Flat tax

The idea of a flat tax to replace income tax is once more in the news. The proposal is an 18% flat tax on all purchases with a $35,000 personal exemption for a family of four. Right now, a family of four with and income of $75,000 pays zero income tax. Subtract $35,000 and 18% of the remaining $40,000 would be $7,200 in taxes. Now compare that to family earning $1 million. Under current law they would pay $261,000 in federal income tax plus state income tax. Using the flat tax this family would pay $180,000 assuming they spent the entire one million. The higher the income goes the greater the disparity between the rich and the non-rich. This plan is not likely to garner enough support to become law.