TITLE: THE WRONG WAY TO SELL A NEW IDEA Many people would like you to believe that flat tax is so named because it will flatten your finances. That at the least is the intended conclusion. By eliminating personal deductions like mortgagee interest payments, the study claims, the flat tax would reduce housing values in this country by upwards of 10 percent. The study's methodology is shaky at best, and the jury on housing values is still o ut. Despite the forces allied against the flat tax, tax reform has grown steadily because the current tax system is so unpopular and the alternatives promise so much. But in addition to the possibility of lower housing values, the flat tax poses several other serious problems too easily dismissed by its advocates. Businesses may be the flat tax's second biggest obstacle. By reducing the cost of compliance with the tax laws and removing uncertainties about the tax situation, the flat tax would eventually benefit businesses. However, they would see their tax burden rise by about two-thirds, on average, from 31 percent of the total tax burden to around 50 percent. This tax increase on businesses would result from the loss of deductions for state and local taxes and for employee fringe benefits, among other things. Though businesses will try to pass on these costs to consumers and employees-by raising prices and trimming fringe benefits, for example-shifting the nations tax burden to the business community will ...
