hey got would support rich people who simply inherited great wealth); and, 3) It confuses much-needed tax reform and tax simplification in defining taxable income with the unrelated issue of whether the rate applied to that income is flat or graduated. Anyone who wants to support a flat tax better run the numbers first and see how much more they're going to pay” (Dunn).With moderate exemptions for low income persons, the rate would have to be raised for middle income taxpayers to make up for the drastic reductions in rates on high incomes and the elimination from the tax base of capital income that is largely received by affluent taxpayers. It is difficult to argue that a flat tax would be fair or that it would contribute significantly to savings or growth.Simplicity?The notion that a flat tax would achieve complete simplicity by eliminating deductions is also questionable. “First of all many items now excluded from income would have to be valued and taxed-health insurance provided by employers and other fringe benefits for example. And in fact any discussion of a flat tax rapidly begins to include exceptions by way of deductions-such as home mortgage interest and gifts to charity-and the single rate necessarily rises, contributing both to complexity and shift of tax burden to the middle class. As Deputy Secretary Summers often says, by the time you figure in all these exceptions, you would need an electron microscope to read the postcard that it is claimed would suffice for a tax return” (Lubick). Fairness?The flat tax initially would raise taxes on the middle class by 20 percent. On average, a family with between $40,000 and $50,000 in adjusted gross income would see their taxes rise about $700 to about $7,500. The flat tax also appears to have a major fairness problem. For example consider two families. The Jones have a combined salary of $50,000 in wages. Under the flat tax, a 20 percent rate would cost this family...
