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Flat Tax in the News4 min read

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Flattax 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)

Fair Tax Then again, maybe ALL income tax is stealingmany 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 TaxThe 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)