In my last blog I (very) briefly discussed the pros and cons of the Progressive taxation system. In this blog, as part of my several-part series, I will explain the pros and cons of the flat tax system.
The flat tax system often is dichotomous with the progressive one. Both seem to be the most mainstream systems in use today. Unlike the progressive tax systems, flat taxes offer across the board percentages for all levels of income. Even though all levels pay different percentages, everyone only pays according to his or her income.
Usually accompanied with a flat tax system is a simplified tax code. Certain tax deductions are abolished, and many experts believe this path would lead to greater efficiency in tax collecting. When everyone pays the same percentage of their income to the government, the random and complicated ins and outs of a progressive tax system are no more. A flat tax system works more quickly and more efficiently.
Like the progressive tax system, the flat tax has plenty of cons. First and foremost is that because 80% of government revenues currently come from the progressive income tax in the United States, a flat tax would considerably decrease our ability to throw money at things. Personally, I think our government needs to learn to budget on a fixed, or rather more regular revenue. So perhaps this con might actually be a pro.
Among any of the cons I read on the internet, the one I find the most ludicrous is that the “tax industry” would no longer be able to get business. Anybody within that particular industry is not necessarily tied to the tax system – all of them certainly have financial information that could easily be transformed into business savvy or banking.
One of the biggest cons of abolishing a progressive tax system would be the dissolving of the IRS. Wait, that’s a positive. Moving on.
Even though there are many types of taxation methods, the two that seem to be the most mainstream are the flat tax and the progressive tax systems. The flat tax, even though it would severely inhibit our government’s ability to spend money, would offer greater simplicity in our tax code and provide greater efficiency in tax-collecting.