Single Tax Rate
By Arnold Kling
Alan Reynolds argues that many problems with tax systems go away if you use a single tax rate.
First, a single tax rate makes it much easier to integrate business and individual taxes. Income originating in business (and used to pay interest and dividends to investors) can be taxed at the business source, rather than distributed to individuals and taxed at different rates depending on what their annual salaries happen to be that year.
…a single tax rate is inherently more stable, not so tempting for politicians to change. Adding a “surtax” at higher incomes would be a conspicuous violation of the rule, as would adding additional tax brackets.
The latter point relates to an idea that I am concerned with–how to keep Congress committed to tax reform once it has been enacted.
For Discussion. Reynolds and others would favor very dramatic tax reform. Is there a case for incremental tax reform instead?