4 Reasons why the Flat Tax is a Bad Idea

1   THE FLAT TAX IS REGRESSIVE AND HURTS THE POOR

 

Flat taxes will result in the tax burden shifting to the middle and lower income groups. Holley Bridge of Clemson University stated that the income tax as presently structured has an important and useful role to play in the overall tax structure. It is at least somewhat progressive, taking a higher share of income from the higher income households than poor people. The reason why a progressive tax structure works best is that it bases off an income. For somebody that makes $25,000 dollars a year in contrast to someone that makes a million dollars, a flat tax rate at 10% is more damaging to the $25,000 income earner. For example, after taxes (with a 10% tax rate), it is hard to survive on $22,500 compared to $900,000.    

2    OVERALL FEDERAL REVENUES WILL LOWER

 Flat taxes will have a negative effect on the revenue generation of the government. When a 35% tax rate on the high-income family drops down to below 20%, the revenue generation mechanism will be seriously affected. This in turn will affect the country's annual budget, making the country economically and politically weaker.

3     PUNISHES SUCCESS

r    Proponents of the Flat Tax mention that, “the progressive tax structure punishes a person’s success.” But they fail to realize that they Flat Tax has the same outcome. For Example: Let's say the Flat Tax rate is 10 %, now a person who earns an annual income of $10,000 has to pay taxes of $1,000, and a person who earns $1,000,000 has to pay a tax of $100,000. Alternatives can include the head tax, where there is a set dollar amount. If the head tax is $8,000, everyone pays $8,000, people making $10,000 or people making $1,000,000.

4

     AFFECTS CITIZENS 

      

      The Flat Tax affects American workers, our current tax system allows taxpayers to earn tax        deductions if they perform good deeds, like donating to charity or nonprofit organizations. The current tax system is creating incentives for people to donate and help out society, without a tax incentive for donations, it is less likely that taxpayers will donate to schools or hospitals, which hurts the quality of life that society provides. This can also hurt employees that depend on tax deductions to help them thrive and provide for themselves.