The flat tax will replace the current tax code with a flat-rate income tax that treats all Americans equally.
Exactly what is needed !!!!!
Nice in theory, except no Flat Tax proposal ever introduced to Congress has ever done that.
Right off the bat every flat tax proposal provides very large personal exemptions that divide Americans into two camps, those that must file, and those below the exemption limits that aren't required to file.
Next is the difference in treatment of the self-employed American as compared to the wage earner.
Next is the difference in treatment of the Americans receiving interest, dividends and capital gains who are not taxed at all under the Flat Tax, as compared to the American that receives only his wage who get taxed by the Flat Tax, as well as the SS/Medicare taxes that are still very much a part of the tax system.
We really need to dump the political hype the "Flat Tax" has been sold with and look at the reality as implemented in the legislation. The two are miles apart.
A good place to start is with the analysis done by Vern Hoven back when Armey, Forbes et. al. were pushing the "Flat Tax" hype during the 2000 political campaigns.
It should be based on income including any and all other sources of income including interest etc. It should have a graduated poverty level. We would still need the IRS no matter how they reform the tax code it just would not be the mega instutition it is now. VAT would be worse than what we have now.
I am trying to understand this.
If I decide to work 80 hours instead of just 40 a week, I will be taxed twice as much as the lazy guy?