One of my best students from last fall recently sent me the question in the title. Here’s my answer:
I’m no expert on different kinds of taxes, Shauneil. An expert I respect is Dan Mitchell of the Cato Institute. For a taste of his thinking I recommend this six-minute video, which he made in 2008 for the Center for Freedom and Prosperity. It’s on the flat tax and the “fair tax” (a sales tax to replace the income tax).
I assume you mean a simple flat tax that taxes all income at the same rate. (It would only kick in above a certain threshold in order to exempt really poor people.) That means no deductions for things like home mortgage interest, charitable donations and the like. It could be filled out on one sheet of paper.
In my judgment there are no disadvantages of a such flat rate tax, as compared to our present income tax. (I defer considering the many disadvantages of taxation as such, as compared to financing human endeavors by voluntary means.)
Two main advantages: 1) It would eliminate the horrific tangle of loopholes, deductions, and exclusions that distort economic incentives and thus reduce the efficiency with which we create goods and services for one another. 2) It would save a gigantic amount of human time and effort now wasted on just dealing with taxes.
Thinking as a moral philosopher rather than as an economist, I also find it unfair to seize increasing proportions of a person’s income as she contributes more to the well-being of others and thereby earns higher income.
One important caveat: Improvements in human prosperity vary inversely with the size and scope of government. How the government taxes us does matter, but how much it taxes us matters too. For any given income, better a progressive income tax seizing less than a flat tax seizing more.