It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Some features of ATS will be disabled while you continue to use an ad-blocker.
A Brief Guide to the Flat TaxBy Daniel Mitchell, Ph.D.
July 7, 2005
Frequently Asked Questions
Q: Should the rich pay more?
A: Under a flat tax, the rich do pay more than the poor. A wealthy taxpayer with 100 times more taxable income than his neighbor will pay 100 times more in taxes. However, a flat tax does not impose special penalties on those who contribute the most to the nation's prosperity by subjecting them to punitive and discriminatory tax rates. For those who think the "rich" should pay a higher percentage of their income, the generous family allowance effectively creates a modest level of "progressivity." For instance, a family with an annual income of $20,000 faces a tax rate of zero. Wealthy taxpayers also benefit from the family allowance, but the effective tax rate on an income of $1 million will be only a tiny fraction below the statutory tax rate.
This approach is much fairer than the current system, which penalizes investors, entrepreneurs, and others who create wealth for the American economy while simultaneously providing myriad deductions, credits, exemptions, and other preferences that are much more likely to be exploited by upper-income taxpayers. The flat tax eliminates these special-interest loopholes, ensuring that the rich play by the same rules as other taxpayers.
Originally posted by mikejohnson2006
However, a flat tax does not impose special penalties on those who contribute the most to the nation's prosperity by subjecting them to punitive and discriminatory tax rates.
Originally posted by charles1952
I don't know if my politics fit into your categories, but I can take a shot at answering you. (Heritage, by the way, is a great place for researching answers. Hit their home page and look up just about anything you want.)
Why would the wealthy pay more when taxes are cut? Let me give you an extreme example that may be the start of an answer.
If you know that your taxable income will be hit with a 90% tax bite, it's natural to try to reduce your taxable income. Maybe by earning less, maybe by hiring accountants and working tax dodges. Now, when it's announced that your tax rate will fall to 10%, you may start thinking that earning extra money is really worth it, after all you get to keep nearly all of it. There's less reason now to try to hide your income or avoid making it.
The effect is taking 90% of a very small pie versus 10% of a huge pie.
By the way, look up the Laffer curve for a graphic description of how this works. If you want, I can try to explain it.
Well, here there is some disagreement. Ezra Klein at the Washington Post, certainly not a right wing paper, asked experts from the left and the right where the drop was. where does the Laffer curve bend? The people on the left said the bend was between 60 and 70%, maybe a little higher. The experts on the right said between 20% and 50%.
That's the thing about the laffer curve. It isn't a bell curve, It rises up to 99,9% and then drops down to 0. Even cons usually guesstimate that the drop doesn't come until 78%