[lbo-talk] The flat tax and income inequality

Doug Henwood dhenwood at panix.com
Fri Nov 16 13:10:52 PST 2007


On Nov 16, 2007, at 3:52 PM, Max B. Sawicky wrote:


> The classic flat tax, by the way, IS a VAT

But a classic flat tax is on income, while a VAT is on consumption. Since the rich consume a smaller proportion of their income than the nonrich, a consumption tax is inherently regressive, despite the flatness of the rate.

Of course, in the U.S., any move towards a flat tax wouldn't be offset by redistribution on the spending side. It would just make the fisc reinforce the inequality of market incomes rather than mildly negating it.

Doug



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