![]() ![]() First, broad economic issues relate to economic effects of the flat tax on the entire economy: equity, efficiency, international trade, price level, interest rates, and revenue. The analysis of the flat tax proposal is covered by the following four topics that sometimes overlap: broad economic issues, narrow sectoral economic issues, simplicity, and international comparisons. The business tax would be a modified subtraction- method VAT with wages (and salaries) and pension contributions subtracted from the VAT base, in contrast to the usual VAT practice. Part or all of an individual’s wage and pension income would be tax-free depending on marital status and number of dependents. The individual wage tax would be imposed on wages (and salaries) and pension receipts. The combined individual and business taxes proposed by H-R can be viewed as a modified value- added tax (VAT). A consumption base is neither inherently superior nor inherently inferior to an income base. Although the current tax structure is referred to as an income tax, it actually contains elements of both an income and a consumption-based tax. income tax system with a consumption tax. This report discusses the idea of replacing the U.S. 1081) would replace individual and corporate income taxes and estate and gift taxes with a flat tax based on the Hall-Rabushka concept. 1040) and Senator Arlen Specter’s proposal (S. ![]() 1040) would allow taxpayers to select a flat tax (based on the concepts of Hall-Rabushka) as an alternative to the current income tax system. In the 110 Congress, Representative Michael Burgess’s proposal (H.R. Hall and Alvin Rabushka (H-R), two senior fellows at the Hoover th Institution. The term “flat tax” is often associated with a proposal formulated by Robert E. income tax system with a flat rate consumption tax is receiving congressional attention. The concept of replacing the current U.S. Flat Tax: An Overview of the Hall-Rabushka Proposal Flat Tax: An Overview of the Hall-Rabushka Proposal Pr ep ar ed f o r M e m b ers an d Com m i t t ees of C ong r e ss ![]()
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