Flat Tax

[muon2]

IL has a flax income tax at 4.95% with very few allowed deductions (eg no mortgage or charitable) and a generous EITC (Earned Income Tax Credit). It's easy to administer but doesn't grow as fast as the cost of services when the population is stagnant or declining, as it has been most of this decade. IL also has a 6.25% state sales tax + variable local tax but it is levied on the fewest categories of any state with a sales tax, mostly just retail goods. The revenue structure would be improved more by expanding the sales tax to cover consumer services (the bulk of which are used by higher income households) than by shifting to a set of progressive marginal income tax brackets with more complex deductions to avoid hitting the middle class.

[muon2]

One of the most evil ideas in economic policy.

The flat tax existed long before the idea of variable tax brackets. In many areas of tax policy it still has a role. One might call it it anachronistic for modern income taxation, but a blanket tag of evil seems over the top.

[muon2]

Can we include corporations in the flat tax? Capital gains? Income from shares and investments? If we did that, closed every loophole, had a per-person and per child deduction at some actually sane poverty rate percentage that was tied to inflation, maybe, maybe, maybe I'd be in favor. But honestly without seeing a workout of the numbers, I'm pretty sure I have to say no.

IL does all that, and even gets high marks for the ability of its flat income tax to weather a recession (it's the only part of finances that can, the rest is pretty bad). Yet the Dems are campaigning on a constitutional amendment to shift to a graduated tax using brackets like CA or MN, but without the itemized deductions targeted for the middle class.

[muon2]

One of the most evil ideas in economic policy.

The flat tax existed long before the idea of variable tax brackets. In many areas of tax policy it still has a role. One might call it it anachronistic for modern income taxation, but a blanket tag of evil seems over the top.

any in particular you advocate?

I was thinking of both property and consumption taxes as two that have broad impact and work as flat taxes, perhaps with credits to offset basic living expenses such as a homeowners exemption or discounts for food.