Monday, December 05, 2005

The Flat Tax

Europe is doing the flat tax. We'll have to see how it turns out.

I used to think the Flat Tax was the way to go. I'd never heard the term 'progressive tax' before, and didn't understand its economic underpinnings (and confess, I'm still unclear), until some political Harvard kids in DC explained it to me. (Thanks, y'all!)

I liked the idea of the flat tax because, well, it seems fair. It's seems logical. It makes sense. And it's simple. What's not to love about the flat tax? Yeah, I know it's weird that Forbes and other nutty conservatives want it, but maybe they're right on this one?

Well, the explanation that made me re-think my take on the Flat Tax went as follows - let's say the flat tax is 15%. Well, a 15% tax on Bill Gates isn't going to hurt him much, if at all. He'll not have to change his lifestyle in any signficant way. But a 15% tax on someone making minimum wage would mean that only one of their kids could eat dinner that night. That is not fair.

Of course, Flat Tax proposers claim there would be exemptions for the poor, etc., etc., but I think we know how all that works - it doesn't.

The tax code can be a hugely complicated problem to deal with, but at least now I understand that there's an alternative to the flat tax - and that both sides of the argument are for fairness - the question is, which type of fairness is more fair?


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