on this point. They say [the flat tax] "would . . . shift billions of dollars from investments that reduce taxes to those that produce goods and services . . . Improved incentives to work through increased take-home wages will stimulate work effort and raise total output. Rational investment incentives will raise the overall level of investment and channel it into the most productive areas." They would cushion the burden of the flat tax on the poor by granting one time exemptions or allowances to low-income taxpayers.
The proposals of Andrews and Rabushka-Hall are similar in that they argue for a relatively pure version of their concepts. For example, all non-business deductions would disappear. Under both proposals life insurance proceeds would be taxed and gifts and bequests would not. One difference is that Andrews would compute personal income in much the same way it is computed today. It is unclear whether he would allow businesses to deduct the cost of fringe benefits. Hall & Rabushka would not, and would tax the value of many of them to emplo
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