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Should we switch to a flat tax system?

Screen shot from CNN Money's YouTube video: Why tax reform is so hard
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As the president and the Republicans in Congress turn their eyes to tax reform in the coming months, it makes one wonder what changes they should make. In the United States, we have a progressive tax system, where those who make more pay a larger percent of taxes than those who make less. This way of doing things has led to a large, confusing tax code that causes many Americans to pay money to tax experts to do their taxes so they won’t accidentally make a mistake, and pay for that mistake for years and years. There is an alternative to a progressive tax system, and that is a flat tax. Everyone pays the exact same rate as everyone else. That’s it. There is no convoluted tax code filled with thousands of loopholes for people to get out of paying their fair share. There are risks, though, because no one knows for sure how such a radical change will affect our society. Poor people may end up shouldering the load, as the deductibles and other benefits will be done away with, and there is a good chance their taxes will rise at the start while the wealthiest among us will have their taxes go down. That being said, should we go to a flat tax system?

Those in favor of a flat tax point to its simplicity to start with. Hypothetically, you set the tax rate at 15 percent and everyone pays 15 percent – no crazy loopholes, no chance for tax fraud, and no giving your hard earned money to someone else to do your taxes. Plus, with a flat tax, people argue that there will be huge economic growth because there will be so much more money being spent by the people and not by the government. Finally, if there is no way to put loopholes in the tax system, much of the money going to Congress to put those loopholes in, will stop, possibly reducing the corruption in Congress.

Those against a flat tax system see it as a giveaway to the rich and an attack on the poor. For the government to be able to do everything it does, they will have to get the money from somewhere. That means if rich people’s taxes are going down, then taxes for the poor and middle classes must go up to make up the difference. Plus, the removal of deductions for children, charities, school, and other deductions are vital to the poor and middle classes. Finally, there are many people who feel that a progressive tax system is the only truly fair system.

Here, CNN Money’s Chief Business Correspondent, Christine Romans, explains why any kind of tax reform will be hard:

The Issue

There will always be a debate about what the government will do with our tax dollars. For the individual American, however, how the government gets those dollars may be more important. We need a system that will let the government function, but not destroy the bank accounts of its citizens. Whether it be a flat or progressive tax system that is best at doing that, we will have to see.

In support of a flat tax

Those in favor of the flat tax system argue that its simplicity is its best feature. There is no huge tax code that can be rigged to get out of paying your fair share.

In opposition to a flat tax

Those against the flat tax see it as a horrible giveaway to the rich, while crushing the poor. It will force the people who have the least to shoulder the burden, so the people who have the most can have even more.

Do you think switching to a flat tax is the way to go?

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