Editor's Note

Is a Simple Flat Tax Really that Simple?

April 28, 2010 RSS Feed Print

You probably thought I was kidding last week when I said that, after dissecting the pros and cons of the value-added tax, we’d turn our attention to the flat tax. And I may have been. But the thoughtful responses we got have encouraged me to press on with our tax seminar. So what about that flat tax? Essentially, it would junk the convoluted tax code and impose a single rate on individual and business income. You could file your return on a postcard. Supporters say it would eliminate the distorting behavior of loopholes and deductions, promoting economic growth as people looked for productive investments instead of tax-avoiding ones. Is it that simple? Give me your thoughts on the flat tax at editor@usnews.com. And maybe next week we’ll look at that Fair Tax scheme.

Tags:
alternative minimum tax,
economy,
income tax

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We already have a flat tax, and it’s called inflation. When money is devalued by normal operations of the fractional reserve banking system by pumping increasing amounts of debt-base money into the economy, the loss of buying power is evenly distributed over every dollar in the economy: a flat tax.

Bill Parks of MD 8:59PM May 12, 2010

The Flat Tax has the same basic problem as our existing tax process. That is, it relies on "voluntary" participation. The result has been an enormous expansion of the "underground economy", where it is estimated that as much as 20% of the total income of this country goes untaxed.

Right now, it is very easy for employers to hire under-the- table employees and avoid have to pay any taxes on them. It also tends to encourage the employment of illegal workers, who can be paid substantially less that the minimum wage. Since the IRS spends most of its resources checking up on those of us who do pay taxes, it doesnt leave much available for enforcement of the employment laws.

The Fair Tax approach eliminates these problems. Everyone gets taxed equally on what they spend; the more you spend, the more you pay. A certain portion of the "sales tax" would be allocated to the Feds, another portion to the State, and an additional portion to local government. Since most states already have a sales tax in place, the reporting and payment of the new tax would not impose that great an additional burden. This would be offset by the savings in no longer having to track, withhold and report employee taxes.

Dale Hilding of OR 3:11PM May 09, 2010

A Flat tax rate is fair for everytbody makes the most sense by far. Every argument I've read against a flat rate tax is either baesed on misinformation or complaints about the transitiion from the current system. However, it will never happen. This is because the current progressive tax code is the favorite tool for elected politicians to impose their will on the public. Legislators can do only 2 things to influence the public, make something a crime or adjust the taxes on it. We need a pardigm shift in the government thought process. Elected representatives need to stop trying to influence public behavior, and start focusing on delivering services to the public as a whole. Until that happens and politicians stop promoting their own social agenda, government will hang on to the tax code as the primary means of manipulating public behavior to their design.

FreedomFan of TX 5:22PM May 07, 2010

Editor's Note

Brian Kelly was named editor of U.S.News & World Report in April 2007, nine years after joining the magazine. With more than 30 years of journalism experience, including covering Capitol Hill, politics, and the presidency both as a beat reporter and as an editor, Kelly is one of the nation’s most experienced magazine editors in steering national and international news content.

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