>>This is exactly why I believe in the idea of a flat tax based on gross income. Your income is higher, you pay more tax. No loopholes to find, no shelters to hide under.
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>The problem with a flat tax is that even if rich and poor pay the same percentage, the impact on the poor is much, much higher.
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>Pick an arbitrary number. I've heard 10% kicked around a fair amount.
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>So, consider three families of four. One earns $40,000 a year (I think that's actually above the federal poverty limit, but I sure wouldn't want to live on 40K), one earns $120,000 a year, and third earns $1,500,000 a year.
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>Family 1 pays $4,000 of taxes, leaving them $36,000 to live on.
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>Family 2 pays $12,000 of taxes, leaving them $108,000 to live on.
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>Family 3 pays $150,000 of taxes, leaving them $1,350,000 to live on.
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>Surely you can see that for family 1, the impact of the taxes in terms of their ability to survive is much, much larger than for the other two families.
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>Tamar

Most proposals I've seen, including several implementations in Eastern Europe, only apply the flat tax to income above a certain level. This reduces the impact on the poor while simplifying the system for the rest.