Paradise Papers

[Pannonian]

Flat taxes are no more nor less able to fund social welfare than the graduated tax. I would argue that, properly free of loopholes, such a tax may actually generate more revenue than a graduated tax despite the lower base rate. Certainly a minimum threshold is required, since taking 20% of the earnings of somebody making 11k a year is far more problematic to that taxpayer than taking the same percentage from Warren Buffet. As you are aware, the base threshold functions, in a flat tax, as the same basic deduction for all -- and the percentage kicks in above that threshold. I acknowledge that closing the loopholes is key here OR with the extant tax system.

I prefer the fair tax approach anyway. Income taxes always serve to protect existing wealth holders at the expense of those trying to improve their condition.

Currently, however, NONE of the USA's social welfare system is funded, nor is anything else in the budget, save on goodwill and faith. The existing debt and continued deficit spending suggests we cannot truly pay for any of it.

Graduated tax is just your two band tax rate with more bands. The problem is still defining what is taxable, and the well off are better placed to hire accountants to define their income in a way that can game the system. Hence Thatcher's fondness for the poll tax, which was simple to define and thus collect. The problem was that its unfairness was also plain to see. Over here in the UK, the government has got around this by ramping up VAT, which is included at the point of purchase and thus unevadable. The problem with this is that VAT is also disproportionately paid by the less well off, and all, even the least well off, are subject to it.

The world would be better off if the rich just pay the top rate of income tax on all their personal income and claim back anything which they're entitled to. That would be the system as it's meant to be. Unfortunately they resent having to pay anything that they can game their way out of, and thus it's the poor who have to make up the shortfall (or more precisely, the next levels down who will have to make up the shortfall). It's the way of the world and I don't expect anything different. However, I wish the tax dodgers would refrain from claiming high horse positions on political issues though.