what is an argument in america for instituting a flat tax

No tax is completely neutral, because taxing any activity will cause people to do less of it and more of other things. Proponents of a consumption tax argue that it is superior to an income tax because it achieves what tax economists call “temporal neutrality.” A tax is neutral (or “efficient”) if it does not alter spending habits or behavior patterns from what they would be in a tax-free world, and thus does not distort the allocation of resources. Nor is the principal reason to eliminate the double taxation of profits, first at the corporate level and again at the individual level as dividends or capital gains. It is not to favor the rich at the expense of the working man. Why should capital income be treated differently than wages and salaries? The economic reason is very different from the political rhetoric. But many reject putting this theory into practice because they think that too much of the benefit would go to the “wrong” people, namely high-income households and the wealthy. Strange as it may sound, most economists would agree that having zero taxes on capital income is theoretically the best thing to do. The political wrangling obscured the real issues underlying a question that has occupied economists and tax experts for many years-whether individuals should pay any taxes at all on capital income. As always, political discussions of the tax cuts focused largely on who would reap the tax savings.

The 2003 tax bill also reduced the top capital gains tax from 20 percent to 15 percent. Bush wanted, but far below the 40 percent many high-income individuals paid in 2000. In 2003, Congress cut the top tax rate on dividends to 15 percent-significantly greater than the zero dividend tax that President George W.

Some of the most significant tax changes in recent years have concerned the taxation of capital income.

What is an argument in america for instituting a flat tax