For years many people have been clamoring for a flat tax rate which would make a fairer tax system, but what is flat tax? According to CNN a flat tax is only one tax rate, considering that today's system has a series of rates, a flat tax would include an exemption based on family size similar to today's standard deduction that everyone can take. With a flat tax system, that exemption would be the only tax break anyone would get. Today's tax code has a complicated amount of tax credits, deductions and exemptions. Recently some Republican presidential candidates are proposing to replace the nation’s income tax with a flat tax. Republican presidential candidates Herman Cain, Rick Perry, and Newt Gingrich all have their own proposal for a flat tax. Their plans differ from one another in several ways such as how high they set the rate; how big they make the exemption, how many other tax breaks they allow and whether they eliminate the payroll tax and the estate tax. Some People say changing the tax rate to a flat tax only make matters worse.
According to the Washington Post Republican presidential candidate Herman Cain flat tax plan which he calls his "9-9-9" plan, is a 9 percent income tax, a 9 percent business transactions tax and a 9 percent federal sales tax. Herman Cain’s 9-9-9 plan resonated with voters which helped him catapult the top spot. The problem with Herman Cain’s 9-9-9 plan is it would increase inequality by reducing rates on rich households, while increasing them on low and middle income households. All, however, would probably lead to less revenue for the US government, analysts say, meaning spending cuts of a sizable degree would be in order.
Herman Cain’s plan would exempt people whose income falls below the poverty line from paying taxes.
The Tax Policy Center calculated taxes under Herman Cain’s plan and they added up all three taxes totaling the equivalent of a 25.38% national sales tax. Using that calculation, taxes for the rich would drop considerably. The Tax Policy Center projects in 2013, 95% of people making $1 million or more would get a tax cut that averaged $487,300. At least 70% of people who fall under the middle income category would see their average federal taxes rise by $4,326. Under Herman Cain’s plan 84% of people would pay more taxes. As of December 3, 2011 Republican presidential candidate Herman Cain dropped out of the race. According to the LA times the reason Herman Cain dropped out of the race because he had been embroiled with allegations of having an affair with a woman for over a decade and sexual harassing women. Now because of this we may never know if Herman Cain’s plan would have worked.
According to the Huffington Post republican presidential candidate Rick Perry seeking to regain the momentum he lost in late August, unveiled his own flat tax plan. In Rick Perry’s plan which he calls "Cut, Balance and Grow" plan Perry would let Americans choose between a 20% flat tax and the current system....