An Empirical Analysis of Equity and Efficiency Attributes of Degressive Forms of a Flat Tax.

The equity and efficiency attributes of degressive flat tax systems are examined and compared with those of the true flat and the pre-1987 tax system. The 1984 National Tax Model was used to empirically estimate the true and two degressive flat tax regimes, and to simulate the Hall-Rabushka degressive system. Among the alternative tax systems, progressiveness and efficiency varied inversely, A degressive model estimated using regression was significantly more progressive than the other alternatives and the 1984 extant system. The tatter regime was associated with the greatest wage efficiency cost. A switch to a degressive system would be associated with a shift in tax burden from lower to upper and especially middle income families.