Sunday, March 13, 2005

Flat Tax

The Flat Tax (or tax simplification) initiative is a Trojan horse.

Tax simplification has universal appeal and it is an easy sale. How would not want to have a simplified tax system, potentially saving us tax-preparation fees, time, etc.?

But the proposed solution of a Flat Tax, or tax on consumption is a trap.

A blue-collar worker spends all of his/her income; therefore, his/her entire wage will be taxed.

Bill Gates spends a much smaller portion of his income: most of his gains will be tax free.

Taxing the spending does not promote savings: most Americans have to spend most of what they make to survive, they don't have the choice of saving or spending.

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