By far, if one is looking to establish an efficient, fair, and moral tax system for a country, looking towards a flat tax as a viable option is a good idea.
Currently, America’s federal income tax system is based on an overcomplicated bureaucratic mess that’s being deemed as ‘progressive.’ If progress is the outcome of this tax structure, it’s failing. The more you earn in America, the more you pay. On the surface, that sounds like a good idea. That’s because it is. However, it’s the implementation of it that is to reproach. The more you earn in America, the higher the percentage of your income gets paid to the government. So, the amount paid isn’t the only thing higher; it’s the percentage too. If America’s economy is in the pursuit of fairness and efficiency, then surely using something that is inherently fair is the best way to go: a flat tax that is, preferably, between 15% and 20%.
The so-called rich are generally not the Scrooge McDuck-esque people the media makes them out to be. The threshold to be in the top 10% of earners in America is approximately $133,000 annually. Those in the top 10% account for nearly 71% of all income tax paid to the government while only accounting for 47% of generated income.
Those in the top 10%, 5%, and 1% are the ones who hire everybody in the 90% below them. They are the ones taking entrepreneurial risks, innovating new products, hiring employees, and providing services to everyone else. Taxing them into oblivion would not help America’s economy, but instead, hinder it.
A preferable national flat tax would also eliminate deductions and loopholes, ensuring that everyone who is required to pay actually does pay. Folks on the Left often complain about the rich utilizing various loopholes to avoid paying income tax, therefore, as a remedy, slashing most deductions from America’s federal income tax codes would work.
The greediness and immorality fueling corporatism is something that those on both sides of the political spectrum can agree is not an advantageous thing to have happening. But, under the United States’ current system, corrupt politicians all too often hand out tax breaks to corporations. Ending this cronyism is essential to entrenching an equitable approach in America’s business world; a flat tax is capable of providing that.
A flat tax would obviously directly benefit both what the federal government considers the rich and the middle class, but how exactly will it benefit the poor? Besides indirect benefits, such as increased income mobility through job creation and economic boom via lower taxes on the wealthy, the poor would also, under certain proposed plans, not be paying any federal income tax at all. Steve Forbes, Chairman, and Editor-in-Chief of Forbes Media explained in both his book and a video on PragerU that under a plan like his those earning under $52,800 per year would pay no federal income tax. Currently, approximately 45% of Americans pay no income tax, under a flat tax similar to Steve’s, that number would increase, alleviating economic pressure on Americans who need it. America would be following in the footsteps of 35 countries who have already instituted a national flat tax.
If you are in favor of economic efficiency, fairness, and prosperity, enacting a flat tax of 15%-20% with little deductibles is the way to go. Job creation, production, investment, and much more would skyrocket as a result of the amount freed up money once again entering the economy instead of being forwarded towards entitlement programs, as a vast majority of our current budget is spent on.