Ted Cruz has centered his whole campaign on the “flat” tax and the abolition of the IRS. He has many supporters, but let’s take a look into the pros and cons of the flat tax and what the possibilities could entail if the IRS was actually done away with.
So, the obvious difference between the flat tax and the progressive tax is that the flat tax is one percentage of household income across the board.
For example, Bob and George both pay 7 percent income tax (random number, I didn’t use a typical tax rate).
Bob only makes $25,000 a year, while George makes $420,000 a year.
George pays the federal government $29,400, while Bob pays $1,750.
There is a large disparity in the amount of tax paid due to the difference between the two men’s salary. Both are paying what many would consider to be their fair share of federal income taxes.
One of the biggest pros of the flat tax is its simplicity. There is nothing confusing about applying one tax rate to all individuals. It would also be cheaper because it only taxes your income, where as now you have the IRS taxing you on anything and everything and then bullying you into complying into payment which in many cases can cause additional costs such as lawyers and accountants.
My favorite aspect of the flat tax however is the complete elimination of the death tax, which is literally a tax imposed upon a person’s estate once he or she dies.
I thought the death tax was a joke until I had to write a report on it about two years ago, and while doing my research, I never once found any good supporting arguments for it.
With the flat tax, no business dividends are to be reported on your federal income taxes. This will prevent double taxation as all business gains are to be taxed at the business level only.
The cons of a flat tax system are very simple. Lower income families have to pay the same amount for goods and services as those in the middle and upper class. Once these goods are services are paid for, they will have less money to actually pay their taxes.
In my honest opinion, the poorest of the poor still won’t be taxed. We know this, and to be quite honest, the middle class has experienced this for years.
Budgeting money is a necessity, and living within your means should be applicable across the board as well.
The other main con is that this system could completely shake the IRS, which some people feel like is a very poor decision to make as IRS employees will lose their jobs.
I can’t really say that I would be against the dismantling of the IRS, but to each their own.
The flat tax is seen by some as a way for the rich to maintain their wealth, and a way to make it harder on poor people.
To me, the flat tax is a way to ensure that all citizens are paying a fair tax rate, a way to get rid of some of the stupid taxes that we are currently enforcing, and it’s all in all a great revamp of our current system.
Who is to say that some things can’t simply be tweaked?