If the GOP candidates want to flatten the tax system to a single rate eliminating trillions of dollars in tax revenue, how exactly do the candidates propose to balance the federal budget? Donald Trump’s flat tax proposal would add $9.5 trillion in government debt over the next 10 years. Republican Presidential candidate Ted Cruz’s plan to impose a flat 10 percent tax on all personal income and greatly lower the corporate tax rate would cost the federal government a minimum of $8.6 trillion over a decade, according to a Brookings Institution Tax Policy Center analysis. So if a flat tax impacts all households with, say, a 15 percent rate as proposed by Ben Carson, then that would mean taxes on the bottom fifth would increase more than sevenfold, while the top 1 percent would see their taxes cut almost in half.Ĭarson is not alone in crafting a tax plan that would cost the federal government trillions while delivering big benefits for the wealthy all of the Republicans running for president are doing it. The top fifth paid 21 percent of their total income and the top 1 percent paid 29 percent. households in the lowest fifth of the income ladder paid about 2 percent of their income in federal taxes. To put a finer point on taxes, a 2011 Congressional Budget Office study found that U.S. Rather than eliminating these and other special breaks, the flat tax proposals would expand them into one big exemption for investment income. Our personal income tax already taxes capital gains and stock dividends at lower rates than wages, which mostly benefits the richest 1 percent of taxpayers. Flat tax proposals would exempt investment income, which largely goes to the rich. Any proposal to adopt a single tax rate somewhere in between the existing highest and lowest rates would result in tax cuts for the rich and tax increases for the poor.Īnd, it gets worse. has a progressive personal income tax, meaning it applies higher tax rates to the well-off and lower tax rates to the less well-off. The flat tax being proposed by Ben Carson, Ted Cruz and Donald Trump is once again at the center of public debate: a single tax rate for individuals, rich and poor, and companies, big and small.īut, is it a good idea - absolutely not. While simplicity is generally desirable in a tax code, it has nothing to do with the tax code being flat.
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