I guess the flat tax idea is resurfacing again. [View all]
It's one of those ideas that sound really wonderful and fair and all that. Everybody pays the same rate.
It's 17% (or whatever) off the top of everyone's income.
Some proponents do propose that the first $20k (or whatever) be exempted, so to that extent it resembles a graduated tax.
However, the problem always comes in the form of defining "income."
If I buy 1000 widgets for $10K total & sell them for $20k, my gross intake is $20k, but my gain is only $10K, so surely I should only be taxed on the $10K
If I have to buy a truck to haul the widgets around, the payment will come off my profits, but how should I amortize it?
If I take someone to lunch in an effort to persuade her to buy my widgets, is that a business deduction?
How about my "working vacation?"
The Maserati my company bought for me so I can impress people at the upper end of the widget market?
Etc.
Pretty soon you're back in the same mess, but with a lower nominal rate on the rich & a higher real rate on the poor.
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