Flat Tax: A Tax Model for the Future. Theory and Practice

«Plea in Favour of a Lifetime-Oriented Income Tax System»

Speech by Manfred Rose (in German)

Economist and professor, University Heidelberg

The proposal by Hall and Rabushka (1995) to introduce a ‘flat tax’ attacks the traditional system of income taxation in two ways. The first provocation lies in the recommendation to apply only a proportional tax rate, which is of course completely incompatible with the traditional idea of a progression of marginal tax rates. At international level, however, there is a tendency towards flattening tax progression, which is reflected in the fact that in many countries the number of tax zones has been reduced and the top rate of the income tax scale lowered. It was a surprise for the discussion of tax reform in Germany that the rather conservatively orientated Scientific Advisory Council at the Federal Ministry of Finance recently proposed the introduction of a proportional rate of 28 per cent. The second attempt to destroy the traditional income tax system is planned by Hall and Rabushka with a redefinition of the assessment bases. I will discuss this in the third section of my article.

The full text of the speech is available as a PDF here:

Text of the Speech

«The Flat Tax»

Speech by Alvin Rabushka

American political scientist and Senior Fellow at the Hoover Institution, Stanford University

The subject of my talk is to explain a comprehensive tax reform plan—a flat tax’—that is designed to replace any country’s current corporate income tax (CIT) and its typically graduated, usually quite complicated personal income tax (PIT).? In brief, a flat tax is a tax system with only one rate that applies to all taxpayers, business firms and individuals alike, regardless of the source and amount of their incomes. A flat tax is known by such other names as a uniform tax, a single-rate tax, or a proportional tax. The flat tax contrasts with a system of graduated rates under which individual and corporate taxpayers pay increasingly higher rates of tax as their taxable income rises.’

The full text of the speech is available as a PDF here:

Text of the Speech