Flat Tax

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Term Paper Title	Flat Tax
# of Words	620
# of Pages (250 words per page double spaced)	2.48

Flat Tax

[Category]:

Business

[Paper Title]:

Flat Tax

[Text]:

Many people would like you to believe that flat tax is so named because it
will flatten your finances. That at the least is the intended conclusion. By
eliminating

personal deductions like mortgagee interest payments, the study claims, the
flat tax

would reduce housing values in this country by upwards of 10 percent. The
study's

methodology is shaky at best, and the jury on housing values is still out.

Despite the forces allied against the flat tax, tax reform has grown steadily
because the current tax system is so unpopular and the alternatives promise so
much. But in addition to the possibility of lower housing values, the flat tax
poses several other

serious problems too easily dismissed by its advocates. Businesses may be the
flat

tax's second biggest obstacle. By reducing the cost of compliance with the
tax laws and removing uncertainties about the tax situation, the flat tax would
eventually benefit businesses. However, they would see their tax burden rise by
about two-thirds, on average, from 31 percent of the total tax burden to around
50 percent. This tax increase on businesses would result from the loss of
deductions for state and local taxes and for employee fringe benefits, among
other things.

Though businesses will try to pass on these costs to consumers and
employees-by raising prices and trimming fringe benefits, for example-shifting
the nations tax burden to the business community will not produce successful tax
reform. Next, the flat tax initially would raise taxes on the middle class by 20
percent. On

average, a family with between $40,000 and $50,000 in adjusted gross income

would see there taxes rise about $700 to about $7.500.

The flat tax also appears to have a major fairness problem. For example
consider two families. The Jones have a combined salary of $50,000 in wages.
Under the

flat tax, a 20 percent rate would cost this family $3,700. Now consider the
S...

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