Flat tax would increase charitable gifts from rich
Imagine the United States as we know it now, but with a flat income tax rate. If you make $1 a year or $1 million a year, you get taxed the same proportional amount. The U.S. doesn’t currently utilize this system, but instead taxes you more as you make more money. Many people argue that a flat tax rate would allow the super-wealthy to hoard their money instead of the government putting it to better use for social good. I believe that this is not the eventuality of a flat tax rate, and that, given complete control over their money, the wealthy will use it for social good and have a selfish interest in doing so.
There exists an exceptionally large income disparity in the United States, which would be augmented with a flat income tax rate. This means that the wealthy would be exceptionally wealthier than their counterparts on the other end of the spectrum. This is the natural result of the difference in talent that exists in any society. Yet even with a natural income disparity that the government doesn’t diminish with the income tax rate, I believe that the wealthy will take it upon themselves to work for social good.
Should there be an income gap between the wealthy minority and the poor majority, action will be taken to promote social equality, especially if exploitation is taking place, which tends to happen in this societal model. If a revolution occurs, the majority will most likely win, and even if they don’t, the wealthy have to spend egregious amounts of money to come out with a remotely desirable outcome. Obviously this outcome is not good for the wealthy, and so the wealthy will take steps to prevent it. Such steps will include philanthropy and charitable giving to causes that the less wealthy majority deems meaningful and will perpetuate a livable society.
If the wealthy start to stray from a philanthropic social norm, the media will play an important role in continuing charitable giving. For example, in the late 1990s Bill Gates had hardly used any of his vast fortune to work social good. Then several articles, from respected newspapers like the New York Times and the Kansas City Star, came out highlighting his extreme wealth and his lack of giving, which prompted him to create the Bill and Melinda Gates Foundation. Yet this argument is also assuming that the wealthy, and people in general, are inherently selfish and only care about what’s in their best interest. I don’t believe that this is the case, and I believe that especially with a 24-hour news cycle constantly making people aware of the incredible injustices that exist in the world, people will donate to promote global social equity.
Many ask why the wealthy don’t already do this. Many do, but many wealthy people are disincentivized from giving because they feel that the government already takes money from them for the purpose of promoting social equity. Someone who makes $500,000 a year loses about 60-70 percent of his or her income each year to federal, state, and local taxes. This is the equivalent of working from January until September for the government. Many in that position resent the governmental imposition of taxes on their income and therefore take what’s left for themselves.
With a flat income tax rate, the wealthy have both a selfish and selfless interest in charitable giving and will donate to causes that they see fit and, in doing so, close the income gap on their own.