Flat Tax Essay

The purpose of the flat tax is to ensure everyone is taxed at a single flat rate. However, the flat tax system recommended by Hall and Rabushka (1995) encompasses of two diverse, then reliable systems of taxation. One is called the wage tax and the other one is called the business tax. Over the years, several types of flat tax proposals have been introduced, but the recommended idea remained the same. Now if this policy, if implemented, would replace the existing federal in addition to corporate income taxes. It will implement a single tax rate applied to labor revenue beyond a set inception, in addition to gross capital revenue subsequently in full investment deductibility. That is why in recent years, it has acquired significant attention from the fiscally conservative population and the Republican Party. …show more content…
Flat tax instead eliminates tax credits and deductions. But although it is the opposite of the current progressive tax, it can be made into the progressive tax if first of all, it uses the single positive rate, and secondly also provides an exemption or exemptions. Besides flat tax carries the possibility to influence businesses specifically small businesses to capitalize by permitting them through the governments instant deductions for all new investments as this lets the economy grow through the small business. It will assume to do well for a small business similar to big business or corporations since the compliance costs will be reduced in addition to by encouraging economic activity. As stated by Piketty and Saez (2007), the current federal tax system is close to Flat tax system for the top one percent of our country. This taxation process is an arrangement of consuming the revenue system that eliminates “changes” linked with the formulation of the progressive income tax and the binary taxation of capital