Advocates of the flat tax

Thursday, November 10, 2011
Alvin Rabushka is the David and Joan Traitel Senior Fellow at the Hoover Institu
Alvin Rabushka is the David and Joan Traitel Senior Fellow at the Hoover Institu

In an article in the Stanford Daily, Alvin Rabushka, the David and Joan Traitel Senior Fellow at the Hoover Institution, discusses his advice to Texas governor Rick Perry on Perry’s flat-rate tax plan. Rabushka also commented on Herman Cain’s 9-9-9 plan: “In effect what you’ve got is labor paying a 9 percent tax, labor again paying 9 percent on income above a poverty threshold, and then again paying 9 percent as consumers.” Click here to read the article.

All the leading GOP presidential candidates have embraced some form of a flat tax, a simplified tax code, or both. Milton Friedman first popularized the idea of a flat tax in his 1962 book Capitalism and Freedom: “The subsidy to the beneficiaries is independent of their poverty or wealth; the man of means receives it as much as the indigent. The tax which pays the subsidy is a flat-rate tax on earnings up to a maximum.” In the Hoover Archives are Milton Friedman’s papers, which discuss a negative income tax system that includes a flat tax. In The Flat Tax (second edition), Hoover fellows Robert E. Hall and Alvin Rabushka refined Friedman’s ideas in a tax reform plan that involves “tax[ing] all income, once only, at a uniform rate of 19 percent.” Thirty-seven countries have instituted some form of the flat tax.