Flat Tax

[mileslunn]

What are people's thoughts on the idea of a Flat tax and if for it, why it is a good idea.  If against, why a bad idea and how many brackets do you think they should have and what do you think the lowest and top brackets should be at in your country?

I am personally generally against a flat tax not so much due to being philosophically against but the difficulty of implementing without causing more harm.  Nonetheless the idea can work will in new emerging democracies where compliance isn't high such as many former Eastern European country.  My reason for being against it in countries that don't have it is there are only two ways to have it.

1.  Implement a revenue neutral one which means tax cuts for the rich and tax hikes for the poor.  Unlike many on the left, I am fine with tax cuts for the rich, but the benefits from that will be less than the harm from hiking taxes on the poor since the poor have a higher marginal propensity to consume.

2.  Drop the top rate to the bottom rate.  Unless there are a lot of loopholes where the rich are paying the same or less than those in the bottom (Contrary to popular opinion this happens far less often than people think) this means exploding the deficit or massive spending cuts.

On the other questions, I personally think in my own country of Canada we should have three brackets and be synchronized with the provinces.  Below are in Canadian dollars and I give the federal rates + provincial rates and then total.

No tax on those below 20K
Lower Bracket: 10% federally + 5% provincially = 15% for those making 20K to 50K
Middle Bracket: 20% federally + 10% provincially = 30% for 50K to 150K
Upper Bracket: 30% federally + 15% provincially = 45% for those over 150K

For UK brackets seem fair as they are, while for US, going on the assumption of a flat 5% state tax, I would suggest the following three brackets

10% for under 90K
25% 90K to 400K
40% over 400K

Due to large hole it would create, deductions would be dramatically scaled back and a 5% VAT implemented.

[mileslunn]

No. Someone making $20K a year shouldn't have to pay the same percent as someone making $500K.

If there was a society where wealth disparity was reduced, say, so the richest make only 4x as much as the poorest, I'd be fine with a flat tax.

Depending on whether the flat tax has a minimum threshold or not they may pay less.  If no minimum threshold than they pay the same, but if a minimum threshold, their marginal rate will be the same but effective rate will be lower.  Say if 10K is tax free and the flat tax is 20%, then someone making 20K would only pay 10% while a person making 500K would pay 19.6%