Thursday, February 9, 2012

Flat Tax vs. Progressive Tax

Flat or progressive taxation--which is better?

Let's look at what an economist said about this issue in 1845.

To me his reasoning still makes sense, even though it's obviously not politically pleasing to the populists.

"Economist John Ramsay McCulloch writing in 1845:

Even if taxes on income were otherwise the most unexceptionable, the adoption of the principle of graduation would make them about the very worst that could be devised. The moment you abandon, in the framing of such taxes, the cardinal principle of exacting from all individuals the same proportion of their income or of their property, you are at sea without rudder or compass, and there is no amount of injustice and folly you may not commit."

To reiterate, this timeless advice is still valid today, even though we've apparently lost our way.

Too much politics results in not enough common sense economics and real world fairness.

That means bigger government and a smaller private sector, which results in smaller economic growth, higher unemployment and less general prosperity.

Thanks. Bob.

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