November 19, 2012
We Already Have a Flat Tax
Pretty interesting summation from Professor Mankiw. He looks at a CBO study which "looks at the effects of income taxes, payroll taxes, and SNAP (the program formerly known as Food Stamps). The bottom line is that the average household now faces an effective marginal tax rate of 30 percent." Soon to be 35%, sadly, but the most interesting bit was his close:
What struck me is how close these marginal tax rates are to the marginal tax rates at the top of the income distribution. This means that we could repeal all these taxes and transfer programs, replace them with a flat tax along with a universal lump-sum grant, and achieve approximately the same overall degree of progressivity.
This is the same as tax rates vs. tax as a % of GDP. For all the government meddling, these things have a stubborn consistency.
We might as well face up to it, like Mankiw says and simplify the code and -- LOLZ!! I just crack myself up sometimez...