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A Flat Debate on the Flat Tax

A Flat Debate on the Flat Tax

In comments to the Sacramento Bee late last week, Governor Arnold Schwarzenegger magnanimously agreed to consider a proposal to maybe discuss a flat tax rate on income in California. Much like similarly surprising talk of ending marijuana prohibition, the news makes for great headlines, but taxpayers should avoid any real optimism for the time being.While Schwarzenegger cleverly pays lip service to what some consider the holy grail of tax code reform, at a suggested flat rate of 15 percent, he has actually proposed a massive tax increase. Currently, even the wealthiest Californians pay “only” 9.3 percent. In the seven states where a flat tax is already in effect, the average rate is just 4.1 percent.