a proposal for a socially conscious flat rate tax 23 June 2010 23 June 2010 Flat but fair: a proposal for a socially conscious flat rate tax CES

Structure of the presentation 23 June 2010 Structure of the presentation Introduction The Dutch system in detail The proposal The effects Conclusions and further discussions

Dutch marginal tariff is already flat 23 June 2010 23 June 2010 Dutch marginal tariff is already flat CES

The proposal A flat rate income tax of 33.25%. 23 June 2010 The proposal A flat rate income tax of 33.25%. Altering the regressive income-dependent health care contribution, so that it applies to all wages. Adding an extra surcharge of 5% to 10% to top incomes above €125,000. Budget neutrality by shifting from income taxes to value added taxes.

A flat health care contribution as well 23 June 2010 A flat health care contribution as well

Room for raising VAT rates 23 June 2010 Room for raising VAT rates

The income effects are rather small 23 June 2010 The income effects are rather small

23 June 2010 Labor market effects Labor supply expand (1.0 %) and unemployment rates fall slightly (-0.1%). Employment for lower incomes decreases (-0.4 %), for higher income increases (1.9 %). Production increases by 1.0%. A flat rate positively increases investment in training and higher education.

Conclusions and discussions 23 June 2010 23 June 2010 Conclusions and discussions A well-designed flat rate leads to a better functioning labor market. A well-designed flat rate reduces red tape. Progressivity can be achieved by other means. A single flat rate for the VAT as well. CES