Introduction of a flat tax system is very a controversial idea that is sometimes discussed in the USA. A lot of people think that flat tax rates are fairer, because the same rule applies to all categories of people. Moreover, some politicians, including Rand Paul, think that American tax legislation became too complex and people/companies waste a lot of time in order to understand how many taxes they have to pay (Nolan). Nevertheless, I think that progressive tax rates are much more effective for American economy.
First of all, reduction of taxes that the rich must pay means that the number of people and enterprises that pay taxes will have to be increased in order to close the gap. If that does not happen, the poor will have to pay more taxes. Steve Wamhoff refers to the book Low Tax, Simple Tax, Flat Tax (1983): “it is an obvious mathematical law that lower taxes on the successful will have to be made up by higher taxes on average people” (Cited in Wamhoff).
Secondly, even if the flat tax system is introduced and American companies become more competitive, it does not mean that earned money will be redistributed fairly. Rick Perry writes that “America’s corporate tax rate is the second highest in the developed world” which is bad for American economy and its growth (Perry). In my opinion, inequality that has been growing in the USA since the 1970s cannot be resolved if companies start to pay fewer taxes. At the same time, I do not state that companies have to pay more. In my opinion, low-income and middle income people should be encouraged to be more economically active. Progressive tax rates are one of the best tools to let people have enough money for living and doing business. Therefore, it seems that proposed flat taxes will do harm to most Americans who are not rich.
Works Cited
Perry, Rick. Flat Tax Unleashes Economic Growth. US News. 1 November 2011. Web. 26
Wamhoff, Steve. Flat Tax Will Benefit Only the Rich. US News. 1 November 2011. Web. 26
Nolan, Hamilton. A Flat Tax is Just a Giveaway to the Rich. Gawker. 18 June 2015. Web. 26
