Investor CAFÉ

What’s the Ideal: Fair, Flat or No Tax?

“A virtuous and industrious people may be cheaply governed.” — Ben Franklin

At this year’s FreedomFest, in memory of the 100th anniversary of the 16th Amendment (federal income tax), we had a panel on “What is the Ideal: Fair, Flat or No Tax?” and the consensus was that while a consumption tax may be the most pro-growth, it may not seem “fair” to citizens to see wealthy people who live off of dividends, interest and capital gains not to pay any taxes. The simplest solution is to establish a flat income tax on all income (earnings income as well as dividends, interest and capital gains). That would appear the most fair and would do wonders to stimulate growth over the long run.

Some 40 countries have flat taxes, including Hong Kong, Belize, Russia, Estonia and most Eastern European countries. Earlier this year, Slovakia was the first country to reverse its flat tax and adopt a progressive tax. Generally, these countries have grown faster as a result of their flat taxes.

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