No, its flat. A flat tax is not progressive. The point of a progressive tax system is that the marginal impact is greater at higher income levels.
> Increased income has no tax disincentives (your tax rate doesn't change because you move into a higher income.)
In a progressive income tax system where the top marginal rate is <100%, there is always a positive incentive to higher income (well, so long as the marginal utility of additional income is non-zero; there's considerable evidence that for most people, there is some level where this assumption doesn't hold, but that isn't a tax disincentive, and tax rates don't really have any effect on it, since they are a multiplicative rather than additive effect on utility, they never take a nonzero utility to zero.)
> Simplifies that tax code dramatically (which would also increase revenue.)
Only if the flat rate is set very high compared to the existing rates paid by most of the population.
> 4) Doesn't artificially encourage capital gains manipulation by large income holders.
If this includes taxing capital gains as income, then this is true, though many flat tax proposals I've seen haven't taken that step. I'd agree that that choice is desirable independently any other changes (and it really has nothing to do with flat vs. progressive taxes or basic income.)
> 5) Removes government manipulation of social policy by giving them ONLY two number to play with... MBI and tax rate!
To do this, government has to alter the definition of taxable income (as well as many other things.) This does not eliminate their ability to make similar decisions in the future, so it doesn't remove any levers. (And, of course, government intervenes in social policy through things other than direct benefit programs and tax policy, so even fixing those wouldn't have the effect described here.)
Generally, I find "autopilot" arguments of the form "once we get government to decide X, government won't be able to decide other things incompatible with X in the future" to be ludicrous.
> 6) Finally, it provides a real mechanism for everybody to feel the effects of tax rate changes.
I'm not sure this makes any sense. Everybody feels the effect of rate changes now, but the utility effect of rate changes is different depending on circumstances. In a flat tax system with MBI, the same thing is true.
> ALL of these effects without negatively affecting market freedom.
> No, its flat. A flat tax is not progressive. The point of a progressive tax system is that the marginal impact is greater at higher income levels.
Marginal impact is greater. Using the numbers I listed above your marginal tax rate at a income of $10k/year is NEGATIVE 100%, at an income of $100k/year it would be 0%, at $500k/year it would be 8%, at $1m/year it would be 9%... asymptotic increasing towards 10%.
> ...there is always a positive incentive to higher income
Sorry, you are correct. I should have said there is increased income doesn't increase disincentives.
> Only if the flat rate is set very high compared to the existing rates paid by most of the population.
The point wasn't being made on total net revenue but on cost per dollar collected due to compliance enforcement and bureaucratic overhead. Regardless the flat tax rate CAN be set very high as long as there is a corresponding offset in the MBI. Ultimately the ACTUAL rate people pay could be similar to the amount they currently pay but normalized over the population as a whole.
> If this includes taxing capital gains as income
> To do this, government has to alter the definition of taxable income
Which is why I specifically mentioned ALL income.
> This does not eliminate their ability to make similar decisions in the future
This is very true, and probably the strongest argument you made in your post. Hopefully such exemptions would "stand out" with such a simplified tax structure but any government that exists will continually work to expand it's power at the expense of the governed.
> Everybody feels the effect of rate changes now
Everybody does NOT feel the effects of a rate change as often lower tax rates are unmodified while higher tax rates are adjusted.
> Define "market freedom".
Sorry, "market freedom" is both to general and arguable incorrectly used in this case. I should have said it equalizes market manipulation by the government.
> Marginal impact is greater. Using the numbers I listed above your marginal tax rate at a income of $10k/year is NEGATIVE 100%
You seem to be trying to count the MBI both as tax-basis income and as negative tax when computing marginal rates. This is obviously improper, because you wouldn't consider positive taxes as part of the tax-basis income.
If you consider your MBI as negative tax and not income, then at $0 income (excluding, for the moment, negative pre-MBI income, which may or may not be possible, depending on how you define "income"), the total tax rate is negative infinity, but marginal tax rate is +10%, and at $100K the marginal rate is +10%, and at 500K the marginal rate it is +10%, and at $1 Trillion the marginal rate is +10%. Its perfectly flat.
If you consider it as tax-basis income but not negative tax, then there is no income below 10K, and from 10K on the marginal rate is still a flat 10%.
You can't count the inverse of the amount paid in tax as part of the taxed income to compute marginal rates.
No, its flat. A flat tax is not progressive. The point of a progressive tax system is that the marginal impact is greater at higher income levels.
> Increased income has no tax disincentives (your tax rate doesn't change because you move into a higher income.)
In a progressive income tax system where the top marginal rate is <100%, there is always a positive incentive to higher income (well, so long as the marginal utility of additional income is non-zero; there's considerable evidence that for most people, there is some level where this assumption doesn't hold, but that isn't a tax disincentive, and tax rates don't really have any effect on it, since they are a multiplicative rather than additive effect on utility, they never take a nonzero utility to zero.)
> Simplifies that tax code dramatically (which would also increase revenue.)
Only if the flat rate is set very high compared to the existing rates paid by most of the population.
> 4) Doesn't artificially encourage capital gains manipulation by large income holders.
If this includes taxing capital gains as income, then this is true, though many flat tax proposals I've seen haven't taken that step. I'd agree that that choice is desirable independently any other changes (and it really has nothing to do with flat vs. progressive taxes or basic income.)
> 5) Removes government manipulation of social policy by giving them ONLY two number to play with... MBI and tax rate!
To do this, government has to alter the definition of taxable income (as well as many other things.) This does not eliminate their ability to make similar decisions in the future, so it doesn't remove any levers. (And, of course, government intervenes in social policy through things other than direct benefit programs and tax policy, so even fixing those wouldn't have the effect described here.)
Generally, I find "autopilot" arguments of the form "once we get government to decide X, government won't be able to decide other things incompatible with X in the future" to be ludicrous.
> 6) Finally, it provides a real mechanism for everybody to feel the effects of tax rate changes.
I'm not sure this makes any sense. Everybody feels the effect of rate changes now, but the utility effect of rate changes is different depending on circumstances. In a flat tax system with MBI, the same thing is true.
> ALL of these effects without negatively affecting market freedom.
Define "market freedom".