On one side, we have Bernie Sanders, Hillary Clinton, Marco Rubio, and Donald Trump proposing redistribution of wealth through progressive tax plans. On the other side, we have Ted Cruz, Rand Paul, and Ben Carson proposing a flat tax plan. Which direction is better for America?
Let’s take out of the equation which would be better for the individual. All of the plans have safeguards to prevent an unfair tax burden on the poor. Cruz’s plan, for example, has the lowest incomes paying literally zero taxes, so even though he has a flat tax plan it doesn’t kick in until people reach a certain income threshold. Rather than addressing the individuals, let’s explore which is better for the country.
One of the contentions by Sanders and Trump is that a progressive tax plan allows for more revenues to be brought into the coffers in Washington DC because it would take from the middle- and upper-class earners and redistribute it to the poor. On the surface, this seems like a novel idea. The problem is that it doesn’t work. It has never worked properly. In a perfect world, it might work, but what ends up happening is redistributing takes away from key private sector components such as more meaningful employment, charitable giving, and economy-driving expenditures by those who make more. The poor have been shown to conspicuously receive less overall with a Trump/Sanders progressive tax plan.
On the other hand, a flat tax enables more money to flow in based upon increased personal incomes without making it cost-prohibitive to succeed. One has to dig below the very carnal surface of psychology and ambition to see how the math plays out much better for everyone in the long run when everyone’s money is protected. Encouraging small- and medium-sized business growth is essential for everyone from the poor to the rich in order to make America work better from a fiscal perspective.
Perhaps the easiest way to understand this is to watch this short video by Prager University.