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...... The idea, according to McGrath is that no American pays tax on necessities. (McGrath, 2009, p.1) The work of Paulus and Peichl (2008) entitled: Effects of Flat Tax Reforms in Western Europe on Income Distribution and Work Incentives states that the flat income tax has become increasingly popular recently, yet its implementation it limited to Eastern Europe. (p.3) Paulus and Peichl conduct an analysis of the distributional and efficiency effects of flat tax scenarios for Western European countries. (2008, p.1) Results of this analysis are stated to show that flat tax rates required to attain revenue neutrality with existing basic allowance improve labor supply incentives. However, they result in higher inequality and polarization. (2008, p.1)

III. THREE MAIN BENEFITS OF FLAT TAX SYSTEMS
Three main benefits are reported to be associated with flat tax systems and these include those of:
(1) Flat taxes enhance labor supply incentives;
(2) A flat tax rate can increase tax compliance and reduce tax evasion; and
(3) A flat tax rate is often part of more fundamental tax reform, it can simplify income taxation significantly. (Paulus and Peichl, 2008, p.2)

Flat tax rates however can have a serious drawback in terms of their impact

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