But again, there is no indication that a flat tax in any way hindered the prosperity that was generated, and no emperical evidence that it was not a contribution to it. In other words, there is no reason or logic to dismiss it any more than there is reason or logic to give it all the credit.
My intent was to defend the flat tax concept from those who would say it cannot work.
Disagree. That the flat tax puts 'skin in the game' does not suggest or ignore that there are no other taxes that do that. But I will continue to defend the flat income tax over any form of consumption tax becase a) it is much more difficult to manipulate without attracting a lot of notice and b) when applied evenly cross the board on all forms of earned income--wages, interest, business, investment etc.--it is less regressive than most or all other general taxes.
Putting aside the underlying assumption of perfect functioning of markets, and the bigger assumption that all good boys deserve favours, and always get them, there are pragmatic reasons not to have a flat tax.
Too much money in the world's financial system is a little bit like unemployed youth. It tends to float around, and eventually cause trouble unless more pro-social tasks for it can be found. The Asian currency crisis, the dot com bubble, and the real estate bubble are examples of money that could have been put to better use. Untaxed money eventually caused a meltdown of the world economy, and trillions of dollars of lost wealth. Government may be inefficient at times, but greed can cause biblical spectacles.
We are already seeing a huge polarization of wealth in the US, and other countries, and a flat tax would accelerate this trend. We don't have to look too far into history to see the results of wealth concentrated in a tiny minority of the population, and an impoverishment of the masses. Even if there is no social dislocation, the further atrophying of the middle class, and enrichment of the affluent means more resources going to peripheral wims, rather than employment creating, local businesses where the middle class are statistically more likely to spend their money.
A progressive tax has certainly not twarted a polarization of wealth nor the erosion of the middle class. The more the government has attempted to go after the wealth of the rich, the more the rich has incentive to shelter more and more of their assets which removes those assets from our overall economy. And THAT erodes the middle class and disadvantages the poor because both then have fewer resources by which they can hope to improve their socioeconomic situations.
The problem is not that there are rich and poor. Such has always been the existence of humankind for all of its history. The problem is when the poor have no opportunity to become richer. So long as their is no hindrance to people to equip themselves to become richer, it doesn't matter how much of the resources are at the top.
There are economic truths I have learned.
1. In a free society, the poor man is not poor because the rich are rich.
2. In a free society, every poor person can prepare himself or herself to move up and will have opportunity to do so.
3. In a free society you cannot help the poor by hurting the rich, and will invariably hurt the poor when you try.