The Flat Tax

First proposed 25 years ago, the flat tax has proven most influential in the unlikeliest of places: state capitals— and the capitals of other nations. On December 10, 1981, Robert Hall and Alvin Rabushka first published on the editorial page of the Wall Street Journal their proposal to replace the federal income tax with a low, simple, flat tax. The flat tax picked up considerable steam in the United States during the next few years, culminating in President Reagan’s Tax Reform Act of 1986. Two rates of 15 and 28 percent replaced multiple tax brackets with a top rate of 50 percent. From that point, the flat tax lost momentum. In 1990, in exchange for spending cuts that failed to materialize, President George H.W. Bush signed the Omnibus Budget Reconciliation Act that included a 31 percent rate on “the rich.”

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