Today on one of my favorite alternate news sources, the 700 Club w/ Pat Robertson, Steve Forbes pimped his new book Flat Tax Revolution: Using a Postcard to Abolish the IRS. The most interesting thing he said was that if the next Republican presidential candidate doesn’t pick this up as part of his platform, a Democrat might get smart and do so, and in doing so, may win the race.
Forbes also addressed briefly (and probably in more detail in his book) some of the criticisms of the flat tax, like it favors the rich, it will bring in less money, etc. He seems to think that these are non-issues. For instance, regarding the poor, he says that with his plan, no one making under $46000 a year (and I assume that indexed for inflation in the future) has to pay *any* income tax. And, as many conservatives believe, Forbes believes the graduated tax to be *unfair* to the rich because it taxes them at a higher rate than everyone else. Many view the graduated tax as a punititive, socialist, wealth-redistribution scheme that is unjust. And I agree.
The successful often make greater sacrifices and take greater risks, so why not let them get the reward? I’ve had people say "well, you’re middle class and successful because you’re a white male, you didn’t have to start off poor." No, I’m middle class because my immigrant Grandfather changed his name to get work, worked two jobs most of his life, eloped so his wife could work (married women often were not given work because the culture at that time expected them to stay home), wore second hand clothes and ate day old bread and food in dented cans to save enough to put himself and our whole family through college. But I digress.
The flat tax has many things going for it. Now, we may need to put some rules in place that limit the concentration of wealth, but let’s do that in a fair way rather than taking the lazy way out and instituting an unfair tax. Like the equally unfair racial quotas that "help" the disadvantaged, I think the graduated tax is another case of trying to make a "right" by adding a second wrong (affirmative action) to fix the initial wrong. This, IMHO, is the problem with a lot of liberal solutions – they assume that the ends justify the means, and this sloppiness, along with an inherent dislike for the wealthy and powerful (somewhat justified, but not to the point of penalizing effort!) make for some rediculous (and expensive) solutions to genuine problems (see the welfare trap)
Then again, maybe ALL income tax is stealing – many argue that we should only have sales tax – this is often called the Fair Tax. But that’s another discussion.
Flat taxes are in the news a lot now because Britian may be considering a flat tax:
- Europe Circles The Flat Tax – The success of a single tax rate in the East is spurring Western Europe to take a closer look (Business Week Online)
- Whatever Brown says, the flat tax is coming – "Ask any politician about the possibility of having a flat tax in Britain, and they furrow their brow and say: "Hmm. Interesting idea. But it’s just a tax cut for the rich isn’t it? That’s a tough sell." If they are a Conservative, they then descend into discussing the party’s interminable leadership election (stay awake at the back). Such a parochial attitude may soon be dispelled." (Daily Telegraph)
- A dip in the middle – "Since then eight other countries in eastern and central Europe have followed suit. Poland appears likely to adopt a flat income tax. Even Germany is flirting with the idea." (the Econonmist)
In theory, the flat tax is considered fair because everyone pays the same nominal rate. However, this theory is as likely to be as successful as Communism. Both are great in theory, but both are impossible to implement. To have the nominal rate equal the effective rate, you're going to have to eliminate all of those deductions and credits we use to incentivize socially desirable states of affairs (home ownership, for instance).
That will never happen.
Ever.
Even if a flat tax were instituted, it'd last approximately 10 minutes before congressmen started inserting new credits, deductions, and rates (viz., no tax on muni bonds) back into the equation, thereby destroying the fairness and the simplicity of the flat tax.
Forgot to add: the upshot about the difference between nominal and effective rates is that what we should be looking at is the effective rate. The rate of the rich, due to their wayyyyyy higher interest & cap gains income, isn't very high, and is frequently lower than virtually ever other group.
We use a graduated nominal rate to try to recapture some of that difference. The purpose of the progressive rate, then, is corrective, not redistributive.
JPE – I see your distinction between "corrective" and "redistributive", but I don't think there is anything to "correct." It is not wrong that after taxes one man makes 200K while the other makes 50K. The person makeing $200K paid MORE in real dollars in taxes – he contributed more.
It's not about what you have left over, it's how much you PAID that matters, and a flat percentage is fair.
I agree that if we move to a flat tax, however, that most deductions will have to go, which will be a tough, if not impossible thing to negotiate w/ all the powers that be. But I think Forbes even addresses this in his book – not sure though, haven't read it.
I think we do need tax incentives to encourage the types of behaviors we believe will benefit society, like saving, property ownership, giving to charity, and the like.
Must be convenient to call others socialists whenever you feel like. And to decry a means justify the ends policy. Especially considering some of the positions that you take socially.
As for a flat tax, it'll never happen, simply because the wealthy won't be able to hide all of their money in minor deductions here and there.
I don't think we need the government to encourage behavior. The federal government's job description has exploded as they take more and more responsibility for things that states and individuals should be doing.
I think a flat tax would be great, as long as like jpe says they don't start screwing with it adding deductions here and there for their favorite intrest groups.
Get rid of pork and get rid of tax deductions and you are well on your way to cleaning up a good portion of Washington.
I don't think there is anything to "correct." It is not wrong that after taxes one man makes 200K while the other makes 50K.
What I meant is that, with lower div & cap gains taxes, a wealthy individual may pay 12%, while the rest of us get stuck with the standard 20-25%. Taxing their earned income at a higher rate (>35) may bump their overall taxes paid up to what we regular joes pay. That's what I meant by progressive tax rates as corrective. The higher rates average out the lower rates that the wealthy disproportionately utilize.
I agree that the flat tax is a hard sell, but let's not move from realism to pessimism (giving up hope.)
Sam, your jibe about calling people socialist is a low ad hominem attack, and wrong besides. I am not being convenient or capricious. I called it socialist for a specific, logical reason – I see the graduated tax as a redistribution of wealth, which is what socialism does. This type of thing is punitive, and removes incentive for hard work and risk taking, just like socialism.
Regarding my positions and the ends/means discussion, maybe you can be more specific rather than making bland accusations that look like non-sequiturs.
Seeker,
You seem to believe that markets shouldn't be able to decide the availability of various forms of media – in other words, you believe on restrictions to certain types of media even if a huge market exists for it.
The truth isn't a lowblow. The thing about social conservatives is that while they decry the availability of whatever, they ignore that many more Americans ARE willing to pay for it. In other words, they oppose an open marketplace. Just as you do.
I'm sick of being portrayed as a socialist liberal when you're just as much a socialist conservative.
Sam
The flat tax does seem the most fair and simplest. I agree that in order for that to work, even "socially desirable" deductions would need to be eliminated. As someone who has been on both sides of the auditor's desk (I used to work for the IRS as an auditor, and when employed, you have to undergo a mandatory audit for the past 3 years returns), a flat tax would reduce a lot of complexity, misunderstanding, and heartache, and could eliminate loopholes and opportunities for fraud.
I do not, however, think this will ever happen. Tax is almost an industry (H.R. Block, accountants, lawyers), as well as a bureaucracy (IRS). Too many people's livelihoods depend on it, as well as those who wish to maintain the bureaucracy for political reasons.
As far as any debate on socialism, from a Christian standpoint it is not the government's job to care for the poor and disadvantaged; it is the church's. Our abdication of our responsibility to the government is one of the main reasons for our lack of effectiveness and our impact on society.
You seem to believe that markets shouldn't be able to decide the availability of various forms of media – in other words, you believe on restrictions to certain types of media even if a huge market exists for it.
Again, this is a wild, ambiguous assertion out of the blue. What are you talking about?
What kinds of media am I interested in limiting the availability of? You mean porno? I have never said anything about that.
Are you saying that because conservatives want limits on free speech, or controls on objectionable, perhaps dangerous content (like child porno) that they are sociliasts? It's hard to figure out what you mean, since you don't really say it. Besides, this post is about TAXES.
Maybe you are not a *socialist* liberal, but those pushing for higher taxes for expensive centralized government programs, and curtailing the wages of the rich to help the poor sound a lot like socialists. Sure, it's not socialism per se, but I bring up the comparison to make a point – those type of systems DON'T work, so why do we keep looking to central governement to save us from ourselves? Liberals who view governement as the solution to the ills of man most certainly are like socialists. They may be right in their desire to end poverty and the like, but their methods DO NOT WORK because they are not based on an accurate world view that views man and governement (and God) correctly.
Even recent commentaries of the european countries with high taxes for big governernment entitlements, which have been touted by dems as some sort of utopia, are actually not working well at all, and endangering the work/life quality and economies of their countries.
I like this quote from Ludwig von Mises' The Agony of Welfare
"History has been rather kind to the American voter. It has provided him with object lessons in socialism. If he looks behind the Iron Curtain, he can learn useful things about the one-party system of the classless and profitless "peoples' democracies." If he studies European budgets, he will be informed about the "blessings" of nationalization. Even if he stays at home, he can extend his views by carefully reading what the newspapers report about the financial breakdown of New York City, the world's largest and richest urban agglomeration, the intellectual capital of Western civilization, the home of the United Nations. There is plenty of experience that can induce a man to analyze scrupulously what the progressive propaganda has taught him, and to think twice before again casting his vote for the apostles of socialization and advocates of public spending."
BTW Sam, you didn't speak the truth at all – in fact, my glibly calling centralist-government liberals "socialist" seems accurate to me, and I provided my explanation above.
Your accusation was a low blow because it had no substance, no truth – it was an empty, baseless accusation which you "backed up" with some crazy argument about limiting media.
Here's what you wrote Seeker –
Liberals who view governement as the solution to the ills of man most certainly are like socialists.
Here is what you wrote in this post –
It is ridiculous to take the position that it is either unconstitutional or wrong to legislate some type of morality on to the populace of America.
Now Seeker – which is it? Can we legislate morality to fix societal ills without being socialists? You'd seem to argue that when liberals try to, it is socialism. However, since you don't identify yourself as a socialist, I can't square your previous position with the second quote.
And yes, this post is about taxes. Still, you wrote –
"Many view the graduated tax as a punititive, socialist, wealth-redistribution scheme that is unjust. And I agree."
In other words, you clearly believe that anybody that believes in a tax-rate adjusted for income level is a socialist. In other words, I'm a socialist, because I happen to believe that the rich can afford to pay higher taxes while remaining rich.
So, again, I point out that while you're busy calling me a socialist, you seem to inadvertently describe yourself as a socialist. After all, opposing legislation that tries to legislate morality is "ridiculous."
Now, those are your words. Point to the low blow.
(I'd argue that while you haven't explicitly supported a ban on pornography, I am willing to believe that you support it. If you don't, I'll happily retract my statement. But it seems that from the regular back and forths we've had, you are a person disgusted with today's media, a person that believes that what's available on television ought to be restricted. Again, arguing this is inherently socialist BY YOUR OWN description of what socialist is. Society's ills can't be fixed by the government.)
I really don't think I'm being at all unfair.
I worry about over-reliance upon sales taxes to fund necessary collective goods. Sales taxes vastly affect the poor more than the wealthy, who in theory have more to lose without collective goods. Hence, sales taxes are usually regressive.
I wouldn't have a problem with sales taxes on nonessential goods, for example a luxury tax on leisure goods. The flat tax ideas are intriguing, and wouldn't really upset me as long as those below the poverty line weren't subject to it, much like now.
As for the welfare arguments, my old roommate is a campus pastor, and he used to say that if Christians would be Christians, there'd be no need for welfare. As long as people remain imperfect, there will be a need for government to provide a minimal level of assistance in order to prevent civil disorder and shameful exploitation of the needy. This necessitates a delicate balance between adequately empowering our governments-federal, state, and local-all while preventing the nanny state that weakens innovation. I believe that the weaknesses of the German economy, for example, highlight the need to balance those sides of the tax-redistribution equation.
I don't see how sales taxes could be regressive since the rich are the biggest consumers. Those that make more more than I do, spend a lot more money than I do. Besides most national sales tax plans call for some type of refund or credit for lower income people buying essentials.
Dan is right that the economic weaknesses in Germany, and really much of Europe, highlight the problems that come about when you go beyond that fine line between helping people and economically destructive socialism.
…the economic weaknesses in Germany, and really much of Europe, highlight the problems that come about when you go beyond that fine line between helping people and economically destructive socialism.
The question that this ignores is: whom does a roaring laissez economy help? Here's a hint: it rhymes with 'shmealthy.'
If we look at how the general population is doing, people are pretty darned happy (far more than their equals here) with their "economically destructive socialism." Now, it's an open question as to whether these kinds of economies are sustainable, but that kind of analysis is well outside of my competence.
QUESTION: How to get Steve Forbes FLAT TAX plan
legislated through Congress?
EXAMPLES of two very powerful lobbys in Washington:
One of the most powerful lobby's in Washington is the
Israeli lobby AIPAC http://www.thenation.com/doc/20020610/massing. This
lobby group is able to persuade both Republicans and
Democrats to vote overwhelmingly for there issues.
“Most members of Congress are not convinced to behave
in a certain way by the letters, by the trips to
Israel or by the pressures on them to conform. They
are convinced by the fear of being defeated. And the
letters and the other forms of pressure represent
symbols of the money and "power" that creates fear”
“Writing in the pro-Israel magazine New Republic,
Morton Kondracke reported a conversation with an
anonymous member of Congress who told him: If there
were a secret ballot, aid [to Israel] would be cut
severely. It's not out of affection anymore that
Israel gets $3 billion a year. It's from fear that
you'll wake up one morning and find that an opponent
has $500,000 to run against
you.&rdquo ;http://www.aaiusa.org/wwatch_archives/081693.htm
With approximately 80,000 members and a $40m budget
they are able to get billions of dollars of
appropriations for Israel. Senators and Congressmen
are scared to death to vote otherwise because AIPAC
will turn loose it’s 80,000 members and $40m war chest
and vote them out of office.
Another very powerful Washington lobby is the
American Trial Lawyers Association (ATLA). “Shortly
after Republicans retook the Senate in 2003, they
decided to take a swipe at the well-paid attorneys who
have sued tobacco companies on behalf of states. Sen.
Jon Kyl of Arizona proposed that the lawyers be forced
to return to states any fees that work out to more
than $20,000 an hour per attorney. ATLA deployed James
Parkinson, a Republican trial lawyer in Palm Desert,
Calif., to lobby Sen. Hatch, an old family friend.
Both men recall Mr. Parkinson saying of the Kyl bill,
"Orrin, I would like to go through this, because it is
absolutely unconstitutional." Sen. Hatch and 12 other
Republicans voted against the measure, which failed by
a vote of 37-61. "They know I will support them when
they are right," Sen. Hatch says in an interview,
referring to this vote” http://www.sfgate.com/cgi-bin/article.cgi?file=/n…
The ATLA along with other affiliate advocacy groups
contribute on average $35m/year to retain there power. http://www.triallawyersinc.com/html/part10.html
CONCLUSION: a well organized , large group with money
can make changes in Washington.
HYPOTHESIS: The advocates for FLAT TAX would be
successful if they organized a group 10m strong with
an annual budget of $250,000,000.
KEY POINTS:
1. SINGLE issue “FLAT TAX”
2. The organization will be run by Steve Forbes, Dick
Armey or Jack Kemp who would email quarterly reports
on the groups progress.
3. The individuals are asked to contribute $2./month
(credit card) for a 3 year period. At any time an
individual may leave the group stopping there
$2./month contribution.
4. Blogs and national media would be used to direct
individuals the FLAT TAX web site for explanation and
sign up.
5. Senators and Congressman would be put on notice –
you are either for the FLAT TAX or your against it.
The organization would then use the power of 10m
members and $250,000,000 annual budget to get the
legislation through Congress within 3 years.
Sam,
You are making connections between my statements in your mind, but those connections don't exist in the text of what I said.
1. Legislating Morality
I never said that we legislate morality to fix social ills – you connected those disparate statements. Legislation is to preserve norms and encourage sociologically healthy behaviors – things like self-control, self-reliance, honesty. However, when you make central government the savior, as socialism seems to do, you destroy self-reliance, initiative, and you end up with more corruption than in a more free society.
You seem to think that my call for moral legislation and big, centralized govt are the same thing. But they are not. I am for limited, but not non-existent governement – hence my call for some legislation, and I argued previously that most legislation is "moral" or ethical in nature.
The difference between liberal (socialist) approaches to solving problems and conservative is that liberals propose solutions that are fiscally government centered (hand outs) rather than designed to have people and communities do for themselves (hand UP). They treat people as if they have no power to help themselves, and they keep them in a state of dependence thinking that they are helping. This type of legislation is based on a faulty, imbalanced view of the role of govt.
2. you clearly believe that anybody that believes in a tax-rate adjusted for income level is a socialist.
No, I stated that this VIEW is socialist, not that anyone who holds that view is a socialist. However, I do think that a lot of social liberals are socialist in their approach. If the shoe fits.
3. you seem to inadvertently describe yourself as a socialist.
Um, non-sequitur. How am I a socialist? Because I want limited govt? Because I claim that legislation is often based on morality (thou shalt not steal, kill, lie, commit adultery, destroy the envirnoment)?
I am not busy calling you a socialist. I am busy calling people who support big centralized government hand out programs socialist. If you're in that group, don't flatter yourself in thinking I'm talking about you specifically.
But you remind me of a saying we had when I used to preach open-air outside the bars. You'll love this one, and get lots of milage out of how "unchristian" it is.
"Preaching is like throwing a brick into a pack of dogs. The one you hit is the one that yelps the loudest."
Let's try this again. Here's what you wrote:
Liberals who view governement as the solution to the ills of man most certainly are like socialists.
Yet you yourself clearly believe that the government can be used to work on the ills of man through a legislation of morality. Which would seem to suggest that you too are "like socialist(s)."
I'm going only by your own words Seeker. And as for saying you want a limited government, define that limited government for the sake of conversation. Because I'd argue a government invading the personal relationships of consenting adults is hardly limited. You'd seem to disagree.
As you quoted me so well, I said liberals who support such policies were "like" socialists. See? That's not name calling ;)
No, you see, I never said that government could solve the ills of humanity. You are making that inference because *you* believe that the reason we make legsilation based on ethics or morality is to "fix society's ills". However, that is not the correct interpretation of what I said, nor did I say that.
All legislation is ethical and/or moral in nature – that was the point of the previous quote of mine. And as stated above, legislation is for setting limits, encouraging socially constructive behaviors, etc, not really for solving problems, although it can definitely help with some problems. So in that point, I concede – government should try to prevent and solve problems, but not in a socialist manner – i.e. steal from the rich, dole out to the poor without any expectations of payback in the form of self-supporting behaviors (getting a job, supporting the kids one has fathered, etc.)
As I have loosely quoted one of our founders in the past:
"No system of government can rule a people that lack virtue." Let me be clear that society's ills can only be cured by a combination of spiritual awakening (addressing man's *spirit*), moral and ethical education to transform societal values (man's *soul*), and lastly and least importantly, the codification of legislation that discourages anti-social (i.e. non-ethical, immoral) actions (regulating man's outer actions, or *body*)