Yeah... My liberal economics professor tried to shove this regressive tax math down my throat as well. But it's really a matter of timeframe. For example, suppose we have the following scenarios:
$10,000 wage earner
$1000 boat @ 10% tax = $100 --> 1.0% tax with respect to total income
$1000 car @ 10% tax = $100 --> 1.0% tax with respect to total income
$100,000 wage earner
$1000 boat @ 10% tax = $100 --> .1% tax with respect to total income
$1000 car @ 10% tax = $100 --> .1% tax with respect to total income
$1000 chair @ 10% tax = $100 --> .1% tax with respect to total income
$1000 bubble gum @ 10% tax = $100 --> .1% tax with respect to total income
$1000 TV @ 10% tax = $100 --> .1% tax with respect to total income
$1000 Tree @ 10% tax = $100 --> .1% tax with respect to total income
$1000 Gun @ 10% tax = $100 --> .1% tax with respect to total income
$1000 Binoculars @ 10% tax = $100 --> .1% tax with respect to total income
$1000 Jeans @ 10% tax = $100 --> .1% tax with respect to total income
$1000 Shirt @ 10% tax = $100 --> .1% tax with respect to total income
$1000 Dress @ 10% tax = $100 --> .1% tax with respect to total income
...
$1000 Designer Dog @ 10% tax = $100 --> .1% tax with respect to total income
-- You get the idea
In each individual case, you can divide the tax paid into the income and calculate the instantaneous tax rate. Now, if we look at it for the entire wage earning period...
$10,000 wage earner
$2000 expenses @10% tax = $200 --> 2.0% tax with respect to the total income
$100,000 wage earner
$20,000 expenses @ 10% tax = $2000 --> 2.0% tax with respect to the total income
So the next typical arguement is... A $1,000,000 wage earner won't spend as much, so it's regressive. Again, it depends on the time frame used. Expand the time frame to the wage earner's lifetime. In most cases, most if not all of the money is eventually utilized for purchases.
Realistically, the 'Flat' tax and a 'Fair' tax accomplish the same thing -- everyone is taxed at the same rate. It's a matter of the timeframe as to when the tax is collected.
Economically speaking, they are both consumption taxes. But the differences are plenty. The flat tax retains withholding, which I see as evil and a tool for growth of government.
The other pernicious detail of the flat tax is that it taxes business - which is actually a hidden tax on individual consumers, individual workers, or individual investors.
ie it's just another way for the gov't to hide the true cost of government.
jmho
I agree but there is a HUGE reason to choose the NRST over the flat income tax in this, the most free country on earth. With the flat income tax you still have the gestapo...err...I mean the IRS and with the NRST you don't.
You're quite correct and there are several scholarly studies that show this.