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The Flat Tax
Book by Hall, Robert, Rabushka, Alvin
Paperback
First published March 17, 1995
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Displaying 1 - 4 of 4 reviews
March 6, 2019
What I learned: tax serves as an incentive. Low tax is an incentive to pay tax. High tax represents a cost of paying tax. People will avoid the cost. This is basic behavioral economics.
July 25, 2024
A PROPOSAL TO RADICALLY REVISE THE INCOME TAX CODE
Authors Robert Hall and Alvin Rabushka wrote in the Preface to this 1995 book, "the adoption of the flat tax would give an enormous boost to the U.S. economy by dramatically improving incentives to work, save, invest, and take entrepreneurial risks. The flat tax would save taxpayers hundreds of billions of dollars in direct and indirect compliance costs. It would also shift billions of dollars from investments that reduce taxes to those that produce goods and services."
They state that "Loss of interest deductions and eliminating interest taxation are two of the most conspicuous features of our tax reform plan." (Pg. 79) They note that disallowing of interest for companies "is a problem only during the transition to the flat tax. Corporations and homeowners with large amounts of debt will suffer, just as those with large holdings of bonds or mortgages will gain." (Pg. 118)
They admit, however, that "We can't tell if there are any interest groups who would pay significantly higher taxes... If we are right that improved incentives will actually raise real incomes by 6 percent after seven years, then it won't take long for the taxpayers who lose at the outset to come out ahead." (Pg. 93) They also concede that "The immediate effect of tax reform (regarding charitable contributions) may be a small decline in giving. Later, as the economy surges forward under the impetus of improved incentives for productive activity, giving will recover and likely exceed its current levels." (Pg. 99)
They argue, "The inheritance tax should be eliminated... An inheritance tax constitutes double taxation, which violates a sacred principle of sound tax policy." (Pg. 126)
The "Fair Tax" (e.g., ‘The Fair Tax Book: Saying Goodbye to the Income Tax and the IRS') is a more "current" proposal for serious tax reform, but the arguments of this book are nevertheless well worth studying, for anyone interested in revising tax law.
Authors Robert Hall and Alvin Rabushka wrote in the Preface to this 1995 book, "the adoption of the flat tax would give an enormous boost to the U.S. economy by dramatically improving incentives to work, save, invest, and take entrepreneurial risks. The flat tax would save taxpayers hundreds of billions of dollars in direct and indirect compliance costs. It would also shift billions of dollars from investments that reduce taxes to those that produce goods and services."
They state that "Loss of interest deductions and eliminating interest taxation are two of the most conspicuous features of our tax reform plan." (Pg. 79) They note that disallowing of interest for companies "is a problem only during the transition to the flat tax. Corporations and homeowners with large amounts of debt will suffer, just as those with large holdings of bonds or mortgages will gain." (Pg. 118)
They admit, however, that "We can't tell if there are any interest groups who would pay significantly higher taxes... If we are right that improved incentives will actually raise real incomes by 6 percent after seven years, then it won't take long for the taxpayers who lose at the outset to come out ahead." (Pg. 93) They also concede that "The immediate effect of tax reform (regarding charitable contributions) may be a small decline in giving. Later, as the economy surges forward under the impetus of improved incentives for productive activity, giving will recover and likely exceed its current levels." (Pg. 99)
They argue, "The inheritance tax should be eliminated... An inheritance tax constitutes double taxation, which violates a sacred principle of sound tax policy." (Pg. 126)
The "Fair Tax" (e.g., ‘The Fair Tax Book: Saying Goodbye to the Income Tax and the IRS') is a more "current" proposal for serious tax reform, but the arguments of this book are nevertheless well worth studying, for anyone interested in revising tax law.
March 31, 2012
The United States tax system is insane. At over 70000 pages and counting, it's impossible for any person to fully understand it. It's riddled with loopholes and special cases, inserted over the years by politicians larding their bills to attract votes. Its incentives distort individual choices by making evasion and avoidance more attractive, it stimulates rent-seeking, and it's spawned entire industries devoted to addressing the deadweight loss from its complexity. It is almost thoroughly unlikable, and it's a system no one would ever design.
This book (also available for free online) presents an alternative tax system: the flat tax. The flat tax strips away nearly all the complexity of the current tax code, reducing the entire tax system (with a couple exceptions like the social security tax) to a handful of figures and simple calculations, stripping away nearly all special cases to eliminate loopholes and opportunities for unequal treatment. The authors reduce the entire code to a mere seven very short pages of text, understandable by any financially-savvy person. The tax forms themselves are the size of postcards.
In this book, Robert Hall and Alvin Rabushka present the rationales for the flat tax, the logic behind it, the details of how it would work, and common questions and answers about it. They labor at some length to present the complete details of the system. It's technical reading you can't simply breeze through: you'll have to work a little to understand it all, and it's best digested slowly. But any intelligent person with a little mathematical skill and mind for finance will come away from this book with significant understanding of exactly how the flat tax would work.
Merits or demerits of the proposal aside, this presentation of the flat tax is excellent. If you want to understand the flat tax, whether to praise it, to bury it, or simply because you want to be better-informed, this is the book to read.
This book (also available for free online) presents an alternative tax system: the flat tax. The flat tax strips away nearly all the complexity of the current tax code, reducing the entire tax system (with a couple exceptions like the social security tax) to a handful of figures and simple calculations, stripping away nearly all special cases to eliminate loopholes and opportunities for unequal treatment. The authors reduce the entire code to a mere seven very short pages of text, understandable by any financially-savvy person. The tax forms themselves are the size of postcards.
In this book, Robert Hall and Alvin Rabushka present the rationales for the flat tax, the logic behind it, the details of how it would work, and common questions and answers about it. They labor at some length to present the complete details of the system. It's technical reading you can't simply breeze through: you'll have to work a little to understand it all, and it's best digested slowly. But any intelligent person with a little mathematical skill and mind for finance will come away from this book with significant understanding of exactly how the flat tax would work.
Merits or demerits of the proposal aside, this presentation of the flat tax is excellent. If you want to understand the flat tax, whether to praise it, to bury it, or simply because you want to be better-informed, this is the book to read.
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August 4, 2011Compelling arguement for tax reform. Written in 1995 but just as valid today. A simpler tax code would propel our economy to new heights.
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