Would you support a flat income tax? What if it meant doing away with all deductions? In a column in the December 2011 issue of ColoradoBiz, economist Tucker Hart Adams makes this very suggestion.
While a flat tax could certainly be a welcome change, Adams’s suggestion of removing all deductions should be viewed with caution. Consider the deduction for home mortgage interest. This helps to drive an already weak business segment (homebuilding) and benefits a large number of American citizens. And when it comes to charitable giving, allowing individuals to reallocate wealth and use deductions to reduce their taxable income, is far more effective than relying on the government to do so.
In addition, Adams notes in her column that, “No one is worth tens of millions of dollars annually to any organization.” However, we must never eliminate opportunity for anyone’s potential to earn, no matter how inordinate the amount of income. As soon as we put limits on opportunity, we limit innovation and economic growth for everyone.
The article by Adams can be found at cobizmag.com