Flat Tax System

Paper Summary:

This paper provides an argument in support of instituting a flat tax system in the United States. The paper begins with a statistical-based explanation of the flat tax system, which maintains that one's income should be taxed just once as close as possible to its source. Next, the paper turns to an analysis of the economic and fiscal benefits of a flat tax system. Finally, the paper turns to the social and political benefits of a flat tax system, explaining that it is progressive -- in that those without income are not taxed -- efficient and simple.

Outline:
Introduction
Explaining the Flat Tax
A Case for the Flat Tax System
Benefits of the Flat Tax System
Progressivity, Efficiency, and Simplicity
Conclusion
Bibliography

From the Paper:

"In this light, the main objections to the flat tax are cancelled out (The Economist, 2005). In addition, the advantages of a simple tax system are enhanced. Simplicity is an advantage in its own right. The costs of administering a complex tax system are huge. Estimates for the United States, whose tax regime, despite government efforts, put the costs of compliance, administration and enforcement between 10 percent and 20 percent of revenue collected. This sum is equivalent to between one-quarter and one-half of the government's budget deficit. And many countries have even higher maintenance costs. According to Hall and Rabushka (1995), the flat tax would save taxpayers hundreds of billions in direct and indirect compliance costs (Hall and Rabushka, 1995). It would also transfer billions of dollars from investments that reduce taxes to those that produce goods and services."

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