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Example research essay topic: Marginal Tax Rates Flat Tax - 5,464 words

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... rate income tax as well as the personal income tax. Most, however, do not address payroll taxes. Both Social Security and Medicare face significant long-term structural problems.

But while flat taxes could be designed to include substantial reform of Social Security and Medicare financing mechanisms, most lawmakers believe that problems of the income tax code should be addressed separately from those faced by retirement programs. CONCLUSION The current income tax system punishes the economy, imposes heavy compliance costs on taxpayers, rewards special interests, and makes America less competitive. A flat tax would reduce these ill effects dramatically. Perhaps more important, it would reduce the federal government's power over the lives of taxpayers and get the government out of the business of trying to micromanage the economy. There will never be a tax that is good for the economy, but the flat tax moves the system much closer to where it should be: raising the revenues government needs but in the least destructive and least intrusive way possible. Endnotes: 4.

Telephone conversation with the author, February 1995. 5. Arthur D. Little, Inc. , "Development of Methodology for Estimating the Taxpayer Paperwork Burden, " study conducted for the Internal Revenue Service, 1988. 6. Malcolm S. Forbes, "Happy Days Will Be Here Again, " Forbes, July 18, 1994.

Previous Chapter | Next Chapter | Contents /hot. map / hot . map ohmic Committee How a Flat Tax Would Benefit Business &# 61623; Ends punitive double taxation of business income and fosters increased savings and investment needed for development and expansion. &# 61623; Ends individual capital gains and dividends taxation, and would spur increased corporate investment. &# 61623; Allows 100 percent first-year expensing of new business investment (plant, equipment, and land), eliminating one of the biggest accounting nightmares-numerous depreciation schedules that can stretch up to 40 years for investments or purchases. &# 61623; Spurs new investment and increased productivity by quickly freeing up capital needed in fast growing businesses through immediate expensing. &# 61623; Eliminates the cost of keeping track of all interest and dividends paid out (1099 forms); because this income would only be taxed at the business level. Corporate income would not be taxed again when interest and dividends are paid to individuals. &# 61623; Eliminates the growth disincentives caused by high marginal tax rates now faced by expanding businesses. &# 61623; Eliminates the corporate Alternative Minimum Tax (AMT), which forces many businesses to calculate their taxes twice under two different methods. Reduces complexity in the taxation of multinational corporations. The flat tax only applies to domestic operations of all businesses, whether they are domestic, foreign, or mixed ownership.

Only the revenue from sales of a product within the United States, plus the value of products at export would be reported. flat. htmlflatax. html ohmic Committee How a Flat Tax Would Benefit Individuals &# 61623; Frees savings and investments from double taxation. After income has been taxed once at a low, flat rate, if it is saved or invested, the returns (interest and dividends) are not taxed again, as under the current system. &# 61623; Ends taxation of capital gains. An individual's income investment in a home or small business would be free from the punitive double taxation of capital gains when sold. &# 61623; Ends estate and gift taxes that represent double taxation and unfairly transfer income from families to the government. &# 61623; Slashes the time, effort, and cost of complying with the tax code.

Taxes could be filed on a form the size of a post-card. &# 61623; Reduces interest rates on home mortgages, credit cards, and auto loans. Since interest income is no longer taxable under the flat tax interest rates would drop to reflect the tax-free status of interest. &# 61623; Stops punishment of individuals and families who work longer or harder to improve their standard of living. With only one low tax rate, government would no longer take an increasingly larger bite of someone's income. One tax rate means a spouse's income could no longer push a family into a higher tax bracket. &# 61623; Increases individual freedom of choice and civil liberties. One low tax rate would allow people to keep more of their money as they earn it and would end government's current micro-management of people's behavior through the tax code. A simple flat tax would dramatically reduce the IRS's infringements on privacy.

flat. htmlflatax. html t Economic Committee The Flat Tax Vital for America's Future A TAX SYSTEM GONE AWRY There is a large and growing consensus among economists, lawmakers, and taxpayers that our current income tax system has become a tremendous obstacle to economic growth. After eight decades of misuse by lawmakers, lobbyists, special interests, and income redistributors, our tax system is unfair, complex, costly, and punishes work, saving and investing. Simply stated, our onerous income tax system is unfit to carry us into the 21 st Century, and prevents us from ensuring a better future for ourselves, our children and grandchildren. The only legitimate purpose of any tax is to provide revenue to cover the cost of government (see "Principles of a Model Tax System").

Taxpayers should be able to clearly see the cost of government spending and thereby determine how much government they are willing to pay for. Unfortunately, since its 1913 enactment, the income tax system has fallen prey to a multitude of unintended purposes including income redistribution, social engineering, and government micro-management of saving, investing, and spending decisions. We have the right to demand that our tax system be equitable, efficient, and supportive of our nation's greatest economic growth potential. Sadly, our current tax system treats individuals unfairly, exacts tremendous administrative and compliance costs, and hinders our economy from realizing its full productive potential.

As a result, Americans' opportunity to better their standard of living is jeopardized. NEW THINKING REQUIRED Mere tinkering cannot correct the enormous problems now codified in our current tax system. Partial reforms have been tried repeatedly, with limited success at best. We must fundamentally rethink the manner in which income is taxed in order to construct a system that is equitable, efficient, and pro-growth.

In order to achieve genuine tax reform, the blinders must be taken off, special interests must give way to overriding national concerns, politically motivated class warfare must stop, and the defenders of the status quo must get out of the way of positive change. The flat tax system, pioneered by Professors Robert Hall and Alvin Rabushka of Stanford University, encompasses the new thinking and fundamental change that is needed to create a fair, simple, and pro-growth tax system. WHAT IS A FLAT TAX? A flat tax would levy a single tax rate on all income subject to tax. Income would be taxed once and only once. The complexity and unfairness resulting from hundreds of exemptions, credits, loopholes and deductions now prevalent in the tax system would be eliminated to make the single tax rate as low as possible.

Only a personal allowance and dependent deduction would be permitted. Can A Flat Tax Be Revenue Neutral? Yes. Any flat tax system can be designed to bring in exactly the same amount of revenue as the existing federal income tax. The specific tax rate that would result in revenue neutrality would depend on the size and number of allowances (deductions) permitted, creating a direct tradeoff between deductions and the tax rate. The higher the allowances are set, the higher the tax rate would need to be to bring in the same amount of tax revenue as the current system.

The chart below shows a hypothetical set of flat tax rates and allowances that would result in revenue neutrality. This model, produced by the Congressional Budget Office shows that all federal income tax revenues could be fully replaced by a system with a flat tax rate of 13. 1 percent and no deductions. Allowing total deductions for a family of four to reach $ 36, 800 (more than double the amount allowed in 1995) would require a 19. 9 percent rate. Revenue Neutral Tax Rates Table Principles of a Model Tax System Why Do We Need A Flat Tax? Comparison of the Current Income Tax System to the Flat Tax Frequently Asked Flat Tax Questions How a Flat Tax Would Benefit Individuals How a Flat Tax Would Benefit Business CONCLUSION Since the passage of the Sixteenth Amendment in 1913, the income tax system has been incrementally reformed and tinkered with for eight decades.

Tinkering has only compounded the complexity and distortion of the tax system. The time has come for a flat tax system that is simple and equitable. Levying a flat tax is not a radical idea. In fact, except for the income tax, flat taxes abound.

The Social Security tax, Medicare tax, sales taxes, property taxes, government licenses and user fees all use a single-fixed rate regardless of income. The flat tax would end the inherent unfairness, complexity, government micro-management, and economic damage caused by the current income tax system. Replacing the current income tax system with a flat tax would foster increased economic growth and opportunity while providing all Americans a higher standard of living. Prepared by Paul G. Merski, Economist, and Jeffery W. Styles, General Counsel.

Economic Committee Why Do We Need A Flat Tax? 7. Problem. Our current tax system is unfair, often levying different tax burdens on people with the same incomes. For example, higher taxes are levied on some senior citizens with Social Security income.

The tax code allows only certain individuals to take advantage of special tax loopholes and tax breaks, while others are forced to pay higher taxes. Solution. The flat tax, with its single low-rate, would both ensure that all taxpayers pay their fair share, and eliminate special tax loopholes that can only be used by a select few. 8. Problem. Our current tax system is needlessly confusing and complex.

It takes Americans six billion hours each year, at a cost of $ 200 billion, just to comply with the tax code. Solution. The flat tax eliminates confusion and complexity by replacing hundreds of deductions and multiple tax rates with one low tax rate. Taxes could be filed on a form the size of a post-card, and all taxpayers would clearly see exactly how much income tax they are paying. The cost of complying with tax rules and regulations would be reduced tremendously for both individuals and government.

These savings could be used to lower taxes even further. 9. Problem. The current tax code punishes people who work hard or take risks to improve their standard of living. Citizens automatically forfeit more of their money to taxes when they are pushed into higher tax brackets cutting Uncle Sam in on a larger share of their earnings. Our current system's steep increases in tax rates crush work incentives and entrepreneurial spirit. Because of high tax rates, many people find themselves working longer and harder and ending up with nothing to show for it.

Solution. The flat tax would not punish hard work and success. Under the flat tax, the more you make, the more you pay. However, Uncle Sam would not demand a disproportionately larger, punitive share of your income as you earn more. 10. Problem. The current tax code discourages saving and investing by taxing these activities more than once.

This can make it much more attractive and rewarding to consume rather than to save. As a result, the savings and investment needed for economic growth are eroded, and every American's chance for a higher income and improved standard of living is diminished. Solution. The flat tax eliminates double and triple taxation. Americans, regardless of how they make their money, would pay taxes when their income is earned.

However, the returns (interest and dividends) on after-tax income that is saved or invested would not be taxed yet again. All but those in the lowest income groups would pay taxes on their income, but they would pay once (and only once) at a single low rate. Unlike the current system, people who save and invest for their future would not be punished with higher taxes. 11. Problem. Because of current high tax rates and the tax code's multitude of deductions, investment decisions are often based on tax consequences instead of economic merit. This stifles economic growth.

Solution. A low-rate flat tax would eliminate special subsidies, loopholes, and tax shelters, allowing investment decisions to be based solely on their economic merit, not their tax consequences. Investment in unproductive tax shelters would shift to more productive endeavors and economic growth would improve. 12. Problem.

The current tax code allows government to micro-manage behavior, jeopardizing individual liberty and the freedom of Americans to decide how best to use their own money. Currently, the government takes a huge chunk of people's income and then bribes them with their own money by giving some of it back with deductions and tax credits. Solution. A low-rate flat tax would allow taxpayers to keep more of their own money as they earn it, and shield them from the changing whims of Uncle Sam. Simply stated, if individuals were given the lowest tax rate possible under a flat tax, their need for special deductions would be eliminated. 13. Problem.

Tax rates are too high. Marginal income tax rates that were set at 15 and 28 percent just a few years ago, now reach as high as 45 percent. High marginal tax rates damage economic growth by reducing the incentives to work, save, and invest. Marginal tax rates largely determine whether people save or spend, invest prudently or seek out tax shelters, and work or just stay home. Solution. Under a single, low-rate flat tax, people could earn more without being pushed into higher tax brackets.

The savings from the efficiencies of a flat tax system would provide relief and encourage individuals to earn as much as they can without being penalized. flat. htmlflatax. html LOW-INCOME FAMILIES AND THE FLAT TAX The greatest benefits of a flat tax would go to lower-income families. Thus, those who say they are concerned about helping the less fortunate should be among its strongest supporters. Among the immediate, direct effects of implementing a flat tax: &# 61623; Since all income would be taxed, there would be no loopholes for the rich, and a person with 10 times the income of another would pay a tax at least 10 times as high. &# 61623; Deductions and exemptions, most of the benefits of which accrue to the wealthy, would be eliminated. &# 61623; The tax burden would shift from poor and middle-class wage earners to those with higher incomes. &# 61623; Simplifying the tax code would eliminate the main business of special interest lobbyists in Washington -- getting preferential tax treatment -- and politicians could not exploit the tax code to generate campaign contributions. &# 61623; The working poor would pay no tax until well above the poverty line -- thus a family of four would pay no tax until its income reached $ 33, 300 (under the Armey-Shelby plan). &# 61623; l Because of the personal allowance and dependent allowances, the flat tax would be progressive.

In addition, a flat tax would have long-term benefits for low-income wage earners and the unemployed: The economy would grow faster, which would raise wages and create more jobs; and it would be easier for people of modest means to accumulate savings, since the flat tax would eliminate the tax on interest earned by savings made from already-taxed wages. Source: Daniel J. Mitchell, "Why Liberals Should Support the Flat Tax, " F. Y. I. , No. 85, February 7, 1996, Heritage Foundation, 214 Massachusetts Avenue, NE, Washington, DC 20002, (202) 546 - 4400. web Dallas Headquarters: 12655 N.

Central Expy. , Suite 720 - Dallas, TX 75243 - 1739 - 972 / 386 - 6272 - Fax 972 / 386 - 0924 Washington Office: 727 15 th St. N. W. , 5 th Floor - Washington, DC 20005 - 202 / 628 - 6671 - Fax 202 / 628 - 6474 1997 NCPA Tax Flat Tax Systems Popular Abroad Recently the Alexis de Tocqueville Institution examined 258 tax systems -- for personal income, corporate income and capital gains -- in 86 countries. It found that the flat tax is the single most common arrangement in the 258 tax codes studied. Here are some other findings: &# 61623; Eighty percent of corporate income tax systems are flat -- with an average rate of 30. 5 percent. &# 61623; Almost half of capital gains tax rates are flat -- with an average rate of 28. 2 percent. &# 61623; However, wage earners pay a flat rate in fewer than one in five countries. &# 61623; Half of the 86 nations apply steeply progressive tax schedules, with effective top rates taking 50 percent to 90 percent of personal income -- the average being 42. 8 percent.

The researchers found that countries with flat personal income taxes grew at an average annual rate of 2. 1 percent over the 15 -year period ending last January. This compares to 1. 1 percent for all countries in the world during that period. Economies of developing countries with a flat personal income tax grew at an average rate of 2. 7 percent -- versus 0. 7 percent for developing countries as a whole. The study's authors advocate a flat tax in the United States lowering rates across the board while strictly avoiding any exceptions. Source: Gregory Fossedal (Alexis de Tocqueville Institution), "What the Tax Reformers Are Missing, " Wall Street Journal, November 13, 1997. web Dallas Headquarters: 12655 N.

Central Expy. , Suite 720 - Dallas, TX 75243 - 1739 - 972 / 386 - 6272 - Fax 972 / 386 - 0924 Washington Office: 727 15 th St. N. W. , 5 th Floor - Washington, DC 20005 - 202 / 628 - 6671 - Fax 202 / 628 - 6474 1997 NCPA FLAT TAX CASE IS COMPELLING The flat tax -- an income tax with a single tax rate -- is the subject of a lot of criticism since Steve Forbes made it the central issue of his presidential campaign and Jack Kemp's tax reform commission issued its report in January. Some of the opponents are spreading misinformation -- wrongly claiming the flat tax must worsen the budget deficit and isn't progressive. However, flat-tax supporters hurt their own cause when they refuse to deal with some of the legitimate public-opinion challenges the idea faces. For example: &# 61623; Although some supporters, counting on faster economic growth and reductions in government spending, claim everyone will get a tax cut, some middle-income taxpayers will pay more -- how many and how much depending on fine-tuning the plan. &# 61623; The flat tax would benefit the wealthy, a fact which is politically inconvenient but beside the point, since the purpose of tax reform is to make the system more efficient and pro-growth.

Supporters need to deal with these objections, because the case for a flat tax is compelling, based on its simplicity and -- more importantly -- its effect on investment. By reducing the tax on investment to zero, the flat tax would produce a huge surge in investment and capital formation. Source: Rob Norton, "The Wrong Way to Sell a New Idea, " Fortune, February 19, 1996. web Dallas Headquarters: 12655 N. Central Expy. , Suite 720 - Dallas, TX 75243 - 1739 - 972 / 386 - 6272 - Fax 972 / 386 - 0924 Washington Office: 727 15 th St. N.

W. , 5 th Floor - Washington, DC 20005 - 202 / 628 - 6671 - Fax 202 / 628 - 6474 1997 NCPA LOOK TO HONG KONG FOR FLAT TAX EVIDENCE The flat tax is alive and well and living in Hong Kong. And the benefits for taxpayer and government alike are enormous. On nearly every score, Hong Kong's tax system eradicates or avoids distortions so common everywhere else: &# 61623; Although there are four levels of income tax -- from two percent to 20 percent -- the system is structured so that no one need pay more than 15 percent of income to the government. &# 61623; There is no tax on capital gains or interest. &# 61623; Corporate profits are taxed at a flat 16. 5 percent. &# 61623; The form Hong Kong taxpayers fill out every year is four pages long -- but that's only because it's printed in both English and Chinese. Far from hurting the middle class, as flat tax critics in the U.

S. keep warning, Hong Kong's effective 15 percent flat tax does not even kick in until people's incomes put them well into the middle class. &# 61623; More than half of Hong Kong's citizens pay no tax at all. &# 61623; Almost all the rest pay only seven percent of their income to government. &# 61623; Nearly 75 percent of tax revenue comes from the wealthiest 10 percent of the population. &# 61623; Even at that, the colony consistently runs a budget surplus in the billions of dollars. &# 61623; Authorities estimate that by the time Hong Kong is handed over to China in mid- 1997, the national coffers will hold more than $ 40 billion. From its inception after World War II, Hong Kong's tax system was never meant to be anything other than a source of revenue. Concepts like redistribution of income are absent. There aren't any of those deductions and penalties that turn tax codes elsewhere into social engineering documents. Source: Editorial, "An 'Untested' Flat Tax, " Wall Street Journal, February 9, 1996.

web Dallas Headquarters: 12655 N. Central Expy. , Suite 720 - Dallas, TX 75243 - 1739 - 972 / 386 - 6272 - Fax 972 / 386 - 0924 Washington Office: 727 15 th St. N. W. , 5 th Floor - Washington, DC 20005 - 202 / 628 - 6671 - Fax 202 / 628 - 6474 1997 NCPA a flat tax An argument for a flat tax system in the United States of America (hint: it already is! ) by Matthew Dent, average citizen Copyright Matthew Dent, 1996 Last Updated: 12 / 09 / 96 Please mail comments to: Me! There has been controversy in recent years over a flat tax system. Even this year's Republican nominee (Bob Dole) is advocating a "Flatter Tax" system which he says he will usher in beginning with a 15 % across the board tax cut.

I don't think there are many in America who believe that we are under taxed, and I know that there are many who believe we are over taxed. It can and should be pointed out, however, we are one of the lowest taxed industrialized nation in the world. Many other countries including our northern neighbors in Canada, "enjoy" a much her level of taxation than we do. Although it must be pointed out as well that they recieve services like a nationalized health care system which we do not. But many of these countries are being crushed under the high rate of taxation. The world economy (not just our national economy) has been experiencing a time of sustained growth in recent years.

In the United States, this has resulted in fewer people being as concerned as they used to be about job security and their financial well being. Whether this is truly the result of the nations economic well being or just the media's lack of reporting on financial issues (including the U. S. 's sluggish growth in the past few years) will be taken up in another document, but nonetheless, it is the case. The following research was originally done for a project on scientific method. The research yielded some interesting results the most startling of which I wish to share with you in the following paragraphs.

In doing this research, the following two facts seemed extremely incongruous: &# 61623; The lowest rate of taxation on personal income is currently 15 % of Adjusted Gross Income. &# 61623; The national average rate of taxation on personal income has hovered around the 10 % mark since 1943. You may also now be remarking, "How can this be?" . The answers can be found in the tax code itself, however as everyone knows, the tax code is pretty complicated, so an entire enumeration of causes is impossible to create. However, there is one cause which is obvious... Adjusted Gross Income (AGI).

Adjusted Gross Income (AGI) is the money you are taxed on after you subtract the money which the government considered a good way to spend your money. For example, interest paid on a loan which was used to purchase your home (mortgage) is "deductible." This means that you can subtract that from the amount of money you received as income before your income tax is calculated. For expediency and ease of research, the standard deduction was used. The standard deduction is the amount the government allows you to subtract because they realize that it does cost something to sustain yourself with food, clothing, and shelter.

Since there are different standard deductions depending upon wether you are married filing jointly, single, or a dependant child, it was decided that the deduction for a single person would be used. We knew this would skew the results as the deduction for two single persons is generally (but not always) more than the deduction for a married couple filing jointly and that the standard deduction for a dependant is almost always less than the deduction for a single person filing alone. Even with this skew, our results didn't come near the 10 % value. The 10 % value is actually just an approximation / average of the rate of taxation on personal income. It was calculated very simply by computing the percentage of personal income which went to the government and was reported as "Federal receipts from Personal Income [tax]." These values were obtained from the National Income and Product Accounts (NIPA) put out by the Federal Government. A summary of each calculation is presented in the accompanying Table 1.

It was further noted that since 1943, except for the years 1977 through 1986, everybody except the bottom 20 % of wage earners was being taxed at or above the "National Average" of 10 %. The laws of mathematics indicate that with an average, approximately 50 % of the population participating in that average will be below it, and approximately 50 % of the population participating will be above it. However, as can be seen in Table 2 except for the years 1977 - 1986, 80 % or more of the population was above the average (that is, if only the standard deduction was taken). Further discussion of this discrepancy can be found in the accompanying commentary on this research. Methodology What follows is the methodology used for the calculations which yielded these results. This methodology was performed within the context of a class on scientific method taught at Concordia College, Ann Arbor, MI, 1993, taught by Neil So.

Data was obtained for the Number of Employees (part & full time) as well as income from Wages & Salaries from the National Income and Product Accounts (NIPA) information available through Econ Data. Then, data was obtained about Percentage Distribution of Income by population fifths from a variety of sources (including several years of The World Almanac and Book of Facts and other such compilations of existing data). This data was not only split out by population fifths, but also included information about the top 5 %, so this information was also used in comparison calculations. Further, this data was not available for all years. Missing years were approximated based on surrounding years. The years 1965 - 1985 most notably were missing from the data.

We understood that the approximations certainly would not be 100 % accurate, however, surrounding years did provide a basis for a trend and this trend was carried through the missing years. We then calculated "Per Person Income" based on the Number of Employees, Income from Wages & Salaries, and the Percentage Distribution of Income by population fifths. This calculation was done by population fifths as this gave us a much better approximation of personal income in differing economic strata. We then consulted the United States Tax Code as published for the standard personal exemption. Then was calculated the Adjusted Gross Income of the population fifths computed earlier by subtracting the Personal Exemption from the Personal Income by Population Fifths. (The top 5 % data and calculated data of the 15 % below them was included as well). Then by using the information obtained from the Tax Code, we calculated the tax bill for each of the population fifths.

Finally, we calculated the Tax Rate of each of the population fifths by dividing the tax bill by the personal income. This provided the basis for comparing government collections to approximate codified tax rates. To complete the comparison, we took Personal Income and Federal Receipts from Personal Income Tax (both in nominal and real dollars) from the NIPA tables. We calculated the percentage of Personal Income which the government received and used this number as "Actual Average Tax Rate", since it is the actual rate at which personal income was taxed and given to the federal government.

We also calculated the Average Codified Tax Rates by averaging the tax rates of the population fifths. We also calculated this using the data which split the top 5 % from the top fifth as a separate calculation for comparative purposes. Because we already had the data regarding personal income, we constructed hypothetical "flat" tax systems at a rate of 15 %, 11 %, and 10 %. 15 % was chosen because it was pushed by the then independent candidate, Ross Perot in the 1992 election. We used 11 % and 10 % because those numbers were close to the actual average tax on personal income. These calculations are contained in Table 3. RESULTS Some of the results of this investigation were brought out in earlier paragraphs.

In the following paragraphs I will attempt to analyze the results of the calculations in a more comprehensive manner. The first interesting thing noticeable thing is that the personal exemption from 1929 to 1931 was substantially higher (in nominal dollars) than it was until 1987. From 1929 to 1931, the personal exemption was $ 1500. That's 1500 1929, 1930, and 1931 dollars or $ 10, 742, $ 11, 110, $ 12, 373, in 1987 dollars respectively. Compare this to $ 1, 900 in 1987 (in 1987 dollars). Or even the all time low of $ 1040 in 1985 (1985 dollars) which is $ 1124 1987 dollars!

I previously mentioned that since 1943, the national average tax rate has hovered around 10 %. It is probably unlikely that anyone will argue the cause for this. In 1943, the United States entered the fray of World War II and the United States government was required to increase taxes in order to pay for the building of all of the armaments of war and to pay US Soldiers to defend us and push back aggressors in Europe. It does seem somewhat disconcerting that since the biggest conflict in our nation's history which was funded with federal funds, our national leaders have yet to ultimately bring down the burden on it's citizens. It could be argued that since that time, there is a larger burden on more Americans today than there were then (See the accompanying commentary). The biggest basis for this arguments can be found in the lowering of the Personal Exemption causing the poorest of our citizenry to need to pay taxes.

These are the members of our society which it is argued, would be most burdened by a flat tax system. The final, and most interesting point, is that barring any changes in the economic development of our nation, including changes in personal income (which would likely have gone up), with a flat tax at 11 % without personal exemptions, if it were instituted in 1943, the Federal Government would have made $ 786. 5 billion more from personal income taxes in the period 1943 - 1987 (as calculated in real 1987 dollars). In that period, the Federal Government received $ 9166. 7 billion (in real 1987 dollars), but would have received $ 9963. 2 billion (in real 1987 dollars) with a flat tax of 11 %. I indicated that personal income would likely have gone up under a flat tax system. When you compare changes in personal income to changes in tax rates, there is a correlation between tax cuts and an increase in personal income. So


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