Fair Not Flat: How to Make the Tax System Better and Simpler

By Edward J. McCaffery | Go to book overview

FIVE
Progressivity Can Live

It is this idea of Robin Hood, or taking from the rich to give to
the poor, that has caused the most pain for the poor and the
middle class. The reason the middle class is so heavily taxed
is because of the Robin Hood ideal. The real reality is that the
rich are not taxed. It's the middle class who pays for the poor,
especially the educated upper-income middle class.

—Kiyosaki, Rich Dad, Poor Dad

UNLIKE THE COMMON FLAT-TAX PLANS THAT WOULD raise taxes for the middle class in order to lower them for the rich, the Fair Not Flat Tax affirms America's historic commitment to a moderately progressive rate structure. Before I defend more fully the “Not Flat” part of the Fair Not Flat Tax, it helps to get some basic facts and vocabulary straight.


THE TERMINOLOGY OF TAX RATES

People often get confused about tax rates. This is easy enough to do with a complex tax like the income tax. Because this tax relies on varying rate brackets, it involves two distinct kinds of rates. One, a marginal rate, is the rate a taxpayer pays on her next dollar of income: if she is in the 33 percent tax bracket, she pays thirty-three cents in tax on the next dollar she makes. Two, the average, or effective, tax rate comes from dividing the taxpayer's total tax by her total income (or consumption or wages or whatever the tax base is.)

-78-

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Fair Not Flat: How to Make the Tax System Better and Simpler
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Tables and Figures ix
  • Acknowledgments xi
  • Introduction - Time for a Change 1
  • One - Tax Basics 9
  • Two - The Trouble with the Income Tax 27
  • Three - The Case for a Spending Tax 45
  • Four - Death to Death Taxes 62
  • Five - Progressivity Can Live 78
  • Six - The Fair Not Flat Tax 97
  • Conclusion - Toward Glass Teamwork, Not Glass Conflict 112
  • Questions and Comments on the Fair Not Flat Tax 117
  • Glossary of Key Terms 161
  • Further Reading 167
  • Index 171
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