Should you have an option on a flat tax?

Stephen Moore writes:

The central idea behind the Freedom to Choose Flat Tax is to create an optional post card flat tax, which would be offered to tax filers as an alternative to — rather than a replacement of — the current tax code.  There would be no deductions whatsoever, except for a generous personal deduction and child deduction.

The flat rate would, of course, be somewhat higher.  Might many people prefer to pay a little more to avoid the hassles of the current system?

I can think of some problems:

1. Many people might fill out two tax returns and pay the lower one, thereby raising tax filing costs.  That being said, the new and second return won’t take much time.

2. Let’s say everyone paid the higher flat rate.  How long will it stay flat for?  Won’t Congress auction off privileges and deductions as they have done in the past?  In the meantime our taxes have gone up, and in the long run we might return to tax complexity.  We are addressing symptoms rather than underlying causes of the problem.

3. The benefits of having a flat tax are often overrated.

Still, the idea has its virtues.  Transition costs would be low.  The relevant legislation would be relatively simple, and easy to explain to the public.  And it might lower tax filing costs significantly.

The quotation is from The Wall Street Journal Op-Ed page, 27 January 2005.  Here is more information.


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