The Flat Tax

Author: Trent0405 ,

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  • Trent0405
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    Trent0405
    On a conceptual level a flat tax has always seemed rather inefficient. However, it seems like most studies show a positive impact. This one shows how a flat tax increases revenue by 25%, increases productivity by 5%, and decreases tax evasion by 10.5%.

    What do you guys think?
  • dustryder
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    The adoption of a flat rate income tax generally is not expected to lead to significant increases in the tax revenues because labor supplies are believed to be fairly inelastic. However, if the economy is plagued by ubiquitous tax evasion, as was the case in Russia, then flat rate income tax reform can lead to substantial revenue gains via increases in voluntary compliance.
    It's obviously not applicable in general. But it can work if your country is full of tax evaders I guess?
  • TheUnderdog
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    --> @dustryder @Trent0405
    Abolish the income tax and replace it with a sales tax and a capitol gains tax.
  • dustryder
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    --> @TheUnderdog
    Why?
  • TheDredPriateRoberts
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    --> @TheUnderdog @Trent0405
    essentially the flat tax would be a use tax on purchases and services.  "luxury" items would be taxed higher.  some states tax prepared food, like at restaurants higher than their regular sales tax.  I like the idea of you get taxed on what you use/buy.  This helps get rid of the tax shelters and b.s. like keeping money in the Cayman islands.  I think it's called "the fair" tax but I can't remember for certain.
    the capital gains tax could then be set to zero since capital gains would be used to purchase stuff, which would be taxed.  zero capital gains encourages investing which is a good thing.  taking investment losses reduces your capital gain tax currently, so it's a game, game of avoiding taxes.  The rich people pay professional players to avoid taxes, it's always been that way and will always be if changes aren't made.  But since the rich are in control it's not likely it will ever change.