Steve forbes has done a commendable job spelling out why America's tax system must be simplified. Scrap the mindnumbingly complex, loophole-filled, savings-averse code, advises the editor-in-chief of this magazine, in favor of one elegant, dear rate. A flat tax is what America needs. That all sounds good to me. But I think we can do even better. Under Steve Forbes' plan the flat rate would be 17%. All families would get generous personal exemptions, so that a family of four would not pay taxes until its income exceeded $46,000. To encourage growth, the Forbes plan exempts income that is saved and invested. Which means that the Forbes plan is really a consumption tax. It taxes people based on what they take out of the system, not on what they put in. I would offer Americans an even lower flat tax rate—14% as opposed to 17%—and at the same time do more to help low-income people. Boston University economist Laurence Kotlikoff and I have put together a plan that works in the following way.
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