Beneficial usage of flat tax Essay Example | Topics and Well Written Essays - 500 words

Beneficial usage of flat tax - Essay Example If the tax burden is redistributed, some people will pay more and some will pay less under the new flat tax system. This paper will discuss the benefits of going to a flat tax system, and examine the implications for taxpayers, businesses, and the government. The most often cited benefit to a flat tax would be to simplify the current code. The current tax code and amendments is over 16,000 pages long, takes up over 20 volumes, and costs in excess of $1100 to purchase (Greenberg). Nearly every source of income or deduction has a special attachment and entails complex complications that require the intervention of a certified tax accountant. The flat tax would simply place a given percentage of tax on all personal and business income. There would be a single exemption, and no deductions for things such as mortgage interest or charitable donations. For example, every family would get a $20,000 exemption and pay a 15 percent tax on all income in excess of $20,000. While there are some flat tax schemes that tax spending rather than income, this paper will focus on the flat tax on income. A single exemption flat tax on income is the most simplified form of taxation available. In addition to the simplicity that a flat tax would have, it would also be more fair. A flat tax would have no penalties for capital gains, savings, old capital, and pension incomes (Gale 43). Under the flat tax system, no one gets preferential treatment and there are no special provisions for individuals or specific businesses. In addition, "The low, flat rate solves the problem of high marginal tax rates by reducing penalties against productive behavior, such as work, risk taking, and entrepreneurship" (Mitchell). Everyone, without exception, would pay the same rate of taxes on their income. Because the flat tax is so simple to implement and calculate, there would be substantial savings for businesses, individuals, and the government. Businesses would no longer be subject to the