It has been suggested that this article or section be merged into Proportional tax. (Discuss) Proposed since August 2011.

A flat tax (short for flat tax rate) is a tax system with a constant marginal tax rate. Typically the term flat tax is applied in the context of an individual or corporate income that will be taxed at one marginal rate. Flat taxes in application often allow certain deductions and thus are a special case of a proportional tax.

Major categories[link]

Flat tax proposals differ in how they define what is subject to tax.

"True" flat rate income tax[link]

A true flat rate tax is a system of taxation where one tax rate is applied to all income with no deductions or exemptions.

Marginal flat tax[link]

When deductions are allowed a 'flat tax' is a progressive tax with the special characteristic that above the maximum deduction, the rate on all further income is constant. Thus it is said to be marginally flat above that point. The conceptual difference between a true flat tax and a marginally flat tax, can be unified by recognizing that the latter simply excludes certain kinds of funds from being defined as income. Then they are both flat on "taxable" income.

There are many proposed marginal flat taxes systems. Specific flat tax systems enumerated at the bottom of this article primarily intermix aspects of three high level approaches:

Flat tax with limited deductions[link]

Modified flat taxes have been proposed which would allow deductions for a very few items, while still eliminating the vast majority of existing deductions. Charitable deductions and home mortgage interest are the most discussed exceptions, as these are popular with voters and often used. Another common theme is a single, large, fixed deduction; the concept here is that this blanket deduction rolls up a myriad of ubiquitous, fixed, living costs and has the simplifying side-effect that many (low income) people will not even have to file tax returns.

Hall–Rabushka flat tax[link]

Designed by economists at the Hoover Institution, Hall–Rabushka is flat tax on consumption.^[1] Principally, Hall–Rabushka accomplishes a consumption tax effect by taxing income and then excluding investment. Robert Hall and Alvin Rabushka have consulted extensively in designing the flat tax systems in Eastern Europe.

Negative income tax[link]

The negative income tax (NIT), which Milton Friedman proposed in his 1962 book Capitalism and Freedom, is a type of flat tax. The basic idea is the same as a flat tax with personal deductions, except that when deductions exceed income, the taxable income is allowed to become negative rather than being set to zero. The flat tax rate is then applied to the resulting "negative income," resulting in a "negative income tax" the government owes the household, unlike the usual "positive" income tax, which the household owes the government.

For example, let the flat rate be 20%, and let the deductions be $20,000 per adult and $7,000 per dependent. Under such a system, a family of four making $54,000 a year would owe no tax. A family of four making $74,000 a year would owe tax amounting to 0.20 × (74,000 − 54,000) = $4,000, as under a flat tax with deductions. But families of four earning less than $54,000 per year would owe a "negative" amount of tax (that is, it would receive money from the government). For example, if it earned $34,000 a year, it would receive a check for $4,000. The NIT is intended to replace not just the USA's income tax, but also many benefits low income American households receive, such as food stamps and Medicaid. The NIT is designed to avoid the welfare trap—effective high marginal tax rates arising from the rules reducing benefits as market income rises. An objection to the NIT is that it is welfare without a work requirement. Those who would owe negative tax would be receiving a form of welfare without having to make an effort to obtain employment. Another objection is that the NIT subsidizes industries employing low cost labor, but this objection can also be made against current systems of benefits for the working poor.

Capped flat tax[link]

A capped flat tax is one in which income is taxed at a flat rate until a specified cap is reached. For example, in 2010, the United States payroll tax assessed a flat rate of 15.3% on all income under $106,800 and only 1.45% above that level.^[2] Thus, someone earning $100,000 paid $15,300 (a rate of 15.3%) while someone earning $1,000,000 paid $28,350 (a rate of 2.8%). This cap has the effect of turning a nominally flat tax into a regressive tax.^[3]

Requirements for a fully defined schema[link]

In devising a flat tax system, several recurring issues must be enumerated, principally with deductions and the identification of when money is earned.

Defining when income occurs[link]

Since a central philosophy of the flat tax is to minimize the compartmentalization of incomes into myriad special or sheltered cases, a vexing problem is deciding when income occurs. This is demonstrated by the taxation of interest income and stock dividends. The shareholders own the company and so the company's profits belong to them. If a company is taxed on its profits, then the funds paid out as dividends have already been taxed. It's a debatable question if they should subsequently be treated as income to the shareholders and thus subject to further tax. A similar issue arises in deciding if interest paid on loans should be deductible from the taxable income since that interest is in-turn taxed as income to the loan provider.^[4] There is no universally agreed answer to what is fair. For example, in the United States, dividends are not deductible^[5] but mortgage interest is deductible.^[6] Thus a Flat Tax proposal is not fully defined until it differentiates new untaxed income from a pass-through of already taxed income.

Policy administration[link]

Taxes, in addition to providing revenue, can be potent instruments of policy. For example, it is common for governments to encourage social policy such as home insulation or low income housing with tax credits rather than constituting a ministry to implement these policies.^[7] In a flat tax system with limited deductions such policy administration mechanisms are curtailed. In addition to social policy, flat taxes can remove tools for adjusting economic policy as well. For example, in the US short term gains are taxed at a higher rate than long term gains as means to promote long term investment horizons and damp speculative fluctuation.^[8] Thus claims that flat taxes are cheaper/simpler to administer than others are incomplete until they factor in costs for alternative policy administration.

Avoiding deductions[link]

In general, the question of how to eliminate deductions is fundamental to the flat tax design: deductions dramatically affect the effective "flatness" in the tax rate. Perhaps the single biggest necessary deduction is for business expenses. If businesses were not allowed to deduct expenses then businesses with a profit margin below the flat tax rate could never earn any money since the tax on revenues would always exceed the earnings. For example, grocery stores typically earn pennies on every dollar of revenue; they could not pay a tax rate of 25% on revenues unless their markup exceeded 25%. Thus corporations must be able to deduct operating expenses even if individual citizens cannot. A practical difficulty now arises as to identifying what is an expense for a business.^[9] For example, if a peanut butter maker purchases a jar manufacturer, is that an expense (since they have to purchase jars somehow) or a sheltering of their income through investment? Flat tax systems can differ greatly in how they accommodate such gray areas. For example, the "9-9-9" flat tax proposal would allow businesses to deduct purchases but not labor costs.^[10] (And thus effectively tax labor intensive industrial revenue at a higher rate.^[11]) How deductions are implemented will dramatically change the effective total tax, and thus flatness, of the tax.^[4] Thus a Flat Tax proposal is not fully defined until it differentiates deductible and non-deductible expenses.

Tax effects[link]

Equity of distribution[link]

Tax distribution across varying income levels is a hotly debated aspect of flat taxes. The question of fairness is centered on what tax deductions are abolished when a flat tax is introduced, and who is most affected by the abolition of those deductions. The controversy over the equity of distribution can be divided into fundamental implementation and philosophical issues. Identification of philosophical issues is important for governments moving towards a flat tax, as the ideals of financial fairness are the starting point for comparison.

Diminishing Marginal Utility[link]

One of the concerns with many flat tax systems is that they are not true flat taxes, which in turn makes the debate over the equitability of the tax difficult. If a system has a large per-citizen deductible (such as the "Armey" scheme below), then it is a progressive tax – one where the tax rate on total income increases as income increases. As a result, sometimes the term Flat Tax is actually a shorthand for the more proper marginally flat tax.^[4]

Proponents of the flat tax claim a single marginal rate is more fair than stepped marginal tax rates (a.k.a. "progressive"), since everybody pays the same proportion of taxable income. Critics of the flat tax, on the other hand, claim that the marginal value of income declines with the amount of income (the last $100 of income of a family living near poverty being considerably more valuable than the last $100 of income of a millionaire), and thus assert that taxing that last $100 of income the same amount despite vast differences in the marginal value of money is unfair. Flat tax proponents contest the concept of the diminishing marginal utility of money and that a marginal dollar should be taxed differently.^[12]

Effects on government spending[link]

Proponents of the flat tax system point out that there is a strong likelihood that another positive effect would be to discourage increased spending by government.^[13] The reason for this would be that any tax increase would affect all taxpayers. In the current tax system, government officials are able to win the approval of the public by raising taxes on certain groups to pay for new spending. If everyone's taxes had to go up with any new spending, every new government program would have to be carefully scrutinized. In the long run, the hope would be that government would become more efficient.

Administration and enforcement[link]

One type of flat tax taxes all income once at its source. Hall and Rabushka (1995) includes a proposed amendment to the US Revenue Code implementing the variant of the flat tax they advocate.^[14] This amendment, only a few pages long, would replace hundreds of pages of statutory language (although it is important to note that much statutory language in taxation statutes is not directed at specifying graduated tax rates). As it now stands, the USA Revenue Code is over 9 million words long^{[citation needed]} and contains many loopholes, deductions, and exemptions which, advocates of flat taxes claim, render the collection of taxes and the enforcement of tax law complicated and inefficient. It is further argued that current tax law retards economic growth by distorting economic incentives, and by allowing, even encouraging, tax avoidance. With a flat tax, there are fewer incentives than in the current system to create tax shelters and to engage in other forms of tax avoidance.^{[citation needed]} Flat tax critics contend that a flat tax system could be created with many loopholes, or a progressive tax system without loopholes, and that a progressive tax system could be as simple, or simpler, than a flat tax system. A simple progressive tax would also discourage tax avoidance.

Under a pure flat tax without deductions, companies could simply, every period, make a single payment to the government covering the flat tax liabilities of their employees and the taxes owed on their business income.^[15] For example, suppose that in a given year, ACME earns a profit of 3 million, pays 2 million in salaries, and spends an added 1 million on other expenses the IRS deems to be taxable income, such as stock options, bonuses, and certain executive privileges. Given a flat rate of 15%, ACME would then owe the IRS (3M + 2M + 1M) × 0.15 = 900,000. This payment would, in one fell swoop, settle the tax liabilities of ACME's employees as well as taxes it owed by being a firm. Most employees throughout the economy would never need to interact with the IRS, as all tax owed on wages, interest, dividends, royalties, etc. would be withheld at the source. The main exceptions would be employees with incomes from personal ventures. The Economist claims that such a system would reduce the number of entities required to file returns from about 130 million individuals, households, and businesses, as at present, to a mere 8 million businesses and self-employed.^[16]

However this simplicity relies on there being no deductions of any kind allowed (or at least no variability in the deductions of different people). Furthermore if income of differing types are segregated (e.g. pass-thru, long term cap gains, regular income,...) then complications ensue. For example, if realized capital gains were subject to the flat tax, the law would require brokers and mutual funds to calculate the realized capital gain on all sales and redemption. If there were a gain, 15% of the gain would be withheld and sent to the IRS. If there were a loss, the amount would be reported to the IRS, which would offset gains with losses and settle up with taxpayers at the end of the period. Lacking deductions this scheme cannot be used to implement economic and social policy indirectly by tax credits, and thus, as noted above, the simplifications to the government's revenue collection apparatus may be offset by new government ministries required to administer those policies.

Revenues[link]

The Russian Federation is a considered a prime case of the success of a flat tax; the real revenues from its Personal Income Tax rose by 25.2% in the first year after the Federation introduced a flat tax, followed by a 24.6% increase in the second year, and a 15.2% increase in the third year.^[17] The Laffer curve predicts such an outcome, attributing the primary reason for the greater revenue to higher levels of economic growth stemming from the introduction of the flat tax.

The Russian example is often used as proof of the validity of this analysis, despite an International Monetary Fund study in 2006 which found that there was no sign "of Laffer-type behavioral responses generating revenue increases from the tax cut elements of these reforms" in Russia or in other countries.^[18]

Overall structure[link]

Some taxes other than the income tax (for example, taxes on sales and payrolls) tend to be regressive. Hence, making the income tax flat could result in a regressive overall tax structure. Under such a structure, those with lower incomes tend to pay a higher proportion of their income in total taxes than the affluent do. The fraction of household income that is a return to capital (dividends, interest, royalties, profits of unincorporated businesses) is positively correlated with total household income.^{[citation needed]} Hence a flat tax limited to wages would seem to leave the wealthy better off. Modifying the tax base can change the effects. A flat tax could be targeted at income (rather than wages), which could place the tax burden equally on all earners, including those who earn income primarily from returns on investment. Tax systems could utilize a flat sales tax to target all consumption, which can be modified with rebates or exemptions to remove regressive effects (such as the proposed FairTax in the U.S.^[19]).

Border adjustable[link]

A flat tax system and income taxes overall are not inherently border-adjustable; meaning the tax component embedded into products via taxes imposed on companies (including corporate taxes and payroll taxes) are not removed when exported to a foreign country (see Effect of taxes and subsidies on price). Taxation systems such as a sales tax or value added tax can remove the tax component when goods are exported and apply the tax component on imports. The domestic products could be at a disadvantage to foreign products (at home and abroad) that are border-adjustable, which would impact the global competitiveness of a country. However, it's possible that a flat tax system could be combined with tariffs and credits to act as border adjustments (the proposed Border Tax Equity Act in the U.S. attempts this). Implementing an income tax with a border adjustment tax credit is a violation of the World Trade Organization agreement. Tax exemptions (allowances) on low income wages, a component of most income tax systems could mitigate this issue for high labour content industries like textiles that compete Globally.

In a subsequent section, various proposals for flat tax-like schemes are discussed, these differ mainly on how they approach with the following issues of deductions, defining income, and policy implementation.

Tax simplification[link]

Flat tax has been proposed as a means of simplifying the tax code from the current progressive or graduated marginal tax rates. Yet of the 72,000+ pages in the tax code as of 2009, less than a quarter of one of those pages is needed to list the progressive marginal tax rates. Calculating the progressive tax after determining the net taxable income may be the simplest activity one performs in manually calculating one's income tax liability. Extreme simplification could be achieved by merely eliminating all tax deductions, exclusions, subsidies, rebates etc. and retaining the six tier progressive marginal tax structure.

Recent and current proposals[link]

Flat tax proposals have made something of a "comeback" in recent years. In the United States, former House Majority Leader Dick Armey and FreedomWorks^[20] have sought support for the flat tax (Taxpayer Choice Act). In other countries, flat tax systems have also been proposed, largely as a result of flat tax systems being introduced in several countries of the former Eastern Bloc, where it is generally thought to have been successful, although this assessment has been disputed (see below).^[21]

The countries that have recently reintroduced flat taxes have done so largely in the hope of boosting economic growth. The Baltic countries of Estonia, Latvia and Lithuania have had flat taxes of 24%, 25% and 33% respectively with a tax exempt amount, since the mid-1990s. On 1 January 2001, a 13% flat tax on personal income took effect in Russia. Ukraine followed Russia with a 13% flat tax in 2003, which later increased to 15% in 2007. Slovakia introduced a 19% flat tax on most taxes (that is, on corporate and personal income, for VAT, etc., almost without exceptions) in 2004; Romania introduced a 16% flat tax on personal income and corporate profit on 1 January 2005. Macedonia introduced a 12% flat tax on personal income and corporate profit on 1 January 2007 and promised to cut it to 10% in 2008.^[22] Albania has implemented a 10% flat tax from 2008.^[23] Bulgaria applies flat tax rate of 10% for corporate profits and personal income tax since 2008.^[24]

In the United States, while the Federal income tax is progressive, seven states — Colorado, Illinois, Indiana, Massachusetts, Michigan, Pennsylvania, and Utah — tax household incomes at a single rate, ranging from 3.07% (Pennsylvania) to 5.3% (Massachusetts). Pennsylvania even has a pure flat tax with no zero-bracket amount.

Paul Kirchhof, who was suggested as the next finance minister of Germany in 2005, proposed introducing a flat tax rate of 25% in Germany as early as 2001, which sparked widespread controversy. Some claim the German tax system is the most complex one in the world.^{[citation needed]}

On 27 September 2005, the Dutch Council of Economic Advisors recommended a flat rate of 40% for income tax in the Netherlands.^{[citation needed]} Some deductions would be allowed, and persons over 65 years of age would be taxed at a lower rate.

In the United States, proposals for a flat tax at the federal level have emerged repeatedly in recent decades during various political debates. Jerry Brown, former and current Democratic Governor of California, made the adoption of a flat tax part of his platform when running for President of the United States in 1992. At the time, rival Democratic candidate Tom Harkin ridiculed the proposal as having originated with the "Flat Earth Society". Four years later, Republican candidate Steve Forbes proposed a similar idea as part of his core platform. Although neither captured his party's nomination, their proposals prompted widespread debate about the current U.S. income tax system.

Flat tax plans that are presently being advanced in the United States also seek to redefine "sources of income"; current progressive taxes count interest, dividends and capital gains as income, for example, while Steve Forbes's variant of the flat tax would apply to wages only.^{[citation needed]}

In 2005 Senator Sam Brownback, a Republican from Kansas, stated he had a plan to implement a flat tax in Washington, D.C..^[25] This version is one flat rate of 15% on all earned income. Unearned income (in particular capital gains) would be exempt. His plan also calls for an exemption of $30,000 per family and $25,000 for singles. Mississippi Republican Senator Trent Lott stated he supports it and would add a $5,000 credit for first time home buyers and exemptions for out of town businesses.^{[citation needed]} DC Delegate Eleanor Holmes Norton's position seems unclear, however DC mayor Anthony Williams has stated he is "open" to the idea.^{[citation needed]}

Flat taxes have also been considered in the United Kingdom by the Conservative Party. In September 2005, George Osborne, then in opposition, said that while he was "fully conscious that we may not be able to introduce a pure flat tax, we may be able to move towards simpler and flatter taxes."^[26] However, it was roundly rejected by Gordon Brown, then the Labour Chancellor of the Exchequer, who said that it was "An idea that they say is sweeping the world, well sweeping Estonia, well a wing of the neo-conservatives in Estonia", and criticised it thus: "The millionaire to pay exactly the same tax rate as the young nurse, the home help, the worker on the minimum wage".^[27]

Around the world[link]

This article's factual accuracy is disputed. Please help to ensure that disputed facts are reliably sourced. See the relevant discussion on the talk page. (January 2012)

Eastern Europe[link]

  Countries that have flat taxes

  Countries considering flat taxes

Advocates of the flat tax argue that the former communist states of Eastern Europe have benefited from the adoption of a flat tax. Some of these nations have experienced strong economic growth of 6% and higher in recent years^{[when?][citation needed]}, particularly the Baltic countries, who experience exceptional GDP growth of around 10% yearly. On the other hand, these countries also include the Ukraine for example, one of the poorest countries in Europe and one of the lowest economic growth rates in the world 1990-2007. Serbia has an even lower economic growth rate over the same period of time. Some argue that other factors, primarily the advent of capitalist economic systems and rapid market expansion after Soviet (communist) domination explain the rapid growth. Some argue that economic growth in these countries would likely have occurred regardless of the chosen tax system.

• Whilst in some countries the introduction of a flat tax has coincided with strong increases in growth and tax revenue, some argue that there is no proven causal link between the two. Some argue that it is also possible that both are due to a third factor, such as new government that may institute other reforms along with the flat tax. Eastern Europe has for example greatly benefited from access to the European Union markets since the fall of the Iron Curtain.

• Lithuania, which levies a flat tax rate of 24% (previously 27%) on its citizens, has experienced amongst the fastest growth in Europe. Advocates of the flat tax speak of this country's declining unemployment and rising standard of living. They also state that tax revenues have increased following the adoption of the flat tax, due to a subsequent decline in tax evasion and the Laffer curve effect. Others point out, however, that Lithuanian unemployment is falling at least partly as a result of mass emigration to Western Europe. The argument is that Lithuania's comparatively very low wages, on which a non-progressive flat tax is levied, combined with the possibility now to work legally in Western Europe since accession to the European Union, is forcing people to leave the country en masse. The Ministry of Labour estimated in 2004 that as many as 360,000 workers might have left the country by the end of that year, a prediction that is now thought to have been broadly accurate. The impact is already evident: in September 2004, the Lithuanian Trucking Association reported a shortage of 3,000–4,000 truck drivers. Large retail stores have also reported some difficulty in filling positions.^[28] However, the emigration trend has recently stopped^{[citation needed]} as enormous real wage gains in Lithuania (presumably due to the shortage of workers) have caused a return of many migrants from Western Europe. In addition to that, it is clear that countries not levying a flat tax such as Poland also temporarily faced large waves of emigration after EU membership in 2004.^{[citation needed]}

• In Estonia, which has had a 26% (24% in 2005, 23% in 2006, 22% in 2007, 21% in 2008, 21% in 2009, planned 20% in 2010, 19% in 2011, 18% in 2012) flat tax rate since 1994, studies have shown that the significant increase in tax revenue experienced was caused partly by a disproportionately rising VAT revenue.^[29] Moreover, Estonia and Slovakia have high social contributions, pegged to wage levels.^[29] Both matters raise questions regarding the justice of the flat tax system, and thus its long-term political sustainability.^{[citation needed]} The Estonian economist and former chairman of his country's parliamentary budget committee Olev Raju, stated in September 2005 that "income disparities are rising and calls for a progressive system of taxation are getting louder – this could put an end to the flat tax after the next election".^[30] However, this did not happen, since after the 2007 elections a right-wing coalition was formed which has stated its will to keep the flat tax in existence. However, critics argue that the tax rates these countries have are actually more progressive than flat.^[31]

• Hungary introduced a flax tax at 16% on 1 January 2011.^[32]

• According to a 2010 study^[33] published in the Brussels newspaper L'Anglophone, the tax burden for typical workers in Central and Eastern Europe's "flat tax" countries is slightly higher (40.3% versus 40.2% of the total cost of employment) than that of the progressive systems elsewhere in the EU. "Slovakia has a “flat tax” rate of 19%," wrote the authors,^[34] "but its employers pay a 35.2% contribution to social security (higher than the 34.8% in Belgium) and, in addition to the flat income tax, employees have 13.4% deducted for social security (also higher than the 13.07% in Belgium)," adding that a typical Slovak worker's Tax Freedom Day is a day later than a Finnish worker's.

Countries that have flat tax systems[link]

These are countries, as well as minor jurisdictions with the autonomous power to tax, that have adopted tax systems that are commonly described in the media and the professional economics literature as a flat tax.

•  Albania (10%) ^[35][36]

•  BIH [20]

•  Bulgaria ^[37]

•  Estonia ^[38][39][40]

•  Georgia ^[40][41]

•  Guernsey ^[42]

•  Hungary

•  Iceland

•  Iraq ^[43][44][45] It is not clear how effectively the Iraqi tax is being collected in practice.

•  Jamaica

•  Jersey ^[46]

•  Kazakhstan ^[47]

•  Kyrgyzstan ^[42]

•  Latvia ^[40]

•  Lithuania ^[40][48]

•  Macedonia ^[42][49]

•  Mauritius ^[42]

•  Mongolia ^[50]

•  Montenegro ^[51]

•  Romania ^[40]

•  Russia ^[40][52]

•  Serbia ^[53]

•  Slovakia ^[40]

•  Trinidad and Tobago

•  Ukraine ^[40][54]

Also:

•  Transnistria, also known as Transnistrian Moldova or Pridnestrovie.^[55] This is a disputed territory, but the authority that seems to have de facto government power in the area claims to levy a flat tax.

Countries reputed to have a flat tax[link]

•  Hong Kong Some sources claim that Hong Kong has a flat tax,^[56] though its salary tax structure has several different rates ranging from 2% to 20% after deductions. Taxes are capped at 16% of gross income, so this rate is applied to upper income returns if taxes would exceed 16% of gross otherwise.^[57] Accordingly, Duncan B. Black of Media Matters for America, says "Hong Kong's 'flat tax' is better described as an 'alternative maximum tax.'" ^[58] Alan Reynolds of the Cato Institute similarly notes that Hong Kong's "tax on salaries is not flat but steeply progressive."^[59] Hong Kong has, nevertheless, a flat profit tax regime.

Countries considering a flat tax system[link]

These are countries where concrete flat tax proposals are currently being considered by influential politicians or political parties.

•  Panama During the 2008–2009 political campaign, presidential candidate Ricardo Martinelli has included on his government plan the replacement of the current tax system implemented by president Martin Torrijos with a 10 or 15% flat tax rate in order to raise employment and wages.
•  Poland In 2007 elections, the Civic Platform gained 41.5% of the votes, running on a 15% flat tax as one of the main points in the party program.^[60]
•  Greece There are some articles from 2005 indicating that the Greek government considered a flat tax. If it is still on the table,^[61] it apparently hasn't passed yet as of February 2012.^[62][63]
•  Australia The current leader of the Australian opposition party Tony Abbott, has expressed his desire for a tax debate that includes the implementation of a flat tax system.^[64] However, the current Australian government believes that a flat tax would be detrimental to middle income earners, who would see a rise in taxation from their current levels.^[65] It is expected that Tony Abbott will unveil his positions on tax policy early next year.^[66]
•  Faroe Islands The cabinet appointed in November 2011, consisting of the Union Party, People's Party, Self-Government Party and Centre Party, defined a flat tax system as a part of its financial policy.^[67] The bill introducing the flat tax passed on 23 December 2011^[68]

See also[link]

Economic Concepts

• Fiscal drag (also known as Bracket creep)
• Taxable income elasticity (also known as Laffer Curve)

Tax Systems

• Consumption tax
• FairTax
• Income tax
• Kemp Commission
• Negative income tax
• Progressive tax
• Regressive tax
• Sales tax
• Value added tax
• 9–9–9 Plan

Notes[link]

1. ^ Hoover Institution – Books – The Flat Tax
2. ^ 26 USC 3101
3. ^ Are Payroll Taxes Regressive The Economist.
4. ^ ^{a b c} See for example the flat tax resources at idebate.org ]
5. ^ Dividends are deductible in rare instances
6. ^ IRS Tax pub 936. the mortgage interest deduction
7. ^ For example the ENERGYSTAR tax credit
8. ^ As a recent example, transaction costs to damp speculation proposed by James Tobin, winner of the 1972 Nobel prize in economics, were recently (2009) proposed to the G20 by British PM Gordon brown as a way to prevent international currency speculation. Krugman
9. ^ Deductible business expenses.
10. ^ Herman Cain's 9-9-9 flat tax variation.
11. ^ E.D> Kleinbart, An analysis of Herman Cain's 999 plan, Social Science Research Center, 2011.
12. ^ The diminishing marginal utility means that the number of units of additional 'happiness' afforded by an extra unit of additional money, decreases as one spends more money. [1]
13. ^ Richard Allen Epstein (10 March 2009). "Favoring A Flat Tax". The Libertarian (Forbes.com). http://www.forbes.com/2009/03/09/flat-tax-plan-obama-opinions-columnists-taxes.html. Retrieved 26 March 2011. 
14. ^ Hoover Institution – Books – The Flat Tax
15. ^ "The flat-tax revolution". The Economist. 14 April 2005. http://www.economist.com/printedition/displayStory.cfm?Story_ID=3861190. 
16. ^ "The case for flat taxes". The Economist. 14 April 2005. http://www.economist.com/node/3860731. 
17. ^ The Flat Tax at Work in Russia: Year Three, Alvin Rabushka, Hoover Institution Public Policy Inquiry, www.russianeconomy.org, 26 April 2004
18. ^ The "Flat Tax(es)": Principles and Evidence
19. ^ Boortz, Neal; Linder, John (2006). The FairTax Book (Paperback ed.). Regan Books. ISBN 0-06-087549-6. 
20. ^ Phillips, Michael M. (16 May 2008). "Mortgage Bailout Infuriates Tenants (And Steve Forbes)". The Wall Street Journal. http://online.wsj.com/article/SB121090164137297527.html. 
21. ^ Flat-Tax Comeback Bruce Bartlett, National Review, 10 November 2003
22. ^ http://www.investinmacedonia.org/news.aspx?news=35
23. ^ Albanian government to implement flat tax (SETimes.com)
24. ^ http://www.investnet.bg/bulgarian-economy/InvestmentIncentives/why-invest-in-bulgaria.aspx
25. ^ [2]
26. ^ "Osborne urges simpler tax system", BBC News, 7 September 2005
27. ^ Gordon Brown's speech to the Labour party conference 26 September 2005
28. ^ http://www.state.gov/e/eb/ifd/2005/42068.htm
29. ^ ^{a b} Niedrige Steuer für alle: Osteuropa: Einige Länder haben die Einheitssteuer. Doch sie ist umstritten | ZEIT online
30. ^ Tenbrock, Christian (1 September 2005). "Niedrige Steuer für alle. Osteuropa: Einige Länder haben die Einheitssteuer. Doch sie ist umstritten" (in German). http://www.zeit.de. http://www.zeit.de/2005/36/Osteuropa. Retrieved 2 February 2012. 
31. ^ Central Eastern Europe and the “Flat” Tax – a follow up
32. ^ [3]
33. ^ Wages and Taxes for the "Average Joe" in the EU 27
34. ^ Belgian Workers’ Wages are Highest-Taxed in Western Europe. Flat tax? Read the Fine Print
35. ^ Daniel Mitchell. "Albania Joins the Flat Tax Club." Cato at Liberty, 9 April 2007. [4]
36. ^ Jonilda Koci. "Albanian government approves 10% flat tax". Southeast European Times, 4 June 2007. [5]
37. ^ The Associated Press. "Bulgarian parliament approves 2008 budget that foresees record 3 percent surplus". [6]
38. ^ Alvin Rabushka. "Estonia Plans to Reduce its Flat-Tax Rate." 26 March 2007. [7]
39. ^ Toby Harnden. "Pioneer of the 'flat tax' taught the East to thrive." Telegraph, 9 April 2005.[8]
40. ^ ^{a b c d e f g h} Michael Keen, Yitae Kim, and Ricardo Varsano. "The 'Flat Tax(es)': Principles and Evidence." IMF Working Paper WP/06/218.[9]
41. ^ Alvin Rabushka. "The Flat Tax Spreads to Georgia." 3 January 2005
42. ^ ^{a b c d} Alvin Rabushka. "Flat and Flatter Taxes Continue to Spread Around the Globe." 16 January 2007.[10]
43. ^ Daniel Mitchell. "If a Flat Tax is Good for Iraq, How About America?" Heritage foundation, 10 November 2003. [11].
44. ^ Alvin Rabushka. "The Flat Tax in Iraq: Much Ado About Nothing—So Far." 6 May 2004. [12]
45. ^ Chomsky, Noam (10 May 2004). "Transfer real sovereignty". ZNet. http://www.zcommunications.org/transfer-real-sovereignty-by-noam-chomsky. Retrieved 22 August 2011. 
46. ^ http://ec.europa.eu/economy_finance/publications/publication415_en.pdf
47. ^ The Economist Intelligence Unit, Kazakhstan fact sheet. "In 2007 Kazakhstan introduced several changes to the taxation system. The flat-rate VAT on all goods was reduced from 15% to 14%, and a flat rate of income tax of 10% was introduced, in place of the previous progressive range of 5–20%." [13]
48. ^ Alvin Rabushka. "A Competitive Flat Tax Spreads to Lithuania." 2 November 2005.[14]
49. ^ "The lowest flat corporate and personal income tax rates." Invest Macedonia government web site. Retrieved 6 June 2007. [15]
50. ^ Alvin Rabushka. "The Flat Tax Spreads to Mongolia." 30 January 2007
51. ^ Alvin Rabushka. "The Flat Tax Spreads to Montenegro." 13 April 2007
52. ^ Alvin Rabushka. "Russia adopts 13% flat tax." 26 July 2000
53. ^ Alvin Rabushka. "The Flat Tax Spreads to Serbia." 23 March 2004
54. ^ Alvin Rabushka. "The Flat Tax Spreads to Ukraine." 27 May 2003
55. ^ Transnistrian government web site
56. ^ Daniel Mitchell. "Fixing a Broken Tax System with a Flat Tax." Capitalism Magazine, 23 April 2004.[16]
57. ^ Duncan B. Black. "Hyman falsely claimed Hong Kong imposes flat tax on income," Media Matters, 27 Jan 2005. [17]
58. ^ Duncan B. Black. "Fund wrong on Hong Kong 'flat tax'." Media Matters, 28 Feb 2005. [18]
59. ^ Alan Reynolds. "Hong Kong's Excellent Taxes." townhall.com, but the column was syndicated. 6 June 2005. [19]
60. ^ "Poland brings in flat tax", Adam Smith Institute
61. ^ "Στο 15% η φορολογία των επιχειρήσεων" (in Greek). www.naftemporiki.gr. 24 February 2012. http://www.naftemporiki.gr/news/cstory.asp?id=2141801. Retrieved 24 February 2012. 
62. ^ Trefgarne, George (15 August 2005). "Greece joins the flat rate tax bandwagon". The Telegraph. http://www.telegraph.co.uk/finance/2920635/Greece-joins-the-flat-rate-tax-bandwagon.html. Retrieved 24 February 2012. 
63. ^ "Flat tax rate on the cards." Kathimerini. 11 July 2005^{[dead link]}
64. ^ "Abbott floats tax idea", Australian Broadcasting Corporation
65. ^ "Abbott's flat tax reform 'unfair'", Australian broadcasting corporation
66. ^ "Abbott promises voter 'conversation", Sydney Morning Herald
67. ^ "Samgonguskjal millum Sambandsflokkin, Fólkaflokkin, Miðflokkin og Sjálvstýrisflokkin", Prime Minister's Office. 2011.
68. ^ http://www.nordlysid.fo/Default.aspx?ID=42&Action=1&NewsId=10490&PID=3773

References[link]

• Steve Forbes, 2005. Flat Tax Revolution. Washington: Regnery Publishing. ISBN 0-89526-040-9
• Robert Hall and Alvin Rabushka, 1995 (1985). The Flat Tax. Hoover Institution Press.
• Richard Parncutt, 2006–2010. Capitalism without poverty: Basic income plus flat tax. [21].
• Anthony J. Evans, "Ideas and Interests: The Flat Tax" Open Republic 1(1), 2005

External links[link]

Wikiquote has a collection of quotations related to: Taxation

• The Laffer Curve: Past, Present and Future: A detailed examination of the theory behind the Laffer curve, and many case studies of tax cuts on government revenue in the United States
• Podcast of Rabushka discussing the flat tax Alvin Rabushka discusses the flat tax with Russ Roberts on EconTalk.
• Podcast of Rabushka discussing the flat tax Alvin Rabushka discusses the flat tax on PoliTalk.
• The Flat Tax: How it Works and Why it is Good for America

Look up flat in Wiktionary, the free dictionary.

Flat, or flatness, describes an object or condition that is very smooth or level.

Flat or flats may also refer to:

Places[link]

• Flat, a residential house or apartment
• Flat, Alaska, United States
• Flat, Missouri, United States
• Flat, Puy-de-Dôme, a commune in région Auvergne, France
• Flat, Texas, United States
• Flat Brook, tributary of the Delaware River in Sussex County, New Jersey
• Flat Island, Hong Kong, People's Republic of China
• Flat River (North Carolina), a river in Southern Person County, North Carolina
• Flats, West Virginia, an unincorporated community in Hardy County, West Virginia, USA

Arts[link]

• Flat (music), a symbol (♭) which denotes a lower pitch
• Flats (comics), the first stage in the comic coloring process
• Flats (theatre), flat pieces of theatrical scenery
• Flats (band), English band
• Flat!, a 2010 Indian film

Footwear[link]

• Flats, footwear which is not high-heeled
• Racing flats, lightweight shoes used primarily for running a race
• Ballet slippers are often referred to as 'flats' or 'flat shoes', as opposed to the Pointe shoes more advanced female dancers wear

Mathematics and geometry[link]

• Flat (geometry), the generalization of lines and planes in an n-dimensional Euclidean space
• Flat (matroids), a further generalization of flats from linear algebra to the context of matroids
• For use of flat sign in mathematics, see musical isomorphism - mapping vectors to covectors
• Flat morphism in algebraic geometry
• Flat module in abstract algebra

Transportation[link]

• Flat, a deflated pneumatic tire
• Flat car, an open container on wheels designed to carry heavy loads
• Flat spot, a fault in the shape of a railroad wheel

Other uses[link]

• Flat, a two-dimensional toy soldier made of tin or plastic
• Flat, a leading type of wordplay predating the invention of crosswords, as identified by the National Puzzlers' League
• Flats or flat butterflies, certain skipper butterfly genera in subfamily Pyrginae:
  • Celaenorrhinus of tribe Celaenorrhini;
  • Calleagris (scarce flats),
  • Eagris, and
  • Tagiades (water flats, snow flats) of tribe Tagiadini
• Flats (USPS), an oversized letter
• Optical flat, an extremely flat piece of glass
• Forest Lake Area Trail System

See also[link]

• All pages beginning with "Flat"
• All pages with titles containing "Flat"
• The Flat (disambiguation page)
• The Flats
• Flatten (disambiguation)
• Flattening
• Mudflat
• Planar (disambiguation)

This disambiguation page lists articles associated with the same title. If an internal link led you here, you may wish to change the link to point directly to the intended article.

Steve Forbes
Forbes in June 2009
Born	Malcolm Stevenson Forbes, Jr. (1947-07-18) July 18, 1947 (age 64) Morristown, New Jersey
Alma mater	Princeton University (B.A.)
Occupation	Publisher
Political party	Republican

Malcolm Stevenson "Steve" Forbes, Jr. (born July 18, 1947) is an American publishing executive who was twice a candidate for the nomination of the Republican Party for president. He is the editor-in-chief of business magazine Forbes as well as president and chief executive officer of its publisher, Forbes Inc. He was a Republican candidate in the U.S. Presidential primaries in 1996^[1] and 2000. He is the son of longtime Forbes magazine publisher Malcolm Forbes and the grandson of that publication's founder, B.C. Forbes.

Personal life and education[link]

Forbes was born in Morristown, New Jersey, the son of Roberta Remsen (née Laidlaw) and Malcolm Forbes.^{[2] [3]} He is married to Sabina Beekman, and they have five daughters; Sabina, Roberta, Catherine, Moira, and Elizabeth^[4]. Forbes attended Far Hills Country Day School. He graduated cum laude in 1966 from Brooks School in North Andover, Massachusetts, and was in the Princeton class of 1970.^[5] While at Princeton, Forbes founded his first magazine, Business Today, with two other students. Business Today is currently the largest student-run magazine in the world.^[6]

In 1996, years after the death of his father, he changed the name credited to him on the Forbes magazine masthead from Malcolm S. Forbes Jr. to the name he had been known as throughout childhood, Steve Forbes.^{[citation needed]} Forbes served as an occasional guest host on the show History's Business on the television channel History.^{[citation needed]}

He was awarded an honorary doctorate in economics from Stevenson University on April 30, 2009.^{[citation needed]}

Forbes is a member of Alpha Kappa Psi and Tau Kappa Epsilon.^[7]

Political career and views[link]

Early political career[link]

In 1985, President Ronald Reagan appointed Forbes as head of the Board of International Broadcasting (BIB), Radio Free Europe/Radio Liberty

He helped craft Christine Todd Whitman's^[8] plan for a 30 percent cut in New Jersey's income tax over three years, and this plan proved to be a major factor in her victory over incumbent Governor James Florio.^[9][10] After her election, Whitman proposed these tax cuts and they were enacted into law. Forbes made an issue of his role in these New Jersey tax cuts in his subsequent campaigns for the presidency.^{[citation needed]}

Campaigns for President and major issues[link]

Forbes entered the Republican primaries for President of the United States in 1996 and 2000, primarily running on a campaign to establish a flat income tax. He also supported the ideas of re-introducing 4 1/2% mortgages and term limits in 1996, but dropped both in 2000 (as they were minor planks in his overall platform).

When Forbes ran for president in 1996 and 2000, he sold some of his Forbes Inc. voting shares to other family members to help finance his run. He did not come close to securing the Republican nomination, despite winning the Arizona and Delaware Primaries in 1996 and getting some significant shares of the vote in other primaries. His awkward campaigning style was considered to be a major factor in his defeat.^[11] Time Magazine called his stumping a "comedy-club impression of what would happen if some mad scientist decided to construct a dork robot."^[11] and also described his campaign as "wacky, saturated with money and ultimately embarrassing to all concerned."^[11] After dropping out early in the 2000 primary season, he returned to heading the magazine and company. During the 1996 campaign, insiders at Fortune alleged that stories about Forbes' advertisers became favorably biased toward them.^[12]

Major issues Forbes has supported include free trade, health savings accounts, and allowing people to opt out 75% of Social Security payroll taxes into Personal Retirement Accounts (PRAs). He supports traditional Republican Party policies such as downsizing government agencies to balance the budget, tough crime laws and support for the death penalty, and school vouchers, opposition to gun control and most government regulation of the environment, as well as drug legalization and same-sex marriage.^[13] This last was despite his father's increasingly flamboyant gay lifestyle before his death.^[14] In terms of foreign policy, he called for a "US not UN foreign policy" (which is composed of anti-International Monetary Fund sentiments, pro-Israeli sentiment, opposition to Most Favored Nation status for the People's Republic of China, and anti-UN sentiment.) His flat tax plan has changed slightly. In 1996 he supported a flat tax of 17% on all personal and corporate earned income (unearned income such as capital gains, pensions, inheritance, and savings would be exempt.) However, he supported keeping the first $33,000 of income exempt. In 2000 he maintained the same plan, but instead of each person receiving an exemption of $33,000, it more closely resembled the Armey Plan (Forbes's version called for a $13,000 per adult and $5,000 per dependent deduction). Forbes himself is very wealthy, with a net worth in 1996 of $430 million.^[1] Although Forbes publishes the list of the 400 wealthiest men and women in the U.S., Forbes conspicuously exempts himself from such disclosure.^[15] In response to this criticism, Forbes promised in his 2000 campaign to exempt himself from the benefits of the flat tax, although he did support the repeal of the 16th Amendment in a debate with Alan Keyes the previous year.

In his 2000 campaign, Forbes professed his support for social conservatism along with his supply-side economics. Despite holding opposite positions in 1996, for the 2000 campaign, Forbes announced he was adamantly opposed to abortion and supported prayer in public schools. The previous year Forbes had issued a statement saying he would no longer donate money to Princeton University due to its hiring of philosopher Peter Singer, who views personhood as being limited to 'sentient' beings and therefore considers some disabled people and all infants to lack this status. Steve Forbes was one of the signers of the Statement of Principles of Project for the New American Century (PNAC) on June 3, 1997.

Other political activities[link]

In 1996, Forbes campaigned on behalf of Ron Paul in the congressional election for Texas's 14th congressional district.^[16]

In December 2006, Forbes joined the board of directors of the advocacy organization FreedomWorks. He is also a member of the board of trustees of the Heritage Foundation, an influential Washington, D.C.-based public policy research institute.^[17] He is a frequent panelist on the television program Forbes on Fox, which also features members of the Forbes magazine staff, and is shown Saturday mornings on Fox News Channel at 11:00 am EST.

On March 28, 2007, Forbes joined Rudolph Giuliani's campaign for the 2008 presidential election, serving as a National Co-Chair and Senior Policy Advisor. Later in the 2008 presidential campaign, Forbes served as John McCain's Economic Adviser on Taxes, Energy and the Budget during McCain's bid for the 2008 Presidential election.^[18]

In December 2009, Forbes, in a nationwide mailer for the National Right To Work Committee, opposed union membership for police officers and firefighters, terming their representatives, "union czars," and requested that mailer recipients contact their congressional representatives with regard to HR 413.^{[citation needed]} In 2010 Forbes endorsed Peter Schiff.

In 2011, Forbes has endorsed Texas Governor Rick Perry for President in 2012.^[19]

Political endorsements for 2010[link]

This article or section may be slanted towards recent events. Please try to keep recent events in historical perspective. (June 2011)

On January 7, 2010 Forbes announced his endorsement of Rand Paul, Republican candidate for the U.S. Senate in the Commonwealth of Kentucky.^[20]

On January 28, 2010 he formally endorsed Marco Rubio, Republican candidate for the U.S. Senate in the State of Florida.^[21]

He endorsed incumbent U.S. Senator John McCain, Republican of the State of Arizona for re-election in 2010.^[22]

On July 28, 2010, he formally endorsed Peter Schiff, Republican candidate for the U.S. Senate in the State of Connecticut.^[23]

On August 13, 2010, he announced his endorsement of Jim Huffman, Republican candidate for the U.S. Senate in the State of Oregon.^[24]

On August 26, 2010, Forbes formally endorsed Mariannette Miller-Meeks, Republican candidate for the U.S. House of Representatives in the 2nd Congressional District of Iowa ^[25]

On September 2, 2010, Forbes formally endorsed State Representative Justin Amash, Republican candidate for the U.S. House of Representatives in Michigan's 3rd congressional district.^[26]

On October 12, 2010, Forbes formally endorsed Bill Hudak, Republican candidate for the U.S. House of Representatives in Massachusetts's 6th congressional district.^[27]

On December 29, 2011 Forbes endorsed Rick Perry on the Sean Hannity Show.

Political donations[link]

Forbes was listed by Campaignmoney.org as the 11th most important contributor of political funds in the United States, for donations from 1999 to 2011, with 15 donations totaling over $7 million. The bulk of these monies was directed towards his own presidential campaign in 2000.^[28]

References[link]

External links[link]

Wikimedia Commons has media related to: Steve Forbes

• Steve Forbes at Forbes
• Issue positions and quotes at On the Issues
• Steve Forbes for President 1996 Campaign Brochure
• Forbes throws weight behind Giuliani
• RightWeb profile of Steve Forbes
• SourceWatch profile of Steve Forbes
• Profile: Steve Forbes, Center for Cooperative Research.
• "Capitalist Tool II: Defending Dynamism", interview with Reason by Virginia Postrel and Charles Oliver
• "Confront Iran to bring oil prices down" April 2006 from $70+ to $15 per barrel
• Kurt Schemers of Traders Nation Interview of Steve Forbes
• An Interview with Steve Forbes at Free Market Mojo