An Axiomatic Case for the Flat Tax

by André Casajus[*] and Andreas Hoffmann

Estonia was the first European country to introduce a flat tax on income in 1994. Many others followed. For example, Hungary successfully introduced a flat tax in 2012. In the U.S., some of the States (e.g. Pennsylvania) have introduced a flat tax on income. As in Germany, however, the federal income tax in the U.S. is still progressive. We believe the case for the flat tax is strong. Presenting an axiomatic justification for the flat tax as a redistribution rule, this post suggests that you need to accept only a few basic properties to favor a flat tax for income redistribution.

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Fiscal Cliff: Sense and Nonsense

by Mario Rizzo

The above table is from the November 8th issue of the Wall Street Journal. The figures for the fiscal cliff consequences are usefully stated for next year and not for the next nine years as those who want to suggest that the numbers are truly impressive (or want to scare children) typically use.

Consider the following facts or likely scenarios: Continue reading