There are many basic principles of political economy that this scheme would challenge.The article goes into excellent detail discussing the impact of a flat tax on the current economic segmentation of our society. Well worth a read.
First, we have held it as a basic principle that we will tax the rich at a higher marginal rate than we tax the poor, on the theory that they are better able to afford it. Put in simplistic terms, the extra importance to a family budget of an additional $100 is much greater if the family only makes $30,000 a year than if the family makes $300,000 a year. Even if the tax was the same in absolute dollars, it will bite more when paid by a family earning $30,000. The so-called FairTax abandons the principle of progressive taxation.
Second, the premise of the estate and gift tax is that it is not good for families to be able to preserve vast wealth and to hand it down from generation to generation. One of the philosophical underpinnings of the estate and gift tax is the notion that "you can't take it with you." This bill could be thought of as the "Preserve Paris Hilton's Family Money Act". - "Virgil Goode and his Flat Tax" cvillelaw at Democratic Central
Monday, September 24, 2007
Flat Tax Critique
For people interested in the idea of a flat tax, there is an interesting critique up on Democratic Central: