At the end of the year, these were the family’s incomes. Harry did the opposite he decided to save money every month and invest it into stocks and bonds. Bob and Darrel spent all of their money and didn’t save for retirement as they paid into social security. The first brother Bob chose to work 20 hours a week and his wife decided not to work, the second brother Darrel worked 40 hours and his wife worked part-time, and the third brother Harry worked 60 hours a week and his wife worked full time. Each one had the same job that paid them $25 an hour. Let’s say there are three brothers, they all have the same IQ, same education, and the same opportunities yet they made different choices. To explain the unfairness of the progressive income tax here’s a story.

However, the assumption in this argument is that if you make more money it is not because you worked harder or made better choices it is because you have somehow exploited the system or your workers through voluntary transactions. Many proponents of the progressive tax system say that it’s fairer as the more money you have the more you should pay.

Eliminating this with a flat tax and cutting deductions and complicated loopholes would allow for faster fillings, a better understanding for taxpayers and could lead to the defunding and or elimination of the Internal Revenue Agency’s (IRS) 11.8 billion-dollar budget. The tax code is littered with complicated rules, loopholes and deductions that slow many taxpayers down and only really benefit the rich who can hire expensive lawyers to understand the jumble. Since the signing of the Tax Cuts and Jobs Act (TCJA), Forbes found that the U.S tax code has become over 75,000 pages long. Tax day is a date that many dread as the U.S tax code is a heavily complicated document and the average American will take 13 hours to complete and file their returns.

The main drawbacks of the progressive system are the high cost of compliance and a disincentive for those who want to make more money. Alternatively, in a system with a flat tax, everyone pays the same percentage of their income in taxes (which is normally lower). In a progressive income tax system rates climb as you make more money. America and other countries like Canada have a progressive income tax. Since the release of President Trump’s alleged tax returns where the New York Times claimed he paid $750 in federal income tax there has been a lot of talk about how the rich get around paying taxes with legal deductions.

Flat tax example