The GOP debates have brought one of Republicans’ treasured ideas back into the forefront: the so-called “Flat Tax.” This happens every presidential election cycle and it takes up a lot of oxygen because, let’s face it, everyone hates filing their taxes. I get it, it’s a hassle, hell I don’t like devoting a couple days of my spring to the unpleasant task, but like death and stupid Republican ideas, it’s a fact of life in America, so I just suck it up and do it.
We all know that the Flat Tax is a dumb idea from a revenue perspective, that it ends up being a huge tax hike on the middle class and a tax cut on the wealthy. I don’t think Republicans care about that, they’ve been selling “trickle down” snake oil for decades. I think Fundiegelicals like the idea because it mirrors a tithe, and Fundiegelicals love to codify their religion in U.S. law as a way of maintaining some modicum of relevance for their dying brand.
But I think what really appeals to rank and file conservatives is this idea that when implemented, the Flat Tax will somehow be simpler. This is another piece of right-wing spin that has zero basis in reality. But it’s an attractive piece of propaganda, so it’s repeated ad nauseum. Republicans love to tell people what they want to hear, don’t they?
Here is why that’s utter bullshit. From the 2011 Memory Hole, I bring you former Federal Reserve vice chairman Alan Blinder:
Many useful steps could be taken to simplify the personal income tax. But, contrary to much misleading rhetoric, flattening the rate structure isn’t one of them. The truth is that 100% of the complexity inheres in the definition of taxable income, which takes up millions of words in the tax laws. None inheres in the progressive rate structure. If you don’t believe that, consider the fact that the corporate income tax is virtually flat once a corporation passes a paltry $75,000 in taxable income. Is it simple?
Back to the personal tax. Figuring out your taxable income can be quite an effort. But once that is done, most taxpayers just look up their tax bill on an IRS-provided table. Those with incomes above $100,000 must perform a simple calculation that involves multiplying two numbers together and adding a third. A flat tax with an exemption would require precisely the same sort of calculation. The net reduction in complexity? Zero.
Got that? The complexity comes from the multitude of deductions codified in the tax code, not the tax rate itself. And as Blinder points out, every single deduction is there because Congress voted for it. Every single deduction is there because some group lobbied for it. I wonder if right-wingers clamoring for the Flat Tax would be willing to give up their home mortgage interest deduction, their charitable giving deductions (including what they give their churches!), their deductions for their kids? Would they give up their deductions for property taxes, state and local taxes — or, as is the case here in Tennessee, sales taxes? As Blinder noted,
Every tax “gimmick” has an ingrained constituency. I shake my head in disbelief when I hear politicians claim to be able to raise huge amounts of revenue by closing loopholes. Arithmetically, that’s easy. Politically, it’s almost impossible.
Blinder goes on to make the mathematical case, showing that the Flat Tax is really a huge tax hike on the middle class and tax cut for the wealthy. Go to the link and read if you wish; I maintain nobody gives a shit about the math, the selling point is the simplicity. And it’s just not gonna happen. What you’re going to end up with is a tax cut for bazillionaires and tax increase for those who can least afford it.
Same as it ever was.