Economic Analysis of Social Issues 1st Edition by Alan Grant

Exercise 5

The U.S. tax code constitutes about 60,000 pages of exemptions, deductions, and loopholes. Conservative estimates place the cost of complying with the tax code (hiring accountants, for example) at well over $ 150 billion. As a result, several politicians have proposed replacing the current tax code with a simple 17% flat tax applicable to everybody, with no deductions allowed. Discuss some of the pros and cons of this proposal.