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FLAT TAX, ONE SLICE AT A TIME

June 17, 2003

The Washington Post has noticed how far down the road the Administration has moved the tax system towards a "flat tax" or "consumption tax - a trend we discussed back in February. The tax changes passed since January 2001 have reduced the rate of taxation of investments; classic "flat" taxes eliminate such taxes entirely.

This tax reform in small pieces enables the passage of popular tax breaks without a discussion of the "fairness" of a flat tax, a trend that strikes some as unhealthy. (Via A Taxing Blog)

The article discusses an apparent debate within the Administration over the direction of tax policy in the next year. One group wants to continue this trend, perhaps by pushing the simplification and expansion of retirement savings incentives proposed earlier this year. Others are reluctant to revisit the tax law, fearing a backlash if the changes go too far.

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