The flat tax and the negative tax

Article Abstract:

Economic analysis of recent flat tax proposals reveals that some of the claims of supporters as well as those of its critics may be unfounded. A flat tax would indeed reduce the incentive to engage in tax avoidance and evasion, but competing income and substitution effects may diminish the economic growth forecast by the tax's supply-side proponents. Because high-income people face a lower marginal rate, many critics assert that the tax burden would be shifted to low- and middle-income people. The elimination of tax preferences could mitigate this effect because deductions and other preferences disproportionately benefit high-income people.

United States, Economic aspects, Income distribution, Flat tax

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Taxing the middle class

Article Abstract:

Bill Clinton's Revenue Reconciliation Act of 1993 claims to tax only the rich and yet taxes the middle class through provisions labeled spending cuts such as the social security benefits now subject to tax. The amendment of IRC section 86(b) while not creating a higher tax bracket can force taxpayers into the next higher bracket by increasing their taxable income once social security income is no longer deductible. The changes allow 85% of the social security income above a pre-determined base to be taxed when previously nothing was taxable.

Social security, Social security beneficiaries

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A reconsideration of effective marginal tax rates after recent tax reform

Article Abstract:

One of the Revenue Reconciliation Tax Act of 1990's purposes was to remove the 'bubble' bracket which increased the marginal tax rate to 33% for certain middle class incomes but then reduced to 28% for higher income brackets. However, the reduction of certain itemized and personal deductions created a hidden 'bubble' bracket for the middle class, once again raising their taxes above the legislated marginal rate of 31%. Therefore, the effort to create tax fairness was not achieved by this tax reform law and still needs to be addressed.

Tax reform, Tax rates

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