The Flat Tax: Bait and Switch

Rick Perry has rather predictably proposed a flat tax. Like the flat tax previously proposed by Steven Forbes, it is packaged in a dishonest way.

The selling point is that it is simple. You can fill out your taxes on a postcard! The problem with this is that the source of the real complexity in the tax code is NOT its lack of flatness. The tax code is bewilderingly complex because of the myriad of special rules, exemptions, and deductions. These features are built into the tax code because of the ability of powerful interests to lobby Congress for rules in the tax code that benefit them. 

So, if we want to simply the tax code, then we can easily do that. Many people have proposed it, but it never seems to happen. Why? It is because of the ability of powerful interests to spend large amounts of money to influence lawmakers. No one wants to give up their tax breaks.

So why is the flat tax a perennial favorite of conservative politicians? It is not about complexity. It is about shifting the tax burden away from the very wealthy onto the middle class. The flat tax dramatically lowers rates for high income earners and typically eliminates entirely taxes that fall disproportionally on the wealthy, such as taxes on capital gains, stock dividends, and inherited estates.

Herman Cain's 9-9-9 tax plan--which is also a type of flat tax--does the same thing. Paul Ryan's Roadmap (not a flat tax) did as well.

Here's a serious question: Are conservatives capable of supporting a tax plan, any tax plan, that does NOT effectively dramatically lower Warren Buffet's tax burden?

Does anyone seriously believe that the real problem in our society is that the very wealthiest Americans pay too much in taxes? Does anyone believe that the solution to the Buffet problem is to lower Warren Buffet's tax burden even more, while raising the burden on his secretary even more?