Why can't a flat tax of 10% work in the US?

Question

Is it because it would put accountants and tax services out of private business.

Answer 1

10% wouldn't collect enough revenue and even a 10% flat tax would be very regressive.

When Steve Forbes was running for President he proposed a 17% flat tax. Economists looked at the plan they said that, in order to keep revenue at the current level, a flat tax would have to be at lease 21%. A 21% tax would be awesome if you are paying 35% but it would put millions of poor people out in the street.

For example a single parent with 2 kids and $20k in income would get about $3300 more back than they had withheld. An effective tax rate of negative 16.5%. With even a 10% flat tax, they would be $5300 worse off and, with the 21% flat tax, they would be $7500 worse off!

A flat tax would wonderfull for the upper middle class and the rich but would be devastating to the working poor.

Answer 2

It would also cause a large number of people that don't presently have much, if any tax, liability to pay 10% of their income toward income tax. Any body that I know of believes that it would take more like 15% to make up the lost revenue. It would greatly benefit the "rich" who now pay something like 35%.

Answer 3

Also it would only provide less than half of what the current system provides, and would hit the poorest people the hardest.