In its purist definition, a flat tax is a single tax that is applied to an entire base regardless of income. The idea of a flat tax seems ideal, yet it is too simple. Steve Forbes’ book, Flat Tax Revolution, holds nothing back when describing the current federal income tax code. He refers to the current system as appallingly, confusing and complex. According to Forbes (2014), “The federal tax code is beyond redemption. We should kill it and institute a flat tax.” The United States uses a progressive-rate tax system. This system requires taxpayers to complete a vast amount of forms and to manipulate the tax code so it benefits you. A flat tax requires taxpayers to multiply their income by the flat tax rate thus equaling their income tax. With
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It has increased Illinois overall tax revenue and economic stability. Furthermore, Illinois is one of the best states for college savers (Moreno, n.d). This hybrid flat tax system has been so effective that other states are incorporating it into their tax code. Many of the countries have implemented a pure flat tax rate system on taxpayers and businesses, including Estonia, Lithuania and Latvia. All three of these countries have experienced substantial economic growth since adopting a pure flat tax rate, but were set back by the 2007 Recession. Furthermore, another disadvantage of a flat tax is when a group of countries near each other enacts a flat tax. This creates a race towards the bottom; in order to compete, nations must keep on lowering their tax rates. Thus causing major economic problems, which could lead to fiscal …show more content…
However, we are unclear if the economic bloom of the post Soviet Union was because of the flat tax or the fall of the Iron Curtain which allowed the countries to open there markets. The flat tax will never completely take over U.S. tax code because we are one of the world’s biggest economies and completely reforming federal tax code would stock the system. The 2007 recession caused many countries to suffer economically. However, the countries that adopted a flat tax had suffrage that was exponentially higher. Therefore, we do not know if the advantages are applicable. Nevertheless, the advantages on a flat tax are vast but the disadvantages can be
It has increased Illinois overall tax revenue and economic stability. Furthermore, Illinois is one of the best states for college savers (Moreno, n.d). This hybrid flat tax system has been so effective that other states are incorporating it into their tax code. Many of the countries have implemented a pure flat tax rate system on taxpayers and businesses, including Estonia, Lithuania and Latvia. All three of these countries have experienced substantial economic growth since adopting a pure flat tax rate, but were set back by the 2007 Recession. Furthermore, another disadvantage of a flat tax is when a group of countries near each other enacts a flat tax. This creates a race towards the bottom; in order to compete, nations must keep on lowering their tax rates. Thus causing major economic problems, which could lead to fiscal …show more content…
However, we are unclear if the economic bloom of the post Soviet Union was because of the flat tax or the fall of the Iron Curtain which allowed the countries to open there markets. The flat tax will never completely take over U.S. tax code because we are one of the world’s biggest economies and completely reforming federal tax code would stock the system. The 2007 recession caused many countries to suffer economically. However, the countries that adopted a flat tax had suffrage that was exponentially higher. Therefore, we do not know if the advantages are applicable. Nevertheless, the advantages on a flat tax are vast but the disadvantages can be