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A flat tax rate is the only equitable way to distribute a nation's tax burden. This is provided that all exemptions and deductions are eliminated. The gross income generated from investments would have to be added to regular income to derive an aggregate income from which the tax liability could be calculated. A baseline would have to be established so that individuals whose income fell below that level would have zero tax liability. This not only serves the greater principle of fairness and equitability, but would serve to greatly reduce administrative costs and increase compliance with a greatly simplified tax code.

Based upon examples of other nations (Russia for one), instituting a flat tax rate actually serves to increase tax revenues. This occurs because many of the loopholes, exemptions, and deductions used by corporations and the rich completely disappear. Some economists attribute it to increased levels of economic growth. Any discussion of a flat tax rate is strictly at a federal level, as different states employ different combinations of income and sales tax to generate their respective operating revenues. Those tax systems could be altered to embrace a flat sales tax which would be applied to all consumer consumption, and be altered to include rebates and exemptions to remove regressive effects.

Currently, there is proposed legislation that would move the U.S. towards a flat tax rate type taxation structure. The taxpayer choice act would amend the Internal Revenue Code. It would eliminate the alternative minimum tax on individual taxpayers, and would create a simplified alternative tax that individual's may choose over the current personal income tax. The new system would offer two tax rates (10% and 25%), with a large standard deduction and no special deductions. The proponents of the legislation argue that it would substantially reduce the damage caused by the complexity of the current income tax system.

The proposals for a flat tax rate in the U.S. have been gaining political momentum and popular support. As we are a nation founded on the principle of equality for all, doesn't it seem fair that those who make the most money should pay the most in taxes? The current progressive tax system is far too complex, uses too much in administrative resources, and is bereft with loopholes, deductions, and exemptions that encourage legalized tax evasion. Given the current economic recession that we find ourselves in, isn't it about time we embrace simplification of the tax system and use the new system to enforce fair and equitable distribution of the collective tax liability? The rest of the world is moving towards embracing one variation or another of a flat tax. The successful use by European nations and the resulting economic boon that it has driven serve as excellent models to emulate. If the devil is in the details, let's eradicate the details and see if we can't flush the devil out.

Learn more about this author, Victor Mikulin.
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