After all, some countries in Europe have opted out of it when they got into trouble. For one, it looks to favor the wealthy – even if it would increase income for everyone in the income scale – as they look to get the biggest gains out of it.Īrguments the Paul Plan mention that it’s not a true flat system as it still preserves several loopholes and exemptions such as the charitable deduction, mortgage-interest deduction, child credit, earned-income credit and tax exclusion for workplace health benefits.Īnother argument for the Paul Plan is the system won’t likely stay flat. While some agree that the plan looks good (even conservative pundit Glenn Beck called the plan “erotic”), there are several downsides to it as well. Based on static analysis, the plan would raise the deficit by $3 trillion over 10 years.
BENEFITS OF FLAT RATE IT FULL
However, it’s still rather vulnerable when it comes to fairness.Īccording to the Tax Foundation, the Paul Plan can increase gross domestic product a full percent each year. Paul’s plan does make things simpler and could do very well on growth. The plan is hedged on the GOP’s three goals of tax reform: simplicity, fairness and growth. – elimination of most double-taxation of income.
– elimination of most credits, deductions and loopholes. – replacement of complicated corporate taxes with a new 14.5% value-added tax. – replacement of complicated personal income tax with a 14.5% flat tax. In his plan, the following would be implemented: Rand is of course a candidate in the 2016 US Presidential Elections and this is his ticket he hopes would take him to the White House.
Its economy has strongly rebounded since 2010, but only after an extremely hard crash has left its gross domestic product still below its 2007 peak.”Įven more recently, Senator Rand Paul, in an article on The Wall Street Journal, suggested a flat tax rate system for the US. Since the 2008 crash, Estonia has resolutely kept its flat tax and signed up for severe fiscal and monetary austerity, even joining the Euro area. Barro wrote: “Even the poster child for flat-tax fans, Estonia, isn’t looking so hot.
The Czech Republic and Slovakia changed theirs to a progressive system. In it was detailed the exit of several central and eastern Europena countries from flat-rate income taxes. Then again, other factors contributed to the case as well.īut an article by Josh Barro in Bloomberg View in 2013 will argue otherwise. The country experienced an 11.7 percent gross domestic product (GDP) growth in 1997 which continuously grew between 7 and 10 percent throughout the early 2000s. The results? Estonia, Lithuania and Latvia have all experienced economic growth since switching to the system.Įstonia adopted the system in 1994 and put a 26% tax on both personal and corporate income. While the US adopts a progressive tax system, there are other countries in the world who have imposed a flat tax rate system on both individuals and businesses. Supporters argue that the system is fair while those who don’t find it an unpleasant situation especially for the lower income class. Having everyone pay the same rate no matter how much they make stirs debate between those who are in support of it and those who are against it. A flat tax system is where ALL taxpayers – regardless of income – pay the same tax rate.
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