Forbes first floated this flat tax .. at least running for president .. I think his rate was 13% if I can remember correctly. No one wants a businessman in the WH .. makes too much cents.
It is good in the very least to get these ideas out there in the publci.
Like I said, I don't support Cain, too close to the Federal reserve - he'd be just like Rommney and Perry - much of the same network as we've had the past 25 years.
The problem with a sales tax is that it is fairly easy to dodge it, and harmful to both the government budget and the national economy to do so.
For all the bitching about taxes and all the "clever" ideas of how to fix it, if you tax the act of employing someone, those who pay the tax will seek to employ less people. A sales tax, especially one that taxes services, does exactly that.
On top of that, as the chart shows, it is exceptionally regressive.
A flat income tax might work. The key to that is to find a decent number that will fund what we need while not increasing taxes on most people. The basis to it working is that you should not be able to avoid it in any way.
Once again you will get the complaint that it is regressive, although mildly so. A simple flat tax would remove all the tax credits that have half of tax payers netting zero taxes. The fact it asks those people to pay their fair, but modest, share winds up killing it depsite the fact it asks corporations and rich people to pay their fair (and much more hugantic) share.
Gramps
I have often thought that a national sales tax would be a better way to raise money for the government than income tax. There would be no paperwork, no hassle, and everyone who buys stuff would have to pay and people who buy more stuff would pay more.
I have been told that there is flaw in this idea from an economics point of view. This kind of tax would collect more revenue in times of economic growth, when less government spending is needed and less in recessions when the government needs to spend more.
So combining a national sales tax with a low rate of income tax might balance things out, so maybe Cain has the kernel of a good idea, but the tax rate would have to be progressive. A very low rate for low income people, a slightly higher rate for middle earners, and a higher still rate for those who earn over a certain amount, say $200,000 or whatever the number is ($100,000 or $1,000,000 whatever works)
Ideally we should have a system where everyone pays, and those who earn more, or spend more, pay more.