EconTalk Alvin Rabushka on the Flat Tax
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Apr 23, 2007 
Alvin Rabushka, economist and Hoover Institution senior fellow known for co-authoring The Flat Tax. He explains a single-rate, postcard-sized return, how identical rates stop tax shifting, why lower rates reduce demand for tax planners, international flat-tax experiments, and political obstacles to overhauling complex codes.
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Most Tax Planners Would Lose Business Under Flat Tax
- Rabushka told Silicon Valley financial planners that only ~1% could keep doing their tax-planning business under a sub-20% flat tax.
- He quipped half a million smart tax planners would need retraining but would become productive elsewhere.
Why Rabushka Champions A Sub‑20 Percent Rate
- The original 19% flat rate was chosen for revenue neutrality after generous personal allowances; Rabushka prefers rates below 20% to avoid creep.
- He notes 19% could be lowered to ~17% if desired due to growth effects.
Mortgage And Charity Deductions Skew Benefits To The Wealthy
- Mortgage interest and charitable deductions mainly benefit higher-income, itemizing taxpayers; removing them under a flat tax is unlikely to reduce homeownership or giving.
- Rabushka cites Canada, Australia, New Zealand with similar ownership rates and historical evidence that donations rise when rates fall.
