>Daniel wrote:
>
>>First, I hope someone will correct me if I'm wrong to say that a flat tax
>>can easily be less regressive than the current system, because just like the
>>current system, it can be written to be regressive or progressive as the
>>framers wish (exemptions, provisions, loopholes, etc.) (Frankly, for my
>>part, I'd gladly pay more just to be able to forget the IRS - so, I'll up
>>the ante and declare myself for the VAT. I know I have to pay for all those
>>fucking bombs, but do I have to do it with a check from my personal account
>>quarterly?)
>
>A flat tax can't be progressive. You can write exemptions and deductions
>into it, but after some point it gets flat. The whole point of a flat tax
>is to lower the tax rate on the rich. A progressive tax system is based on
>taxing the rich at a higher rate than the middle and the poor least of all.
>You may be confusing complexity with progressivity - you could eliminate
>all kinds of loopholes and favors, greatly simplify everything, and still
>have a progressive rate structure. A VAT, without offsetting spending, is a
>regressive tax, since the lower you go on the income scale the larger share
>of your income you consume. The bottom 20% spends more than its income, so
>a VAT would be bad news for them.
>
>Doug
A flat income tax, with a large exemption such as the $40,000 suggested by Henry, is very progressive up to a high level--if the tax rate is 25% the effective rate on an income of $50,000 would be 5%, on $100,000 15%, and on $300,000 21 2/3%. It would never become actually flat, but for multimillion incomes would be asymptotic, approaching 25%. For virtually the entire population the effect would be progressive, compared to the present system. This is much more strongly the case for the payroll tax, which is actually regrssive because of the cutoff on taxable wages, but would be progressive if the cutoff was eliminated and an exemption for the first few thousand dollars instituted. A VAT would be a very progressive tax, and probably the best of all in efficiency and unavoidability, if the entire VAT on an amount equal to the cost of a basic health and decency consumption level was refunded to every individual--including the unemployed, welfare recipients, prisoners, etc.
Shane Mage
"Thunderbolt steers all things." Herakleitos of Ephesos, fr. 64