The flat tax, file-on-a-postcard system proposed by 2016 presidential candidate Ted Cruz was mocked by the establishment because it seemed tha politicians on both sides have a vested interest in a complex tax code — it is the means by which politicians derive their power. See Milton Freidman on the subject:
Milton Friedman used to say that a flat tax of 15% would be enough to replace the entire scheme of income tax. There is also one major boon: lots of capital is spent on taxes, from accountants to lawyers to gubernamental organizations, etc etc.
An effective 15% rate without exemptions would fly very well with the right (simple flat taxes) an the left (no exemptions) but as MF said, the political stances on this topic dont trust each other and they are both right: even if we moved to such a system, the right would still advocate for exemptions and the left for increases in taxation.
Its a noticeable deadlock.
I also want to mention that flat taxes are not regressive by definition. The progressiveness or regressiveness in that case requires to see where the taxes are spent.
Secondly, I'm not a big fan of how you (and quite a few economists) conflate personal and corporate income taxes. It really muddies the water as even questions like "what even is income" is different between the two.
Additionally, flat tax doesn't go well with the left. On the corporate end, exemptions in a lot of ways are the carrot to the sticks of fines and penalties that we use to regulate business (encouraging positive behavior). On the personal end, you greatly increase the tax burden on those least able to bear it, with an increase in benefits being totally orthogonal (most flat tax proposals intend to be revenue neutral). Someone making $25k nearly doubles their tax burden with a 15% flat tax.
It was an example of how nominal tax rate is not the same as effective tax rate. For example, mortgage interest deductions are a regressive benefit which lowers the effective tax rate. Unfortunatenly, we cannot make good date on what the effective tax rate is because it is protected information.
> On the personal end, you greatly increase the tax burden on those least able to bear it, with an increase in benefits being totally orthogonal (most flat tax proposals intend to be revenue neutral)
That depends on what you cut. And thats why i say that you need to look at the revenue and the expenditures to know if taxes are regressive or not.
For example, Federal income tax is nominally progressive, but california has plenty of regressive taxes: sales taxes and property taxes that favor older tenants. In general state and city taxes are regressive, because those are the easiest to levy.
You're literally arguing against the accepted definition of a term.
Personally, I'm fine with taxes having progressive rates but not the countless deductions.
Let's say today I make $24,900/yr. That puts me at the edge of the 20th percentile for 2017. The average effective tax rate for people of my income was -4.7% (or a tax of -$1170)[0]. You're suggesting increasing my taxes to 15%, taking $4905 out of my pocket as compared to today. Now, since I make next to nothing, pretty much everything I make is going to rent, food, and just generally getting by, and I have nearly $5k less real money (or ~20% of my income!!!) in my bank account to make that happen.
[0] - http://www.taxpolicycenter.org/model-estimates/baseline-aver...
Its a tautological affirmation on progressive taxes being progressive. A flat tax would make a $24,900 pay $3,735, and if you made $249,000 you would pay $3735, your taxes increase just as proportional to your income. Its just..flat.
With a flat tax:
* On the high end you're taking from ability to have luxuries.
* On the low end you're taking from the ability to pay rent and put enough food on your table for your children.
The utilitarian argument is for me one of the most practical and also one of the most scary. Are you ready to exploit the poor if it were proven that it was economically profitable to do so? I digress. My point is that seeing flat taxes as regressive is either false or inconclusive, regardless of the desire of being flat, regressive or progressive in taxation.
Thats why you can have a flat tax, and a progressive government by spending for the poorer and levying flat. In fact, a flat tax is probably progressive simply because the rich dont use a multitude of public services the average poor does, like schooling, or healthcare or whatever.
The commonly accepted denotation:
> (of a tax) taking a proportionally greater amount from those on lower incomes
Has absolutely nothing to do with spending, but on how much proportionally you are taking.
You can have super progressive taxation and a wealth distribution from the poor to the rich, and a super regressive taxation that distributes from the rich to the poor.
With the reporting changes of a few years back, for any stocks acquired after the changes took effect, they also already have all the information needed for the stocks as well. All that is missing is the type of sale you wished to make (FIFO, LIFO, average cost, etc.) when you sell the stock if you don't sell all of it off at once.