is essentially a level tax on goods, services, and income. Everyone, regardless of how much or how little they make, would be taxed the same.
Let's use the famous 9-9-9 Pizza deal by herman cain.
All sales tax would be 9%.
All income tax would be 9%
All inheritence tax would be 9%.
vs the current structure, which taxes the rich at a higher rate on additional income, and does not tax, but supports the poor by giving them tax promotions (i.e. corporate welfare).
Currently, wages are set low, corporations pay high taxes, and in turn the government uses those taxes to support the poor collectively.
Under a flat tax, the poor and rich would all pay the same taxes based off of percentage, but unfortunately in order for this to be feasible, minimum wage would need to rise drastically. (but it would eliminate welfare, etc).
This is very different from a consumption tax, which basically eliminates all income tax, but taxes everything you buy (let's use 9% as an example).
Whether you are rich or poor, you would pay the same percentage on anything. Many say this unfairly treats the poor, as they will be paying a larger portion of their income to taxes, as they spend nearly 100% of their income, vs the rich who spend a small portion of their income. There is validity to this to some degree, because if both a rich and poor person ONLY buy necessities such as food, then both will be paying the same amount, literally, if they buy the same food, but it would impact the poor person more. The positives to this are that the amount of taxes you pay are fully within 100% control of what you choose to buy. Unfortunately because of this, studies have shown that, while it does increase personal wealth, it also has the potential to destroy an economy as people would be encouraged to spend less.
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