Ironing out the Flat Tax

One of the major claims of the promoters of the Flat Tax is that it would be simple to administer. Yet to date, no details of the design have been offered, which makes evaluation of the administrative costs difficult. This paper attempts to fill in the gap by considering the design issues presented by the Flat Tax. A wide variety of issues are considered, including the Flat Tax taxation of financial transactions, business formations and reorganizations, small businesses, accounting methods, and international transactions. The major finding of this paper is that there would be significant administrative difficulties in implementing the regime. Even with significant administrative difficulties, however, the regime would most likely be simpler than current law in many respects.