If you’ve just paid not only your taxes but also an exorbitant sum to your tax preparer, you might be in the mood to entertain ideas about the flat tax.
Stephen Moore has a good Weekly Standard piece on the flat tax, which became a hot topic in 1996 when Steve Forbes popularized it with his White House bid, and is now back as several GOP candidates are looking at it and other ways to simplify our tax system.
Rick Perry, for example, is probably very much a long shot for the nomination, but Moore quotes him making a compelling pitch for the flat tax:
Perry knows firsthand that low tax rates are important, because Texas, of course, has no income tax at all. “It’s our great comparative advantage,” he insists, “and it helps explain why for five years we created more jobs in the Lone Star State than the rest of the nation combined. If Washington wants to create jobs for America, it should adopt the Texas tax model.”
Ripping up the 70,000-page tax code has visceral appeal to voters. I always remind this year’s crop of White House aspirants: What is the one thing—maybe the only thing—voters remember about 2012’s dismal presidential primary race? Herman Cain’s 9-9-9 plan. “The simplicity of the concept is what sprung [sic] Herman into the lead,” recalls Ohio-based economic consultant Rich Lowrie, who helped devise the plan. “People were absolutely captivated that we could really make the tax code that easy to understand—and that pro-growth.”
The new Republican party has been baptized in the iron logic of the Laffer Curve. High tax rates stifle innovation, work, investment, and American competitiveness. Our absurdly high corporate tax rate (40 percent on average) is incontrovertibly sending jobs and corporations abroad, where rates are typically half as high. Just ask Burger King, one of the latest iconic American companies to flee to a lower-tax competitor.
Moore recalls that, when President Reagan reduced the marginal tax rate from 70 to 28 in the 1980s, with such stunning effects on the American economy, both Democrats and Republicans accepted the idea that a broad base and a low rate promoted a robust economy. Today that would be heresy for Democrats, whose putative next leader Chuck Schumer wants higher taxes and more spending. This means tearing up the tax code and substituting a flat tax would be difficult. But well worth trying.
I urge you to read the Moore piece. I won’t get into the weeds here (Rand Paul vs. Lee-Rubio plans), but Moore does sum up the challenge for Republicans, if they want to introduce a flat or simpler tax code:
The challenge for Republicans is to convince voters that abandoning the Rocky Mountain high of multiple tax rates for a flat tax is “fair.” Democrats will scream “tax cuts for millionaires and billionaires.” The key, as Forbes explains, is to “convince Americans that the current progressive rate system is unfair, because the people who get hurt the most from tax rates that chase jobs out of America are the poor and the middle class.”
The way to sell the flat tax is as the ultimate Washington versus America issue. The only people who benefit from a complicated, barnacle-encrusted 70,000-page tax code are tax attorneys, accountants, lobbyists, IRS agents, and politicians who use the tax code as a way to buy and sell favors. The belly of the beast of corruption in American politics is the IRS tax code. The left keeps saying it wants to end the corrupting influence of big money in politics. Fine. By far the best way to do that is enact a flat tax and D.C. becomes the Sahara Desert.