1/18/2024 0 Comments Argument against flat taxThese proposals aimed to replace the income tax, drastically simplify taxes, and spur economic growth by flattening tax rates, eliminating tax preferences, and taxing consumption rather than income. The flat tax and the idea of fundamental tax reform dominated policy discussions in 1995 and the early part of 1996. The politics of tax reform are cyclical, and once again, we’re hearing the call for sweeping change. Nonetheless, more plausible consumption and income tax reform plans should not be ignored. But when examined closely, the simplicity breaks down, payments would be close to impossible to collect, and the tax’s fairness would be, at best, questionable. Advocates praise the simplicity, the potential for economic growth, the enforceability, and the fairness of a tax system based on consumption. This go around, it’s the retail sales tax. The tax reform panacea in vogue several years ago was the flat tax.
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