"I've always favored (if thats the right word) a flat tax over a consumption tax since the latter seems to "punish" and discourage the very root of capitalism- consumption. A flat tax also takes away the Dems big modus operandi, wealth redistribution. But I'm open to ideas by someone who knows something about the subject."
The reality is that a flat tax won't stay flat for long. What we have today is a flat tax 90 years removed from inception. As recently as 1986, we had an "almost-flat" tax and the system today is far worse than that one before the well intentioned, but temporary, simplification.
The fact of the matter is that, if the past 90 year experience has taught us anything, it is that any system that is based on the elusive concept of "taxable income" is destined to be caught up in a spiral of ever increasing complexity and compliance costs.
This doesn't even touch on one of the biggest problems with such a system in the 21st century, which is that tax costs "cascade" within the production chain, making our products uncompetitive on the world market. This is a huge factor in our ballooning trade deficit. In an increasingly global economy, we simply cannot afford to stick with such an antiquated and outdated system.
I get it- but isn't a consumption tax going to give the gvmnt leverage as far as tax rate reductions for compliance with "cafe" and other environmental standards, minority production, etc? It just seems that a consumption tax also "cascades" from production to market. Help me out here.