Good evening Professor and class. I will first be examing the merits and risks of the flat tax to determine whether it is a viable solution to economic growth followed by an examination into the national sales tax (NST). The flat tax is just that, a tax, which sets an even playing field for all (individuals, businesses, and corporations) (Hall & Rabushka, 2007). The key points within this type of tax structure is to invest more money into businesses to allow for continued growth by creating more jobs, more product, therefore, boosting the U.S. gross domestic product (GDP) value and amount of viable tax revenue for the government to function. According to Hall and Rabushka (2007), the flat tax increases work effort, reduces taxes on business, encourages entrepreneurship and once fully implemented the U.S. could see as much as six percent increase in revenue. …show more content…
Hall and Rabushka (2007) reports that middle-class earners have the greatest to lose mainly impart due to loss of deductions and credits with an increase from the marginal tax rate of 15 percent to 19 percent. Essentially, these individuals have the least to gain from the change and would likely need to increase work effort to offset the additional tax. In my opinion, after assessing both the merits and risks of the flat tax, I think the flat tax is better for the U.S. economy by reinvesting in itself and allowing the return of the classical economic theory that our forefathers started with rather than the Keynesian economic theory through government intervention. Next let’s analyze the merits and risks to the