tax

Daniel Mitchell at the Cato Institute says it is time to implement a simple and fair flat tax, but Holley Ulbrich, senior fellow at the Strom Thurmond Institute at Clemson University, says a flat tax would further shift the tax burden to the poor and middle class. Your feedback:

Both your commentators had valid points. The present tax code represents both a huge burden in time and money to taxpayers, and a legacy of congressional corruption embodied in thousands upon thousands of special deals. It is also an example of micromanaging social engineering run amok. However, it should be possible to simplify the system to such an extent that the tax code would comprise 100 pages, instead of 67,000. Begin by eliminating the special deals: Any provision in the tax code which was not utilized in 75 percent of all returns this year would be removed from the code. Next, any provision not utilized in 80 percent, then 85 percent, until the code applies equally in practice, not just theory, to nearly all taxpayers. For now, a graduated tax system—just far less complicated—would seem a prudent course. Once it is simplified, and thousands of variables are taken out of the equation, it would be much easier to judge cause and effect and to adjust tax rates accordingly.

JIM BURDICK Rocky Face, Ga.

A properly implemented flat tax (consumption tax, sales tax, FairTax, whatever you want to call it) would be neither disruptive nor unfair as Ms. Ulbrich thinks. Gradually phasing it in, by reducing income taxes as the flat tax is implemented, would allow everyone to adjust. Secondly, I disagree with Ms. Ulbrich that it would be unfair and redistribute the burden. As I envision it, we would not pay tax on our needs (or our investments) but only on our wants. A basic amount for food, shelter, clothing, and transportation would be exempted or rebated. This means that the poor would pay no tax, just as they do not now pay tax. We would pay tax on what we spend but not on what we invest. I think the tax load would be distributed pretty much as now, without the possibility for Congress to tinker and without the complicated tax code. I am talking about a tax at the point of purchase. Everyone will know exactly what it takes to support the government. I am not in favor of a value-added tax. It is hidden, so we do not know what we pay for tax, while it burdens the economy.

FRANK ZOZ Waterloo, Iowa

It is easy to see why a flat tax is preferred by rich individals, foundations, and corporations. A flat tax, even with some adjustments, is inherently regressive. And the rich always prefer others to carry the load. Holley Ulbrich complains that the current system is too complex. Most of that is due to lobbyists for the well-to-do and connected who can pay to influence Congress to put in more benefits for them. Yes, the system can be made less complex; but that would reduce or eliminate provisions favoring the higher-income groups, not a likely scenario.

JIM COPENHAVER Chandler, Ariz.

The real answer, and the only one with any chance of succeeding, is a very simplified version of our current progressive tax system. One with no itemized deductions or credits, increased personal-exemption amounts and no more than four or five progressive brackets. To increase savings and investments, the following types of income would be taxed at reduced rates, by allowing a special 50 percent deduction: qualified interest and dividend income, long-term capital gains, and retirement and Social Security income. Let's take the social engineering out of our current system; stop catering to the special interest groups; and make the system fair, simple, and easy to administer for everyone who wants to pay his fair share (no more, no less).

ROBERT SMETANA Downers Grove, Ill.

Under the flat tax, you will still have the Gestapo IRS, and politicians will continue to manipulate the tax code to suit their own advantages. Under the FairTax, you will be taxed on new purchases only. We have a huge underground economy that does not pay any taxes. We also have millions of illegal aliens working who do not pay taxes, as well as nefarious services, such as drug dealers, gangsters, hookers, etc., who do not contribute to our tax system. The rich do not pay their fair share of taxes due to their trusts. But with FairTax, all will contribute by paying taxes at the cash registers. We need change, but our system of taxation is broken beyond repair. Our tax code is so complex that even the IRS cannot decipher what is written. If you call the IRS with a simple question, you will get a different answer each time you call. Is that fair or what?