{"id":10278,"date":"2016-02-02T06:08:10","date_gmt":"2016-02-02T13:08:10","guid":{"rendered":"http:\/\/lastbestnews.com\/site\/?p=10278"},"modified":"2016-02-02T06:08:10","modified_gmt":"2016-02-02T13:08:10","slug":"opinion-why-is-flat-tax-a-lousy-idea-let-us-count-the-ways","status":"publish","type":"post","link":"https:\/\/montana-mint.com\/lastbestnews\/2016\/02\/opinion-why-is-flat-tax-a-lousy-idea-let-us-count-the-ways\/","title":{"rendered":"Opinion: Why is flat tax a lousy idea? Let us count the ways"},"content":{"rendered":"<p>As sure as pimples follow chocolate, flat tax proposals erupt with each election cycle. Many of us enjoy chocolate, enough to tolerate the inevitable acne. Far fewer of us enjoy the palaver in favor of flat tax, but we\u2019ve warned ourselves to expect it nevertheless.<!--more--><\/p>\n<div id=\"attachment_10279\"  class=\"wp-caption module image alignleft\" style=\"max-width: 144px;\"><img loading=\"lazy\" decoding=\"async\" class=\"addboard wp-image-10279 size-full\" src=\"http:\/\/lastbestnews.com\/site\/wp-content\/uploads\/Bruce-Lohoff.jpg\" alt=\"Lohoff\" width=\"144\" height=\"180\" \/><p class=\"wp-caption-text\">Bruce Lohof<\/p><\/div>\n<p>The United States began its flirtation with a flat tax during the Civil War. In the 20th century the romance ran the gamut from left-of-center (when presidential hopeful Jerry Brown supported it in 1992) to the right (when Steve Forbes talked it up in 1996 and 2000). Current presidential aspirants Ben Carson, Ted Cruz and Rand Paul flirt with a flat tax. So does Marco Rubio, although he prefers one rate for the poor, another for the middle and a third for the rich.<\/p>\n<p>In how many ways are all of these flat-taxers wrong? At least four:<\/p>\n<p><strong>One, flat-tax schemes won\u2019t pay the bill<\/strong>. Ben Carson initially advocated a flat tax of 10 percent, a tithe, something that he\u2019d read in the Bible. When he learned, to quote Gershwin, that it \u201cAin&#8217;t Necessarily So,\u201d Carson moved to 15 percent, only to discover that, even then, his scheme would generate an additional deficit of $1.1 trillion per year. Cruz hasn\u2019t budged from the tithe: \u201cUnder the Cruz Simple Flat Tax,\u201d his website says, current \u201crates of personal income tax will collapse into a single low rate of 10 percent.\u201d<\/p>\n<p>Other candidates use other numbers. Paul has landed on 14.5 percent. Rubio\u2019s multiple brackets are 15, 25, and 35 percent. The bottom line, though: none of these plans pays for the government that the public wants. (Perhaps, though, they\u2019d pay for the government that the <em>candidates<\/em> want. Just sayin\u2019.)<\/p>\n<p><strong>Two, flat-tax schemes are unfair<\/strong>. For 103 years, American tax policies have been progressive: tax rates correlate with income, i.e., the more you earn the higher your tax rate. Fair enough. The highest rate, 39.6 percent, is merely onerous if your income is a half million dollars a year. If your income is $18,550\u2014the top dollar in the bottom bracket\u201439.6 percent would not be onerous but catastrophic. On the other hand, if you earned a half million a year but paid the bottom bracket of 10 percent, your taxes would seem like pocket change.<\/p>\n<p>But it isn\u2019t just tax rates that correlate with income. Benefits correlate, too. In his 2012 presidential campaign Mitt Romney divided American voters into \u201cmakers\u201d and \u201ctakers,\u201d the \u201ctakers\u201d being folks who \u201cbelieve the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it.\u201d<\/p>\n<p><div class=\"well\"><div class=\"dfad dfad_pos_1 dfad_first\" id=\"_ad_652\"><a target=\"_blank\" href=\"https:\/\/goo.gl\/mjhWkW\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/lastbestnews.com\/site\/wp-content\/uploads\/201703_capeair_variable.jpg\" alt=\"CapreAir_Variable\" width=\"510\" height=\"180\" class=\"alignnone size-full wp-image-18069\" \/><\/a><\/div><\/div>He was, well, wrong. A few government programs benefit \u201ctakers\u201d only: Medicaid and food stamps, for instance. Mostly, though, both \u201ctakers\u201d and \u201cmakers\u201d are beneficiaries. Do only the poor benefit from defense expenditures, or Medicare or Social Security programs? Don\u2019t you need an automobile or an airplane ticket to take advantage of the nation\u2019s interstate highways or its airports? And perhaps it\u2019s best not to mention how the \u201cbenefits\u201d of our criminal justice system morph as we move from poverty through affluence and into actual wealth.<\/p>\n<p>The bottom line. Both \u201cmakers\u201d and \u201ctakers\u201d enjoy the public table. It\u2019s just that the \u201cmakers\u201d get larger portions.<\/p>\n<p><strong>Three, flat-tax scheme are risky<\/strong>. Ours is a consumer society \u201cin which the buying and selling of goods and services is the most important social and economic activity\u201d (Oxford Dictionary). Mixing flat tax with consumer society is a recipe for disaster; it imperils consumers and, with them, society itself.<\/p>\n<p>Who are consumers? Consider the data. Families with annual incomes of less than $20,000 spend more than 97 percent of their money on basic necessities while saving a mere 2.6 percent. Among families with incomes greater than $150,000 the corresponding numbers are 84 percent spent and 16 percent saved. When dissected, the data are equally disturbing. The poor spend 15 percent of their income on food while the rich spend less than 11. Housing and utilities? Forty and 32 percent. (Tellingly, the rich outspend the poor on education by three to one.)<\/p>\n<p>Now fold into this batter a flat tax large enough to forestall massive government deficit. How big would a revenue-neutral flat tax be? The devil is in the details, of course, but economists suggest rates of 21 to 34 percent. Split the difference and call it 27.5 percent. Then think about how that flat-tax rate would affect consumer habits. Perhaps the rich would spend and save at marginally higher rates. But it you\u2019re one of those $20,000-a-year families that I just mentioned\u2014the ones who spend more than 97 percent on the basic necessities\u2014tripling your taxes will make you wonder which bills you\u2019re going to pay this month.<\/p>\n<p><strong>Four, flat-tax schemes ignore the real problem<\/strong>. Deductions, exclusions, exemptions, deferrals, preferences. Policy wonks call them \u201ctax expenditures.\u201d The U.S. Tax Code runs to more than 70,000 pages. Multiple tax brackets aren\u2019t to blame, though. Tax expenditures are.<\/p>\n<p>To be fair, many flat-tax schemes pay lip service to loopholes. Ben Carson\u2019s website promises: \u201cno deductions, tax shelters or loopholes.\u201d Rand Paul \u201cwould eliminate nearly every special-interest loophole.\u201d And Marco Rubio\u2019s plan \u201cdramatically simplifies the tax code by eliminating all itemized deductions and tax \u2018extenders.\u2019\u201d<\/p>\n<p>But flat-taxers are shell-gamers; they want to take your eye off the nut. The problem isn\u2019t a few tax brackets; it\u2019s the enormous number of tax expenditures. For they are many and each is cherished by someone. Your home mortgage interest deduction is to the hedge fund manager\u2019s carried interest as my charitable deduction is our landlord\u2019s depreciation scheme. And then we have special arrangements for the elderly and the frail, for the farmers and fisherman\u201470,000 pages of them.<\/p>\n<p>Cruz talks of \u201ca flat tax that would allow every American to fill out his or her taxes on a postcard.\u201d A postcard filing is devoutly to be wished. Reducing tax brackets won\u2019t help, though; eliminating tax expenditures will be required.<\/p>\n<p>America\u2019s graduated income tax policies\u2014which have been in place since 1913\u2014have served us well. We can agree that our tax system is a mess, but a flat tax is\u2014in four ways\u2014a false solution. In other words:<\/p>\n<p>Flat tax is bumpy.<\/p>\n<p><em>Bruce A. Lohof is a native of Montana. A former professor and a retired diplomat, he lives in Vienna and in Red Lodge.<br \/>\n<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As sure as pimples follow chocolate, flat tax proposals erupt with each election cycle. Many of us enjoy chocolate, enough to tolerate the inevitable acne. Far fewer of us enjoy the palaver in favor of flat tax, but we\u2019ve warned ourselves to expect it nevertheless.<\/p>\n","protected":false},"author":76,"featured_media":10279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[3295,3745,3331,3746,1674],"class_list":["post-10278","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-ben-carson","tag-flat-tax","tag-marco-rubio","tag-rand-paul","tag-ted-cruz","prominence-category-featured"],"_links":{"self":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts\/10278","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/users\/76"}],"replies":[{"embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/comments?post=10278"}],"version-history":[{"count":0,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/posts\/10278\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/media\/10279"}],"wp:attachment":[{"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/media?parent=10278"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/categories?post=10278"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/montana-mint.com\/lastbestnews\/wp-json\/wp\/v2\/tags?post=10278"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}