I’ve been surprised about all the flat tax talk this October by Republican presidential candidates. The flat tax idea usually doesn’t surface much until April, when taxpayers and their helpers gather around dining room tables to figure out how much they can get away with in their tax reporting. The fact that flat tax mania among Republican White House aspirants has come to the fore this early thus strikes me as a seasonal affectation gone awry.
Whatever the season, however, the appeal of flat taxing for most people is simplicity. Or supposed simplicity. You can’t just multiply your income by a single percentage (9 percent or 20 percent or whatever) and come up with a tax rate. Under almost all flat tax proposals, people below a certain income level don’t pay any taxes. A few write-offs or exemptions are sometimes also left in place (mortgage interest deductions, et. al.).
Still, it’s true that all flat tax proposals if adopted would make for less tax figuring and finagling. Through the extent of this figuring and finagling and its costs to the overall economy depends on the numbers you like to play with.
Through clever but unsubstantiated extrapolation, some experts have come up with a figure of 6.1 billion hours spent by American taxpayers on their taxes. Some conservative economists than multiple this figure by average hourly wages in this country (about $23) and conclude the economy could save $140 annually with a flat tax system.
Is this a valid figure? Too large, too small, utterly irrelevant? Yes, no, maybe. Some people like it. Some journalists need filler for their tax stories. So you’ll see numbers like these often in coming months. Best to keep an open mind when they appear, however.
Here’s really the only thing you have to remember about all current flat tax proposals coming your way. They won’t affect the poor much — many of whom don’t pay federal income taxes today under the present system What these proposals will do is put a lot more cash in the pockets for the rich. And the deduction and exemption-deprived middle class will end up paying more, subsidizing the rich in the process.
Republican flat taxers are thus asking the voting middle class to pay more in taxes in return for a few hours less spent on tax computations. Along with this, they throw in their favorite pitch — that more money flowing to the top of the income ladder means more jobs.
This comes about (in Republican economic thinking) because when rich people get any extra cash in pocket, they don’t buy a second (or third) home on a foreign beach front. Instead, they invest the extra cash and open a pizzeria that employs one baker, one counter man, and three waitresses.
This kind of thinking is where Republican tax policies and their policies generally would take this country. A country with a shriven middle class, pockets of vast and growing wealth, and a great many people employed in lousy jobs, but so poor they escape federal income taxes (though still paying the killer Payroll Tax and local taxes).
Come to think of it, this is where President Obama has been taking the country, too, since coming into office. Except he would also give the huddling masses health insurance coverage.
Wow! What a great choice in 2012! I can hardly wait to vote.
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