>>Isn't a graduated flat tax a contradiction in terms?
>
>I don't think it is. If you make under 20,000 per year, you pay 10%, if you make over 500,000 per year, you pay 30%, no deductions, no trusts, no nothing. You earn, you pay.
>
>>And what is there about a flat tax that would eliminate loopholes and what is there about a graduated tax that encourages them?
>
>Nothing but the flat tax. No deductions, no nothing.
Apparently I mis-understood your definition of flat. To me it means the rate is flat - there is one rate at all income levels. Draw a graph and the line is flat
30% |
20% | X X X X X..........etc
10% |
0% |
_______________________________________________________________
10K 20K 30K 40K 50K...........
If the rate changes based upon income level that's a graduated tax rate.
It seems to me that what call a graduated flat tax actually advocates the removal of ALL loopholes and deductions. I don't have strong objections to that since I'm not sure that social engineering via the tax code has been a success - with the exception of the deduction for mortgage interest. (and I think there are counter-arguements to this one also)
But I strongly believe that the same forces which got all those loopholes/deductions into the tax code in the first place will ensure that large numbers of them remain, especially when calculating business income.