Most pundits have tended to dismiss the flat tax, on the unimpeachable grounds that it is too simple. After all, if ideas ever got too simple, what need would there be for pundits to explain them? Of course, "one person, one vote" is a pretty simple idea, too, and most of us seem to have got our heads around that. And in tax policy, simplicity is a virtue. Even after the 1980s tax reforms, the tax code in both countries is riddled with special exceptions, deductions and discounts.

"Flattening" out these wrinkles isn't only a matter of putting the tax lawyers and accountants out of business, but also of fairness and efficiency. Fairness, since a dollar in income, however it is earned, contributes in the same way to the taxpayers' ability to pay: a buck is a buck is a buck, as the Carter Commission taught us in the 1960s. And efficiency, because offering tax exemptions for certain types of activity leads people to do things not because they make sense, but because they make tax sense.

The higher the rate of tax, the worse the effect of these distortions, which is why the flat tax is also about flattening the present schedule of escalating marginal tax rates on higher incomes. This leads to a second major charge, that the flat tax is an abandonment of the principle of progressivity - that is, the idea that rich people should pay a higher share of their income in tax than poor people.

Some flat tax advocates are genuinely opposed to progressivity. If so, they misunderstand their own proposal, since - can you keep a secret? - the flat tax is progressive. There are, after all, two ways to ensure that an ever-rising share of higher incomes is paid in tax. The traditional way is to keep raising marginal rates, while keeping the taxable proportion of income, the tax base, the same. The other way is to keep marginal tax rates the same - i.e., a flat tax - while progressively expanding the tax base.

Under Mr. Forbes' proposal, for example, the first $36,000 for a taxpayer with a family of four is tax-free. Anyone earning less than that would pay no federal income tax at all, which is pretty progressive in anyone's books. At $72,000, the same taxpayer would pay the flat 17 per cent on half his income, for an average rate of 8.5 per cent. At $144,000, he would still pay the same flat 17 per cent, but now three-quarters of his income would be taxable. His average rate would rise to about 13 per cent. And so on.

Where the Forbes plan really runs into trouble with its critics is in its treatment of income from investments: dividends, capital gains and interest. These would not be taxable, which rather seems to fly in the face of the buck-is-a-buck-is-a- buck idea. Even those, such as the editorialists at The Globe and Mail, who understand the traditional economist's lament over the double taxation of savings - once when first earned, a second time when invested and yielding a return - balk at Mr. Forbes' remedy. Why not, they ask, simply exempt all income as it is saved, then tax it when consumed, rather than single out income from capital for special treatment, while taxing labour income at full rate?

In the Canadian context, they would be right. But Americans suffer under another kind of double taxation. Alone among the developed world, the U.S. taxes the same income from investments at both the corporate and the personal level: once as profit for the corporation, and a second time when whatever is left after tax is distributed to shareholders. Mr. Forbes would fix this by sparing individuals from the tax. Other conservatives would prefer to abolish the corporate tax. The problem with either proposal is that it opens the possibility of shifting income back and forth between the personal and corporate sectors to lessen your tax load. Which means those unemployed accountants would be back at work.

Canada has a better, albeit imperfect system, including all capital income in the tax base, but compensating individual taxpayers for the tax paid at the corporate level via the dividend tax credit. With that modification, the flat tax should fit in here just fine.