Essay on Flat Tax

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Flat Tax An Analysis of the Flat Tax Rate System Should the flat tax rate system be implemented? No, the flat tax rate system should not be implemented. In this paper, the pro arguments will be presented, which will affirm the thesis. Then the con arguments will be presented. A rebuttal will then follow, and finally, the author’s conclusion will be offered. The loudest clamor against the flat tax would come from homeowners, Realtors, and builders, who would be hammered as the flat tax does away with deductions for mortgage interest payments and local property taxes. If not negotiated with skill, this issue could be the flat tax movement’s Achilles’ heel. An analysis by the economic consulting firm DRI/McGraw-Hill estimates that…show more content…
(Dishman 40) What if workers, particularly those modestly paid folks who would face no tax under the Armey plan, choose to pocket the cash instead of paying health insurance premiums? Dallas Salisbury, president of the Employee benefits Research institute in Washington, worries that they might expect the government to pay for their care when they need it. Presumably, a system to avoid the problem could be created, but it is clearly going to b a thorny issue. (Dishman 40) The flat tax eliminates deductions for home mortgages. In addition to getting hit on their stock holdings, homeowners will likely suffer a 10 to 15 percent drop in the value of their homes. (Darell) Another negative effect of the flat tax is that of the decreased market value of tax-free bonds. Under the most popular flat tax proposals, market value of tax-free bonds could easily drop by 20 percent. High on the list is the blow that investors take when they trade the securities. Because there are so many thousands of small issuers, the market for municipals would have wide spreads between the bid and asking prices. That increases transaction costs. Also, getting good and timely financial information on many issuers is difficult. When Orange County filed for bankruptcy in December of 1995, for example, the most recent financial statements available to the public were for the fiscal year ending June 30, 1993. In other words, they were nearly 18 moths out of date (Tarik 50) So in a flat tax

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