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The Pros And Cons Of Flat Tax

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Should we tax the rich more? There is an ongoing debate in the USA and across the world about how big the tax contribution of the wealthy should be and whether it should be increased. The nonpartisan Tax Foundation found GOP candidates are proposing anywhere from $2 trillion to $12 trillion in tax cuts over the next decade. How they do that is up for debate. Both Republicans and Democrats favor tax cuts in some instances. Republicans favor across-the-board tax cuts, both for individuals of all income levels and for corporate interests. Democrats favor tax cuts for lower and middle-income families, but believe taxes should be raised on wealthy individuals and corporations. In many cases, Democrats favor temporary exceptions for businesses that …show more content…

On the same note there are real world examples of flat tax successes. A common misconception made by Republican candidates is that if we cut taxes and spend, the economy will prosper or vis-à-vis. To demonstrate the radical change post 1920, government spending had decreased over 50%, taxes had dropped from a staggering 77% to a minute 25%, and lastly unemployment had dropped to its lowest rate in peacetime history to 1.8%. In flat-tax countries, taxpayers in the highest brackets move from consumption or tax-sheltered investments to more productive, taxable investments. Indeed, the Brussels-based Center for a New Europe notes that none of the countries that have adopted the flat tax are seriously contemplating any retreat from it. Since the tax's inception in 1994, Estonia has had an average growth of 5.2% a year, and now also ranks fourth (out of 155 countries) in the Index of Economic Freedom, published by The Wall Street Journal and the Heritage Foundation. After being mired in stagnation for years, in 2001 Russia implemented a flat tax of 13% for individuals, along with a 15% rate for most business income. The economy grew 7.3% last year, thanks in part to underground activity going legitimate, more than doubling revenues from income taxes. Even the New York Times, which opposes a flat tax in the U.S., has praised, President Vladimir Putin for "radically simplifying the code and slashing rates." On a trip to flat-tax Slovakia earlier this year, President Bush extolled those who are using the flat tax "to attract capital and create economic

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