y, just as, under current law, no corporate income taxes are refunded to them. Chuck Hahn, the tax director for Dow Chemical, estimates that the tax advantage Dow’s powerful global competitors enjoy cuts Dow’s profits on sales outside the U.S. by 3 to 4 percentage points, a huge differential in this ruthlessly price competitive industry. (Dishman 46)Even households with earnings as low as $20,000 a year would see their total tax bill rise. It is true that the large individual and family deductions will drop many modest income Americans from the federal income-tax rolls. But under current tax law, wage earners trying to support two children on yearly incomes up to $26,673 are eligible to offset both their income tax and a portion of the Social Security taxes they now pay by claiming an earned income tax credit (EITC) of up to $3110. The flat tax would withdraw that economic lifeline by repealing the EITC. (Consumer Reports 9)House Majority leader Richard Armey presents a plan which replaces the progressive income tax with a flat tax, and it replaces business taxes with a consumption tax. Both elements would dramatically shift the tax burden from the wealthy toward the middle class and the poor. (McAfee 93)If not for stunning misrepresentations, this would be obvious to everyone. The personal income tax now starts with a zero effective rate on lower income families (families of four currently earning up to about $23,200 pay no income taxes) rising to a 39.6 percent top marginal rate on the incomes of the richest 1 percent. Replace that with a flat rate of, say, 20 percent and clearly the rich will pay far less in taxes. That has to be made up somewhere. (McAfee 93)Flat tax advocates imply that the lower tax rate will be made up by closing loopholes fore the wealthy and well connected. In fact, the opposite is true. The complete tax exempting for personal investments replaces many small loopholes with one enormous loophole. Ra...
