I haven’t read the associated study, but the way The Observer reported the findings lacked what I think is the correct assumption about the flat tax. Consider:
Flat taxes fail to boost revenues, as their advocates claim, and are likely to be abandoned by the countries that have introduced them, according to research published by the International Monetary Fund.
But the IMF analysts who carried out the research cast doubt on the main advantage claimed for flat taxes: that they increase revenues by allowing people to pocket more of their hard-earned cash, and thus persuade them to work harder.
That’s not really the point. Tax equality is the main advantage because income redistribution is ethically wrong. The government shouldn’t be punishing anyone through its tax policy, which is the core result of progressive income taxes. The government should set the tax rate to generate the necessary revenue to meet its (legitimate) expenditures. Ultimately, the flat tax is a means, not the goal.
The report is here.
One thought on “I am not a right-wing economist”
The benefits that I have seen economists from Latvia, Poland etc claim is that they are very simple and fair. The flat tax is irrelevant to the amount of revenue they raise.
A flat tax can raise just as much revenue as a progressive system – you simply change teh rate.
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