They’re the co-directors of the institutes’ Joint Tax Policy Center, which is non-partisan.Īnd William Gale, why don’t you get us started by just explaining what a consumption tax is, who pays it, what does it tax? And Len Burman is a senior fellow at the Urban Institute. William Gale is a senior fellow at the Brookings Institution. It’s a broad idea that’s also gained favor among some policymakers in Washington.įor a closer look at consumption taxes, what they are and how they might work, I’m joined by two men who study these issues closely. Greenspan said the tax code needed to be simplified and suggested one idea worth considering was implementing some kind of consumption tax. It is a system that has been proven to work at a national level.Ray Suarez: The president’s advisory panel on tax reform met for the second time today, this time seeking the input of Fed Chairman Alan Greenspan.It would eliminate the self-employment tax.New Hampshire: 5.00% (only on dividend and interest income).A new Biden administration analysis, however, pegs the average tax rate for the 400 wealthiest households at 8.2% from 2010 to 2018.
Government estimates put high-income filers’ average rates in the mid-20s. On paper, the top marginal income-tax rate is 37% on ordinary income and 23.8% on capital gains. For both taxes, the rate is split between employers and employees. For example, Social Security and Medicare taxes are flat taxes, charging 12.4% and 2.9%, respectively. What is an example of flat tax?Īs the name suggests, a flat tax is a single tax rate assessed on all taxpayers, regardless of their income levels. No longer would the tax code penalize success and discriminate against citizens on the basis of income. A wealthy taxpayer with 1,000 times the taxable income of another taxpayer would pay 1,000 times more in taxes. Who would benefit from flat tax?įairness.
Some drawbacks of a flat tax rate system include lack of wealth redistribution, added burden on middle and lower-income families, and tax rate wars with neighboring countries. You might be interested: What Is Property Tax Rate In Los Angeles County? (TOP 5 Tips) Why is a flat tax unfair?
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