Tuesday, April 10, 2012

U.S. Public Opinion on the Flat Tax

In April 2012, the American Enterprise Institute released its updated list of public opinion polls and responses on taxes, compiled by Karlyn Bowman and Andrew Rugg, spanning 1937 to today.  All survey questions and results on the flat tax appear on pages 38-45.

Forty-four questions asked if one or another form of a flat tax was a good or bad idea; thirteen how it would affect different economic classes (the respondent’s opinion, not based on any statistical analysis, and therefore largely excluded from this post); and four if it would be simpler or fairer.

The largest batch of 44 questions on whether the flat tax is a good or bad idea fell into several categories.  The results that appear below represent a majority of those polled in each of the surveys that included the specific question, or a clear plurality when including “don’t know” replies.

1.  Do you have a favorable or unfavorable impression of a simple flat tax with little or no deductions.  Results: 10 favorable, 4 unfavorable, 3 about even.

2.  Favorable or unfavorable if all or some current deductions eliminated?  Results: 4 favorable, 6 unfavorable.

3.  Favorable or unfavorable with preferential low rate for capital gains?  Results: 1 unfavorable.

4.  Favor or oppose Herman Cain and Jerry Brown’s specific flat tax proposals?  Results: 3 oppose.

5.  Prefer graduated to flat tax or flat to graduated tax?  Results:  8 prefer graduated tax, 5 prefer flat tax, 1 even.

6.  Simpler (1 yes); fairer (1 flat tax, 1 graduated tax, 1 even).

The surveys were taken between 1992, when Jerry Brown sought the Democrat Party nomination for president, through 2011.  Many were taken during Steve Forbes campaign for the Republican Party nomination during 1995-96 in which a flat tax was his chief economic proposal.

To summarize, a majority of surveys show that the American people favor a broad-based, low-rate, simple flat tax.  However, the public is opposed to preferential treatment for capital gains, and, by a small margin, want to retain popular deductions, despite a majority favoring a flat tax without deductions.  To further muddy the water, more surveys revealed support for a graduated over a flat tax.  In those surveys asking respondents to opine on how different economic classes would benefit from a flat tax, most stated that the wealthy would receive the largest benefit.

Barring a major surprise, Governor Mitt Romney will be the Republican nominee.  This means that the flat tax will not be an issue in the 2012 presidential election.

Tuesday, March 20, 2012

A Flat Tax on Personal Income is Under Consideration in Thailand

The Bangkok Post edition of March 20, 2012, reported that Thailand is reviewing the pros and cons of a flat-rate tax on personal income as a possible replacement for the current four-bracket system of 10%, 20%, 30%, and 37%.  The goal is to eliminate loopholes, broaden the tax base, simplify the system, and in so doing collect more revenue than the current personal income tax.

Wednesday, January 18, 2012

Book Citations: Flat Tax vs. Progressive Tax

Google's ngram viewer allows a comparison of the frequency among two or words or phrases between selected years.

The following graph plots the frequency of "flat tax" vs. "progressive tax" during 1960-2008. (Click on link) It shows that "flat tax" took off around 1980 with the publication of the Hall-Rabushka plan that was the basis for many of the flat-tax bills proposed in Congress during 1982-86.  It faded somewhat after passage of the Tax Reform Act of 1986, which resulted in two rates of 15% and 28%.

The frequency of the words "flat tax" accelerated again in the early 1990s with proposals from House Majority Leader Dick Armey and Republican presidential candidate Steve Forbes.  The early 1990s also witnessed first wave of flat-tax legislation in the Baltic states of Estonia, Latvia, and Lithuania.

Its frequency in books declined again after 1998, but remains comfortably ahead of "progressive tax" through 2008, the latest year for which Google books data has been compiled.

Saturday, December 31, 2011

Flat Tax Roundup 2011

No major flat tax developments transpired in 2011, either in new countries getting on the bandwagon or existing flat-tax countries falling off.

Vietnam has joined the list of countries-- Malta (15%), Andorra (10%), Malaysia (15%)--that tax non-residents at a flat rate, set at 20%, while residents pay graduated rates up to 35%.

The big news is the revival of the flat tax in the campaign for the Republican presidential nomination.  Herman Cain (since withdrawn), Rick Perry, and Newt Gingrich have explicitly proposed a flat tax.  If either Perry or Gingrich win the nomination, the flat tax will be a major issue throughout the campaign.  Although Jon Huntsman signed a flat tax into law in Utah, he proposes three federal income tax rates.  Mitt Romney plans to lower rates in the future, but is not proposing an immediate major reform.  Michele Bachmann, Rick Santorum, and Ron Paul support reform and lower rates, but none of these seem likely to secure the nomination.

Thursday, November 17, 2011

Malta Extends its Preferential 15% Flat Tax

To enhance Malta’s attractiveness for skilled persons engaged in certain high-tech economic fields, the government, in its 2012 budget, has extended its preferential 15% flat tax to international professionals developing digital games.  Maltese companies that commission digital games will qualify for a tax credit of about $20,000.

The government will also exempt royalties from copyright-protected books, film scripts, music, and art.

Monday, October 24, 2011

Return With Us to Those Exciting Days of Yesteryear

The Flat Tax Rides Again--Perry, Huntsman, Gingrich (optional), Cain, and Bachman.

Et tu Romney?