Why can't a flat tax of 10% work in the US?
Answers:
10% wouldn't collect enough revenue and even a 10% flat tax would be very regressive.
When Steve Forbes was running for President he proposed a 17% flat tax. Economists looked at the plan they said that, in order to keep revenue at the current level, a flat tax would have to be at lease 21%. A 21% tax would be awesome if you are paying 35% but it would put millions of poor people out in the street.
For example a single parent with 2 kids and $20k in income would get about $3300 more back than they had withheld. An effective tax rate of negative 16.5%. With even a 10% flat tax, they would be $5300 worse off and, with the 21% flat tax, they would be $7500 worse off!
A flat tax would wonderfull for the upper middle class and the rich but would be devastating to the working poor.
It would also cause a large number of people that don't presently have much, if any tax, liability to pay 10% of their income toward income tax. Any body that I know of believes that it would take more like 15% to make up the lost revenue. It would greatly benefit the "rich" who now pay something like 35%.
Also it would only provide less than half of what the current system provides, and would hit the poorest people the hardest.
The answers post by the user, for information only, BAnswer.com does not guarantee the right.
More Related Questions and Answers...