Is a flat tax feasible?

Question

It has many benefits and downsides, but could it actually be instituted

Answer 1

The only benefit that I see is for the wealthy. A flat tax would have to be levied at 25% - 27% to raise the same revenue as the current graduated tax system does. Only the wealthiest of taxpayers pay any where near that in total income taxes.

If you remove the burden from the wealthy you have to make it up somewhere else. That leaves it up to the poor and middle class to shoulder the burden. The middle class would buckle at the knees with a flat tax and the working poor would largely be driven into the streets with a flat tax.

If you think a flat tax is such a great idea, pull out your tax return and run the numbers yourself! Take the total income line on your tax return and add back any tax preference items like retirement, health care etc. Now take 25% of that and compare it to the total tax line on the return. If it's lower, congratulations, you're fabulously wealthy. If you're like MOST taxpayers it will be MUCH higher than your current tax bite.

Anyone who thinks it would do away with the IRS is simply naive. Someone will have to collect the tax AND enforce collections from the scofflaws just as is done today. You might be able to kick a few IRS employees to the curb but the IRS' budget is a small part of the Federal budget anyway.

The so-called "Fair Tax", a massively expensive national sales tax -- again around 27% or so -- on top of the current state sales taxes is even worse than the flat tax. The opportunities for black marketing under such a high tax would create an entirely new underground economy to escape the tax burden especially among the working poor. The fraud from the "prebate" feature would be staggering.

Answer 2

Of course! We pay a flat tax whenever we pay state sales tax. I also think it is unlikely that the federal government would ever dismantle the IRS and put all those people out of work--including accountants, the IRS itself, etc. But it could work more simply than the mess we have now.

Answer 3

Could it work? Probably.

Would it be "fair"? Absolutely not! It would shift the tax burden of the country down to the lower and middle classes.

Answer 4

There's some fabulous research available at www.fairtax.org - the fairtax is not strictly a flat tax and eliminates many of the downsides. It could be instituted as long as the 16th amendment was also eliminated. Check it out!