[lbo-talk] The flat tax and income inequality

[Max B. Sawicky]

>I remember a Luxembourg Income Study working paper from long ago,  
>which I now sadly cannot unearth, that showed that countries with  
>more progressive tax systems are often the most unequal.

A simple scatter plot tells you that taxes as a share of GDP are closely correlated, negatively, with income taxes as a share of tax revenue.  The one big exception is Sweden -- big taxes and big income tax.


>a VAT soaks the  
>midrange - but the redistributive action really happens on the  
>spending side (health insurance, child care, income support, etc.).


>[WS:] True. . . . 
>Progressive taxation is really a lame of way of income redistribution - 

We are singing from the same hymnbook.

The classic flat tax, by the way, IS a VAT, but with a standard deduction and exemptions.  Better for a developing country, IMO, then dropping a 15-20 percent price increase on the heads of all persons rich and poor alike.