what is an argument in america for instituting a flat tax

The perceived regressivity of Illinois’ current flat tax (It’s actually very slightly progressive.) has long been an issue.

The fairness argument is so central to the argument for a graduated tax that proponents dubbed their proposal the Fair Tax. The flat-rate system is more stable and predictable.Įquity/Fairness – The tax should be both fair - and perceived as fair -so that those with more income pay more tax. Stability/Predictability – Dramatic fluctuations should be avoided, so both taxpayers and governments can anticipate. This principle depends upon the overall level of taxation and could be met under a flat-rate or graduated system. The principles of sound tax policy include:Īdequacy – The tax structure should raise enough revenue to fund government operations.

Despite the graduated federal income tax, Billionaire Warren Buffet has famously pointed out that he pays a lower effective tax rate than does his secretary.

That means when the rate was increased, the burden went “disproportionately” to Illinois’ wealthiest.

The Center for Tax and Budget Accountability (CTBA) reported that with the 2015 rollback from 5 to 3.75 percent tax relief “disproportionately” went to Illinois’ wealthiest. The principle that the highest income people pay most of the tax held when the flat-rate tax was increased in 2011.The top 1 percent of filers pay 24 percent of the tax: the lowest 35 percent of households pay 4 percent of the tax. Under the current flat-rate tax, the highest income Illinoisans pay most of the tax (properly so because they have most of the income).This is not an argument over the level of taxation in Illinois it is simply an argument about the fairest and most efficient way to collect income tax. While the graduated proposal may be good tax politics, when measured by the principles of sound tax policy, the flat-rate tax is the better choice. Numerous proposals for dealing with Illinois’ fiscal problems call for abandonment of our flat-rate tax in favor of a graduated-rate income tax.

What is an argument in america for instituting a flat tax