The idea being that when Government get's too greedy it hurts everyone (proportionally) the same ammount and prompts a unified outcry.
Problem is the only proposed flat tax
H.R.1040 Sponsor: Rep Armey, Richard K. (introduced 3/15/2001).
doesn't do that.
It has an $13,600 adult personal exemption and despite rhetoric to the contrary is retains a standard & itemize deductions.
The net result is to increase the number of folks forming the larger government spending constituency that Walter Williams warns of:
Walter Williams, World Net Daily, 10-25-2000
According to the most recent U.S. Treasury Department figures, ... the top 50 percent ($36,000 and over) paid 96 percent of income taxes. Guess what the bottom 50 percent of income earners paid?
If you're among those who pay little or no federal income taxes, what do you care about tax cuts? Moreover, if you think tax cuts pose a threat to government handout programs, you might be openly hostile and support Al Gore's silly "risky scheme" talk. So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
It still maintains the plethora of business deductions, necessary to the calculation of taxable income and increases the tax base of businesses to make up for lost revenues on the individual income tax side.
It treats the individual proprietor as both a business and and individual who is taxed on both business earnings, and as an individual for individual income.
It does nothing to replace the multitude of payroll taxes, including SS/Mediscare taxes.
It does nothing to remove specialized excises on product sales and manufacture.
Those who are able to live off of savings, bonds, and investment income(dividends and capital gains) pay no taxes. Whether they are business or individual.
Complexity is in the details of how taxable income is figured, not in the size of the reportcard or number of tax brackets. The costs of tax planning, accountion, litigation and enforcement do not just go away, for individuals or for businesses. For the bottom line on that I recommend reading:
Flat Tax as Seen by a Tax Preparer
by Vern Hoven
It's quite an eye opener.
The IRS is still around, and the tax maintains every individual in legal jeopardy to prove there income on challenge whether they may qualify to file or not. Businesses still jump throught the same old hoops and the total overhead costs to business in complying with the tax remains generally the same, (65cents for every revenue dollar collected) and gets included in the price of goods and services for us all same as any other business cost.
Bottom line, it's essentially the same thing we have now, they just make cosmetic changes that shift the overall tax burdens around concentrating them on the middle class and really doesn't change the impact on growth of government.
It doesn't exactly sound like a brainstorm.. Does it?