Q&A Friday #7: What’s So Great About A Flat Tax?
Question: “John, I’m 18 years old, I consider myself a Social and fiscal conservative, but I do have a few questions about the proposition of a flat-tax. What exactly does it do? I mean, it sounds a little bit like price controls to me, and every time I hear the words price control a little red flag goes off in my head that says “union-induced” or something to that effect. So my question is: what does a flat-tax proposal do in the long term?” — LexLuthor13
Answer: First of all, flat taxes are totally unrelated to price controls or unions, so don’t worry about that =)
Secondly, there are books on this subject, but here’s the short version of what’s so great about a flat tax. Since everyone except the poorest Americans would pay the same tax rate…
1) Tax rates would tend to stay low because politicians would make everyone angry by raising them.
2) There would be more motivation for people to work hard and be entrepreneurs since they wouldn’t be penalized for earning more money. That would lead to significantly increased economic growth.
3) It would make it much simpler and easier to prepare taxes under flat tax.
In my opinion, a flat tax would probably be the best thing we could do to help keep the economy growing strong long-term.