The 15% Tax Rate

So if I have a flat tax that only affects incomes over a certain income level, and that income level is set high enough so that a reasonable person's food, shelter, and clothing needs are met, it's a lot harder to argue that the tax is unfairly regressive, especially when you consider the flat tax above a certain income level is actually the same progressive tax we have now but with a single rung on the ladder.

The flat tax proposals, being simple and loophole free, make it more difficult (and more financially burdensome) to game, whereas the current system seems to be designed to allow people to gain by paying accountants to find loopholes. The benefits of a simplified version of the current progressive tax we have seem self-evident.

The idea is to reduce or eliminate the incentive to cheat. Fairness really doesn't factor into it much, although it could be seen as a nice side benefit. End of argument.

Personally, I'd posit that the only truly fair tax is a fixed rate, like "everyone pays $2000 annually." Everyone is entitled to the same protection under the law, and therefore should owe the same amount. Laws which don't meet the criteria that they apply to all people equally should therefore be stricken.

The next closest "fair" thing to me is a retail sales tax, provided that everyone is provided a stipend to cover the tax paid on basic living expenses. That prevents the negative effects of the regressive nature of the tax.

They wouldn't pay the same amount. They would pay the same proportion of their income.

Why not just have a graduated tax system with a clean base? It's not the tax brackets that make it complicated, it's the byzantine process of calculating "taxable income."

The current tax system encourages speculative investment for capital gain and discourages investment for passive income due to lower tax rates on capital gain. Just look at the dismal amount of dividends paid out by companies in the US compared to Australia, where many companies pay out over 50% of their profits in dividends.

A person who earns a $10m a year but only spends $20,000 pays close to the same tax as a person who earns $10m and spends all $10m.

Both contributed lots to society to earn that $10m, but since the first person only spends $20,000 he only claims back a tiny amount from society resources due to him for his contribution. The second person claims back everything, equal in value to his contribution, resulting in no net gain to society. [correction: less net gain, because earning $10m would likely have provided several times that in benefits to society]

Replacing income taxes with only consumption taxes will further increase incentive for production, while discouraging unnecessary consumption. You'd get more people like the first person than the second person, and society will reap more of the rewards of more productive individuals, who use up less resources.

It'll be like society giving out pieces of paper that is put in a building called a bank in return for real goods and services, that are carefully allocated because no one wants to waste anything.

An example of a consumption tax is the VAT.