Mar 022005
…Because it’s Fair and it Works
If you know me, then you know I’m a huge proponent of scraping our current income tax system for a flat tax.
This article by Bruce Bartlett only further reinforces my belief.
It should also not be forgotten that a flat tax is the revenue-raising system that is most compatible with human freedom. As University of Chicago law professor Richard Epstein recently put it, “It is no accident that every strong defender of limited government has gravitated toward the flat tax.â€
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Uh, why is it fair? If it wasn’t for the progressivity of the income tax poorer Americans would be taxed at a greater rate than the rich. It’s the only aspect of our taxation system to balance FICA, user fees, sales taxes and other taxes that weigh heaviest on the poor.
It stands to reason that those who have prospered so much from our ecomonic and political system should be asked to pay more to sustain it than those who have not fared well.
You think Robin Hood taxation is ‘fair’. I disagree. I think, by the very definition of fair, that if we each pay the exact same amount…that is fair.
I’ll never convince you that you don’t have a right to my money just because I’ve “fared” better than you. You’ll never convince me that you do have a right to my money.
Perhaps what I would like to see even more than a flat tax is a consumption tax.
I know enough to know that I don’t know enough about economics to fully understand the current tax system. Nor would I know the best way to revamp the current tax code…which undeniably needs to be overhauled.
But I know who I’d ask first for advice: Alan Greenspan. He knows more about this tax and economic stuff than you, me, and a city full of other smart people could ever pretend to. And Alan Greenspan thinks that we should use a consumption tax — basically, a tax on money that people spend, such as a sales tax, rather than on what they earn.
I like it. If ‘rich people’ want to buy boats, luxury automobiles, and plasma screen HDD-TVs, then they’ll pay a tax to own such nice toys.
Or is this not fair either? If you’re going to argue that it’s regressive, then I’d be glad to counter that any such consumptive tax should exempt certain items, such as food and clothing.
Hmm…
Yeah, I guess we have different interpretations of the obligation of the citizen. I feel that the lessons I learned in church regarding my responsibilty to the poor are influential in my understanding of the role of government.
I feel that I have been lucky largely due to many things outside of my control. I was adopted by well-educated, middle-class people- what if I remained with my (probably poor and ill-equiped) birth mother? I think that I would be in a vastly different place in my life even if I had worked just as hard.
I apply this same standard to the many people in this country that bust their asses in several jobs but are barely getting by. I feel that it is completely ‘fair’ to ask Bill Gates to pay a higher percentage of his income to, say, pay for public education because he would not have made billions of dollars if others hadn’t made investments into this country before he was born. A Bill Gates born in Nigeria may have worked as hard but would not have changed the world and earned billions of dollars.
We make this a better country when we invest in it- not just the roads, but also the people. In the end, even the wealthy are better off in that type of society.
On this we completely agree.
I just don’t think our charity should be government-mandated. Bill Gates and Michael Dell — and numerous other wealthy Americans — give much more back to their communities through endowments, scholarships, and foundations, above and beyond their tax responsibility.
Plus, I think Gates (your example) has given back, and back, and back to our nations economy many times over — how many jobs has he created? Not just at Microsoft, mind you…but the too many to count software shops, engineering labs, and assorted other companies…that are dependent on Windows technology to create their products.
Don’t you think Bill Gates creating hundreds of thousands of jobs significantly compensates for also having to burden a ridiculous tax burden? I do.
I understand your arguments. I just don’t agree that ‘moral compassion’ is a good nor fair premise for devising a tax code.
‘Charity’ (though I would dispute that discription) became government mandated because the alternative didn’t work. Before Social Security old age was a time of dispair or else decreased independence. Those who were unlucky could live in group homes or worse- the ‘lucky’ elderly simply had to move in with their children when they were unable to afford independent life.
There is nothing preventing charities from alleviating poverty now- yet we have horrible problems with childhood malnutrition and education. How much worse would these problems be if the government stepped out of the equation.
I understand the intellectual clarity of your ideology yet I just don’t think that life is so cut and dried. If we agree about the importance of investing in the people of the US how can we leave these things to chance?
Gates has certainly given back to the country (though I don’t respect his role against open-source software and restrictive intellectual property rights, among other things) But there is not a single Democrat that would tax him into poverty. We simply feel that as his stake in an educated, secure America has grown his responsibility to provide for that education and security has grown as well.
(Lastly, and least important, I think it is instructive when people like Bill Gates see the danger in the creation of a permanent aristocracy and support the continuation of the Estate tax.)
What to do, what to do?!
But there is so much more going on. Steve Forbes hit the nail right on the head AGAIN today in an opinion piece on his flat tax idea in the WSJ. I tried to find you guys a link, but a search only comes up with whiney Libs talking about Fuzzy Math. Wo…
Did anyone (directed at the whiners) actually READ Steve Forbes’ flat tax idea?
I family of 4 received a standard deduction of about $13k for each of the parents, $4k for each kid. An additional tax credit (like EIC) of $1k for each kid under 16 (in addition to the 4k). So a regular family of 4, with 2 kids under 16, doesnt pay tax on the first $40k of income!
Lets say mom and dad had a decent job, and made 30k each. 60k-40k = 20k. 17% flat tax = $3400 tax liability. Thats WAY less than they would pay now. Take that same family, and have them make only 20k a year, and they pay NOTHING in taxes.
No loopholes, no rich people with good lawyers and accountants. Heres the tax, pay it. This would free up about 200 BILLION dissolving the IRS.
As far as a consumption based system of taxation, I do think that this is flawed. It would severly damage the economy for at least a year while people got used to it. And imagine what it would do to new home sales. Paying 60,000 in taxes on a $200,000 house. Ouch. It would likely cut the people qualifying for mortgages by 50%, and closer to 90% for minorities, who have been at an all time high for home ownership.
OK. Enough for now, flame away, or come to my blog, the link is there.
[...] Back on March 3, I wrote a piece titled Why It’s Time for a Flat Tax. [...]
i said directed at the whiners