THE BIG issue of the Republican campaign is the flat tax proposed by millionaire publisher Steve Forbes.
He advocates a 17 per tax on all incomes and that tax returns could be on a postcard, rat her than on complicated forms.
The principle is 17 cent tax would be income over $26,200 for a married couple, a their allowance of $5,300 for each dependant. Capital gains and investment income would be exempt.
Earned income tax credits, which benefit the less well off, would disappear. There would be non allowances for charitable donations or mortgage interest as now. Corporation tax, currently 33 per cent, would be cut to 17.
On the down side, some people would pay more tax, as annual rebates would disappear. The value of houses could fall because of the elimination of mortgage interest relief.
The surge in growth would compensate for loss in revenues, advocates say. Critics maintain that a 20-23 per cent flat tax rate would be needed to avoid raising the deficit.
In practice people living unearned income would pay nothing to Uncle Sam, while factory workers would pay their taxes much as usual.