Herman Cain isn’t the only candidate vowing to junk the unwieldy federal tax code and replace it with a simpler structure. On Wednesday, speaking to attendees at the Western Leadership Conference in Las Vegas, Rick Perry announced that implementing a flat tax would be one of the centerpieces of his plan to spur economic growth. “It starts with scrapping the three million words of the current tax code, and starting over with something much simpler: a flat tax,” Perry told attendees at the Western Leadership Conference in Las Vegas.
Perry withheld key details of his plan, which he’ll unveil in a speech next week. But embracing the flat tax is a move fraught with risk. Perry is among the highest-profile presidential contenders in history to hook his Oval Office hopes to the flat tax, a controversial idea that has ricocheted around the right for decades but which is derided by opponents as a regressive system that slashes taxes for the wealthy while increasing them for nearly everyone else.
Kind of a no-brainer, they should all come up with their own crazy regressive tax plan. It’s a copy cat league.
j low
Jared for President!
fasteddie9318
Sue Lowden’s “chickens for highways” program is just sitting out there waiting for one of these candidates to adopt it.
chopper
yeah i can hear the jingle. twelve! twelve percent! twelve percent flat taaaaaax!
EconWatcher
Does anyone else remember when Jerry Brown ran for the Dem nomination for president in 1992, with one of his main issues being a flat tax? Bizarrely, he was the favorite of the far left, with the likes of Alexander Cockburn shilling not only for his candidacy, but also his flat tax idea.
I’m baffled to this day about how that became a left position. It certainly isn’t now.
balconesfault
I’d bet that about 2.2 million of those 3 million words in the tax code were put in there as part of one tax credit/jobs growth bill or another.
That’s why I’m relatively unimpressed by these “simplify the tax code, cut rates and eliminate deductions” pitches. Rates get cut, then the lobbyists go to work and the deductions/credits reappear in no time.
cleek
as Mencken once said: Complex problems have simple, easy to understand, wrong answers.
Bullsmith
Somalia has no income tax whatsoever, and tons of opportunities for entrepreneurs, all you need is some guns and a boat.
daveNYC
Fixed.
Rick Massimo
Whenever someone starts going on about “simplifying the tax code,” the question I ask is, “Would you be in favor of a simple, flat-rate tax that would allow you to do your taxes on a postcard, but would result in you paying slightly MORE tax?”
If the answer is “no,” then I say, “So you don’t REALLY care about simplifying the tax code; you just want another tax cut.”
Hint: The answer is always “no.” Always.
Comrade Dread
Next up, combo taxation:
“I’ll take the American Exceptionalism Happy Tax with a double McMilitary spending hold the Social Security and Welfare, a super-sized Iranian invasion, extra aid sauce to Israel, and a Diet Coke.”
Judas Escargot
@EconWatcher:
In theory, a flat tax can be quite fair. Mass. state income tax is a flat rate (5.3% on income, 12% on interest I think), and I don’t feel particularly oppressed or anything by that.
Trouble is, the GOP “Flat Tax” isn’t really a flat tax because it’s on earned income only (ie workers).
I love it when someone like Steve Forbes stands there with hundred dollar bills stuffed in his pockets, lecturing us on the fairness of a Flat Tax– which of course wouldn’t apply at all to his money because it’s all inheritance and/or investment income.
jimmiraybob
Anybody else notice that the 9-9-9 plan adds up to the magic number 27? As in the 27%? Or is the magic number 26? Anyway, close enough.
MikeJ
@Rick Massimo:
People earning less than $100,000 under 65 with no dependents can file the EZ which has seven inputs. Easily few enough to fit on a postcard.
Generally anything more complicated is a way to lower what you owe.
cleek
@jimmiraybob:
i might have, if i could’ve got past the “inverted 666” thing.
Jay in Oregon
For assholes who seem to think that they are unfairly taxed on their millions of dollars of earnings while people who are trying to feed a family on $20,000 a year don’t “pay any taxes” (the lucky duckies)?
I’m positive that family of four will gladly trade places with you, so you can live “tax-free”.
Martin
@EconWatcher: Well, I think both left and right are desperate for a simpler tax structure. I think voters both left and right are correctly distrustful of a system that, the more you can invest in deconstructing the rules, the more you can game that system.
So, think of progressive/regressive on one axis, and simple/complex on the other. Ideally left wants simple/progressive, the right wants simple/regressive. But depending on the state of the board, the voters may bias making ground on the progressive/regressive axis at the cost of making ground on the simple/complex, and vice/versa.
I would overall chalk it down to the usual problem of the more ideological participants of each party being unable to hold two thoughts in their head at one time. But Brown has always tilted toward populist trends – if simplifying the taxes was the meme of the year, he’d lean that route and recalculate as he went along.
FlipYrWhig
Before I bought a house, doing taxes was not particularly hard, even with paper and a calculator, rather than with Turbot Ax or the equivalent. I feel like Legends Of The IRS intimidate people into feeling like one small screwup is going to doom them and ruin their lives, and as a consequence people have no idea how their own taxes get done, what rates they end up paying, etc. Instead they feel like the whole thing is an exercise in harassment by obtrusive government. And those are the people who are prone to getting suckered by flat-tax schemes. It’s totally bogus.
bleh
Hey, it fits right in with the other core concepts of the Republican economic plan.
— Cutting taxes increases revenue
— Cutting taxes on wealthy individuals and businesses creates jobs
— The middle class need to suffer benefit cuts now, since otherwise the middle class might someday suffer benefit cuts
— Poor people don’t pay enough in taxes (and they deserve to be poor anyway)
cpinva
kind of goes nicely with his flat head.
fasteddie9318
Well fuck that. I declare my candidacy for the presidency and it winds up in moderation.
piratedan
@Judas Escargot: or deal with all of the loopholes that have been introduced since Jerry was running for the office. It’s a wondrously simple concept, yet how much you wanna bet that the fine print has already been leveraged all to hell.
The Moar You Know
One asshole jumps, they all jump.
Could any of you have imagined even two years ago that we’d be sitting here watching GOP primary contenders vying to steal the thunder of the frontrunner – who happens to be a black guy?
“Post-racial America” is getting fucking weird, I tells ya.
Martin
Ok, this is awesome.
MikeBoyScout
Why is Perry calling for new taxes?
Belafon (formerly anonevent)
I’ll simplify it quite a bit: 95% on all earnings above 250,000. Not just wages, but all earnings.
Perry knows what kind of problems his tax causes. Texas has a sales tax, but it is only collected on certain goods, and a few services: My lawn mower pays a tax, probably to keep the state from looking into where his workers come from. But most services, such as accounting and law, are not taxed. Because of that, it’s not only regressive, but really regressive. The state’s revenue sucks.
Thoughtful Black Co-Citizen
That’s like me saying I’m withholding the cures I’ve developed for cancer, heart disease, diabetes and the common cold.
catclub
@Judas Escargot: beat me to the Steve Forbes reference.
Men like Perry can see farther because they stand on the shoulders of giants…like Steve Forbes. lol
Comrade Javamanphil
@daveNYC: This.
Lee
Here is the deal, IF his flat tax has a base (the first X amount of earned income is tax free) then it actually works out to be fairly progressive (it’s a math thing).
I seriously doubt his flat tax plan will have a base amount.
catclub
@Belafon (formerly anonevent): 5-95 is catchier.
5% on income from $50,000 to $250k, 95% on the rest.
Jay in Oregon
@Martin:
I loved these:
catclub
@Lee: But that still ignores the fact that there is no higher bracket than $350k, while there are people earning hundreds of times that.
Any flat tax that is revenue neutral will lower taxes on the highest income class. Therefore, any revenue neutral flat tax is at some point regressive. QED
catclub
@Jay in Oregon: “… unhappy ending.”
depends on your viewpoint
Belafon (formerly anonevent)
@catclub: Works for me, and it fits on a postcard.
PGE
I’ve always thought radically simplifying the tax code, and replacing most or all deductions with writing a check to the taxpayer, independent of the taxing mechanism, for things that are thought to be a social good, would be a big improvement. I think the “Write a Big Check to Exxon” bill would have much less chance of getting thru congress than a provision buried in the tax code.
David Koch
WOW! Hillary personally killed Khaddafyi with her bare hands.
You would think people would know better than to fuck with Hillary after smoked Vince Foster.
JPL
@catclub: Ask Warren Buffet how progressive our current code is.. not very it appears.
If all income is taxed at one rate, with a large deduction, Under 500000, you might do 19 percent and 25 percent over. The CBO has not scored this and I’m just making up percentages but it’s better than 9-9-9.
MikeJ
The complexity of the tax code doesn’t come from the number of brackets. It comes from deductions. Ask homeowners if they want to get rid of mortgage interest deductions. Or deductions for each kid they have (I love pointing that one out as it parallels the wingnut stories of women having more and more children for the sole purpose of getting more money.)
Keith
My plan is to take your age and reverse the digits, and you pay the lower number. I also tend to think at some point the gop will fully embrace the idea of voluntary taxing by claiming it was the Founders’ intent.
JPL
catclub… btw..my deduction would be 50,000…
khead
@FlipYrWhig:
I’ve screwed up my taxes with both the state and feds recently – to their favor – and they both actually corrected it for me and sent me some money. Go figure. Of course, the IRS sent the money to an account that didn’t exist because of an error on their end, but I eventually received a check.
Also, the snarky comments in this thread are just full of win.
Belafon (formerly anonevent)
@Lee: That starts to be progressive, for sure, but there needs to be a couple of other brackets higher up. Yes, if you goal is just to fund the minimum operations of government, then what you describe is OK. If, like me, you feel that there is an obligation to take care of those who are worse off than you, then a bit more should be required of those better off. I would probably fit into a second tier of tax level in any system like this.
Roger Moore
@Rick Massimo:
I wouldn’t mind that, so long as the tax increase isn’t really big. The problem is I don’t see how you could do it for people who run their own businesses. They really need to have some kind of deduction for legitimate business expenses, and that’s never going to fit on a post card.
Paul in KY
@Bullsmith: Hell, just have the guns & you can ‘leverage’ your own boat ;-)
It’s a Galtian paradise!
wrb
I think a a flat tax on inheritance would be cool:
“You can keep up to a flat $1m. We flat take the rest.”
The Ancient Randonneur
So our favorite “looks like an aging male prostitute” and the leader of the Faith Based Lynch Mob now wants a flat tax. No one could have predicted …
Jay in Oregon
I can’t stop laughing at that post title, Doug. :)
Villago Delenda Est
Tax simplification is not a bad idea, the devil, of course, is always in the details. Every proposal by Republicans would make taxation more regressive than it already is.
The ideal proposal is one that would turn every Republican candidate into a pauper, and let them beg for alms in the streets. Perhaps then, when they are in such dire straits, they’ll learn some empathy.
Oh, wait, they’re already grifting like mad. For some of them, it’s the reason to run…the Allen Keyes model. They’re just adding to their current wealth. Also, it’s unlikely that these sociopath shitstains would aquire the desired empathy from the experience; it would probably only exacerbate their current pathologies.
I guess the only way out is tumbrels. A pity.
David Koch
Here’s a photo of Hillary leading her Delta force operators.
http://cache.daylife.com/imageserve/0fan2FK7RE89O/610x.jpg
Paul in KY
@Judas Escargot: I was always amazed at the chutzpah it took to stand up there and say that without ending it with a ‘buwahahahahahaha!’ and a crazy grin.
He did have a creepy smile, now that I remember.
David Hunt
In addition to being an immediate giveaway to the top “earners” in the form of a massive tax break that redistributes the tax burden to the lower income brackets, the “flat tax” is a another vehicle to lowering taxes on the wealthy EVEN FURTHER. It’s the same as Reagan’s overhaul of the tax system in ’86. We lower the nominal tax rate and get rid of a bunch of deduction and it comes out “about the same.” Then lobbyists go to work and start talking to various congress-critters, convincing them that this or that special case needs to be written back into the tax system to benefit such and such a special cause and you’re back with a bunch of deductions but top rate the richies are paying is lower. The “flat tax’ will be the same way if we ever have the misfortune to have it inflicted upon us.
Belafon (formerly anonevent)
@MikeJ: I totally agree, which is why it will not change any time soon. Tell people that simplifying the tax code eliminates their mortgage tax credit or child care credit, and support for any change will fall through the floor.
Belafon (formerly anonevent)
@Roger Moore: You would create a similar tax chart for businesses, based on their profits.
Jay in Oregon
@David Hunt:
Exactly. Unless the Flat Tax was written into the Constitution, I don’t see any way to keep lobbyists from sneaking those loopholes back into the system.
Comrade Luke
@Belafon (formerly anonevent):
And capital gains.
Remove the mortgage deduction, child deduction, tax capital gains as regular income and let the Bush tax cuts expire.
Easy peasy :)
Paul in KY
@catclub: Exactly. The Fed government isn’t going to start collecting less money. So, if they collect less money from the top, the only place to make it up is at the bottom.
It is amazing how many people don’t understand this.
Xboxershorts
I propose a 5×5 stepping tax plan.
It’ll work because it’s all in the timing isn’t it?
(electronics tech snarkism here for anyone who is likely to not get the joke)
Roger Moore
@MikeJ:
Only if “You had only wages, salaries, tips, taxable scholarship or fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest was not over $1,500.” Also, too, all of your tips have to be reported on your W2. If you have any kind of income from any other source, even if it’s only $1, you have to fill out a different form.
Paul in KY
@Comrade Luke: Speaking as someone with a mortgage, I kinda like that deduction.
danimal
The GOP proposals are only going to get sillier as the campaign heats up. Tax policy is only the beginning. This is a direct result of the tactics of President Barack Obama, who has occupied the middle ground on a number of political hot topics. He has forced the GOP to compete at the narrowest rightward fringe. All the leftier than thou whining about Obama’s negotiating style ignores this part of the dynamic.
The GOP can’t be reasonable and still draw a contrast with Obama; that’s a direct and intended consequence of the President’s style and tactics. As frustrating as Obama’s moderation may be at times, there is a benefit and there is a strategy. It’s not 11th dimension chess, just basic political positioning.
/”Obot” leaves the room
El Cid
We need to get rid of all these complicated different speed limits.
Why can’t we finally have something fair and simple?
I call it the 55+5 plan: No matter where you are, on a highway, in a neighborhood, in a parking garage, in front of a school, there’s no more wondering if the government put a speed trap in front of you.
You go 55 mph.
For those who go faster, you pay a fine, amounting to $5 for every mile over the speed limit.
If people want to drive faster, then the free market will let them.
And everyone benefits — we get to work faster, children get to school faster, deliveries are quicker.
Sure enough, the liberal big government types are going to whine and complain about how, oh, so and so many people will die in traffic accidents in small intersections, or how crazy people are driving 150 mph in town because they prefer paying $95 in fines.
But liberals hate an even playing field.
FAIR SPEED LIMIT NOW!
PurpleGirl
@Lee: I don’t know what Norway’s current tax structure is, but at one time (according to my pen pal) the first X amount was tax free and covered pretty well basic living costs (food and housing, etc.) After that base amount income was taxed at 50%. Now, at that point college was free but restrictive as to passing tests to get in, their electric rates favored people at home doing energy-intensive tasks at night (power was free overnight; hydroelectric power from those fjords), medical care from the state.
Jay in Oregon
@El Cid:
Berke Breathed beat you to it.
slag
@Belafon (formerly anonevent): I agree that the complexity comes from the deductions/loopholes. But I disagree that support for revisions would fall through the floor if it meant getting rid of certain deductions that supposedly benefit people.
By making the income tax system more progressive, you could theoretically eliminate many standard deductions/loopholes while either lowering or keeping stable the amount the average person pays. You just need to revise the overall system to accommodate the changes while maintaining revenue streams. It’s both doable and marketable, it seems to me.
fasteddie9318
Since FYWP ate it above, my campaign-changing announcement:
Today I’m announcing my candidacy for the Republican nomination for President in the 2012 election. I will build my campaign around one principle: my own 999 tax plan. No, this is not some complicated matrix of “corporate taxes” plus “sales taxes” plus “income taxes.” Whew, I got tired just thinking about all those words, and then typing them. That was a lot of words, don’t you think? But Herb Cain wants you to remember all those words about his bogus 999 tax plan. That’s not right for America, not today or in the future.
My plan? My plan is simple, and it’s the real “999” plan. Every American will pay $9.99 to the government each year. And that’s total. No more “state” and “local” taxes mugging you and your children. Do you like thinking about your children being mugged? Herb Cain obviously does. He wants the states to keep taking apples from your children’s mouths, but you know what happens then? The children starve. Herb Cain wants to starve your children. My plan lets your children keep their apples and their oranges and is completely revenue neutral, because some dude at my gym ran some numbers and it totally came out right. Anybody who says otherwise hasn’t done the math. They probably did some other kind of math, like the kind you learn in schools, but that’s elitist and un-American. Did you know that school math uses Arabic numerals number shape things? I guess Herb Cain wants terrorists to control our maths and taxes. Do you want that? I don’t. We won’t use number shape thingies in the fasteddie9318 administration.
I know what you’re about to say: “fasteddie9318, this tax plan is genius and will totally make the economy grow by like lots and lots of trillions of dollars and there will be a billion new jobs created like every day, but I’m askeert of what might happen if we can’t afford to pay the police man to beat up hippies and throw dark people in prison for scaring me. Well, here’s the second part of my nineninenine plan (no more terrorist number shape things, remember?). Right now when a dark person scares you or a hippie gets in your duct work and catches your house on fire, you call 911 nineoneone. Isn’t that offensive? Lots of people died on nineoneone (I would say how many but without the number shapes it’s hard). I guess Herb Cain likes to remind people about all those dead Americans every time they have an emergency, which makes sense because he wants the terrorists to control our maths and probably our precious bodily fluids. In my plan, when a dark person scares you, you call, you guessed it, nineninenine. You’ll talk to a nice Britishean lady who will send some of them faggy Brit cops from Londown or whatever, the ones what don’t pack any firearms, out to take care of the darkies. Shouldn’t take more than about three weeks to clear up your problem.
In conclusion, don’t let the terrorists control our maths and mug your children, like Herb Cain wants. God Bless the United States of America.
slag
@Martin: I agree. I was thinking Tom Levenson also needs to get in on that.
ETA
This one was my favorite. Made me laugh.
maya
Maya’s Monopoly* flat tax plan:
First we take all the wealth of America and divide that up by every player; man, woman and child – like the Alaskan Permafund. Then deduct what is currently owed by the US Government and pay off the National Debt. Then distribute what is left to each person. (This should take care of the repubs abortion angst too, right?) Then we can start Cain’s Sim City 9-9-9 plan, or whatever. And then we roll the dice.
*In the game of Monopoly it is customary that everyone gets the same amount of money to begin with.
wrb
@El Cid:
Conservatives would just demand that government engage in a massive construction program to take the curves out of roads so they can drive at the constitutionally-guaranteed speed
Frankensteinbeck
@EconWatcher:
It’s a longstanding libertarian issue, and modestly popular with groups they mix with, like conspiracy theorists and Naderites. Basically, anyone who thinks the government will automatically stick a knife in you if you can’t see both their hands.
Bill E Pilgrim
It does seem to have devolved into a Four Yorkshireman style runaway one-upsmanship festival.
Right, I promise to tax everyone exactly the same… half a million dollars! If you’re worth anything half decent it will only be a drop in the bucket. If you don’t have it, it’s science experiments for the lot of you.
Martin
My plan:
1) Eliminate all current personal deductions
2) Replace that with a single personal deduction for all income earned up to the federal established poverty level for the size of household you are claiming. No taxes paid until you are above the poverty line.
3) One tax rate on all income earned above the poverty line up to the median income.
4) Each additional bracket is defined by the difference between individual and median and taxed at a 20% higher rate than the preceding bracket, up to a max of 50%.
Example, assuming poverty rate of 15K for one earner, median of 60K, lowest bracket rate of 15%:
0-15K: $0
15K-60K: 15% of each dollar, max of $6750.
($45K difference from poverty to median means each additional bracket is $45K in size)
60K-105K: 18% (15%*120%) of each dollar, max of $8100.
105K-150K: 21.6% of each dollar, max of $9720.
150K-195K: 26% of each dollar, max of $11,600.
etc.
The closer median income gets to the poverty line, the faster taxes ratchet up by making the brackets smaller, so it self-corrects. As median income goes up, the brackets stretch out, so taxes go down on the wealthy. If the rich want to pay lower taxes, they should pay more to people below the median income.
For unearned income, you pay a rate inversely proportional to how long you hold the asset, from 95% for assets held for a day or less to 10% for assets held for 30 years or more (we’d figure out a clever formula there). No special cases for college, retirement, houses, etc. The longer you hold the asset, the less you pay. That alone should encourage saving for retirement, college, etc.
It’s more complicated than the current system at the base level, but by eliminating all special cases, it’s actually crazily simpler.
Belafon (formerly anonevent)
@slag: In a rational world, I would totally agree with you. But even people I know who I would have otherwise thought to be smart have no clue how taxes work and how changes actually affect them. My dentist was one of those who said she would stop earning more than 249K because Obama’s taxes would take more money than you earn above $250K. (My wife heard this, so I didn’t get to rebut.) Most people would only hear “I’m losing my mortgage deduction.”
Lee
That is not true at all that 1. the higher incomes would pay less in taxes and 2. if that were true that it automatically makes it regressive. Where is it written it has to be revenue neutral?
Why not an increase in revenue?
A flat tax with a base your actual tax rate starts out miniscule, then as you get higher incomes the actual rate starts to approach the flat tax rate.
And remember this is a flat tax rate. Meaning corporations would pay the exact same rate without any loopholes.
Bill E Pilgrim
@Jay in Oregon: I miss Bloom County. I don’t miss anything that came after it, by him I mean, just Bloom County.
Roger Moore
@Belafon (formerly anonevent):
Define “profits” in a way that will fit on a postcard and won’t allow massive tax cheating.
John M. Burt
Seventy-odd comments* and nobody has proposed a flat tax on assets?
A half-million dollar homestead exemption, and X% annually of the value of everything else.
*Admittedly, not as odd as at, say, Sadly, No!
harlana
i’m sick of hearing about stupid, radical tax plans. i thought we were supposed to be talking about jobs.
slag
@Belafon (formerly anonevent): I hear you. And on some level, I kind of agree with you. But Republicans love to talk about simplifying the tax code, and in their talk, they rarely ever seem to specifically bring up eliminating personal deductions. And none of their constituents seem to object. Simplification is a huge selling point.
If people aren’t understanding the system as it is, are they necessarily going to understand all the little ways in which it is being changed?
ETA It also sounds like you may need to find a new dentist, if you can.
Martin
@John M. Burt: So, right at the time that most people maximize their assets and minimize their income (retirement), you would maximize their taxes?
That’s where the plan blows up – it makes retirement almost impossible to reach by taxing people increasingly the closer to it they get. We want to encourage people to retire, not discourage it.
goblue72
Bonddad does a pretty good job explaining why the “tax code is too complicated” argument is complete bull: http://bonddad.blogspot.com/2011/10/my-god-were-overtaxed-and-my-god-tax.html
And speaking as a someone who “Didn’t play a corporate lawyer on TV, but did in real life”, he hits the nail pretty well on the head. For likely 95% of the country, doing one’s taxes is fairly routine and easy. Yeah, nobody likes having to spend a weekend afternoon or so once a year filling out tax forms, but whatever – that’s part of what is called being a grownup. And with tax prep software, its easier than ever.
And for the remaining 5% with a more complicated tax return because you own various types of investments assets, partership interests, businesses, second homes and the like – congrats, you are more affluent than 95% of the country and can afford to hire an effing accountant.
And instituting a flat tax isn’t going to make the tax code go away. Figuring out your marginal tax rate is the not difficult – its the easiest. The part that takes the time is figuring out what part of your income is actually subject to taxation. And contrary to what the Flat Tax nuts claim, instituting a flat tax doesn’t make the rest of the code go away. We have plenty of states with flat income tax rates – and it doesn’t seem to have ended complex tax codes.
Martin
@harlana: How about a tax policy that was so complicated only a tax accountant could understand it? Everyone would have to hire somebody to prepare their taxes. Jobs!
Triassic Sands
Over the years, the discussion about a flat tax has hidden its regressive nature behind talk about simplicity, as though simplicity has anything to do with having different tax rates for different taxable income levels. But there is nothing inherently complicated about a very progressive tax code. What is complicated is determining one’s taxable income. Once that is done, figuring out how much tax is owed is incredibly simple — everyone has a single line in the tax tables that applies to their taxable income. (I’m ignoring the Minimum Alternative Tax.) If Congress can get rid of all deductions in the name of a flat tax, it can just as easily get rid of all tax deductions and use tax tables that are as progressive as Congress wants them to be. In truth, what the Republicans are really looking for is more regressive, not simpler taxation.
Every “flat tax” plan I’ve ever seen is highly regressive. Worse still, the authors invariably pretend that the flat tax rate needed to be revenue neutral is much lower than it really is. So, if we take a typical Republican flat tax proposal and make it the law, we’ll get richer rich people, poorer middled class and poor people, and bigger deficits.
Unfortunately, the average American tends to be a sucker for “simplicity,” even if it is illusory, and getting the average voter to make a rational decision about such plans can be problematic at best.
catclub
@PurpleGirl: “rates favored people at home doing energy-intensive tasks ”
Grow lamps?
slag
@Triassic Sands:
This is why I like when Obama talks about simplifying the tax structure. As others have stated, there’s no meaningful connection between a flat tax and tax code simplification. Republicans have just sold it that way. There’s no reason why Democrats can’t sell a progressive tax system in the exact same way.
El Cid
@goblue72: Spending so much time filling out taxes is criminal. That time is much better spent doing something like a fantasy football pool roster.
TheF79
Triassic Sands and others hit the nail on the head about the “simplicity” of a flat tax. Given a level of taxable income, figuring out what you owe is incredibly easy. The complicated part of the tax is determining your taxable income.
It sure would be nice if someone actually asked the GOP candidates how exactly this flat tax makes the tax code simpler.
El Cid
@TheF79:
How am I supposed to understand such a crazy complex sentence? I mean, the main part isn’t even until the 2nd clause! How am I supposed to have all this ‘time’ to read to the end of a sentence? I could be a small businessman!
This is what we mean when we say we need a simplified clause system!
PeakVT
@Judas Escargot: No, a flat tax can’t be fair because the marginal utility of income declines. I don’t know a lot of states have only one bracket, but just because they do doesn’t necessarily make it good policy.
For taxes, flat doesn’t necessarily make for simple, and simple doesn’t require flat. What we want for the overall system is simple and progressive.
catclub
@El Cid: There is no sanity clause.
Be sure to tip the veal and try your waitress. I’ll be here all week.
slag
@goblue72:
Maybe I’m stupid, but I find doing our taxes incredibly…taxing. It puts me in the stress position every goddamned time. I don’t want to end up leaving money on the table (which I invariably do). I don’t want to go searching my files for documents at the last minute (which I invariably do). I don’t want to spend a lot of time and effort trying to figure out what has changed between last year and this year that has caused a change in my totals (which I invariably do). And I don’t want to go away from the whole process feeling like it was brought to me by Excedrin–the better headache medicine (which I invariably do).
Thoughtful Black Co-Citizen
All that’s left is to place your bets on the GOP Candidate who’ll suggest a poll tax. My money’s on Santorum, but that may be due to my desire to see a large angry mob introduce him to a guillotine.
El Cid
Simple is always better!
Every time you go to the doctor they’ve got some ‘new’ test to give you or a different ‘diagnosis’!
That’s just a way to spend your hard-earned money.
We need a Fair Treatment System, which would simplify medical treatment down to 10 treatments, and if you wanted more than that you could pay for it.
Nobody needs all this complication in medicine when probably 2 or 3 things would fix you. Probably.
AkaDad
I charge more than $5 to have a taste of my footlong.
r€nato
@Paul in KY: I and millions of others bought homes based in some part on the assumption that we’d have some part of our taxes offset by the mortgage interest deduction.
The ONLY way to get rid of this deduction would be to slowly phase it in, grandfathering those with existing mortgages.
But, it will never happen. The Nat’l Ass’n of Realturds would fight it tooth-and-nail, for one.
The other problem is that the market would eventually adjust for the removal of the mortgage interest deduction… which would take the form of housing prices moving even lower. That’s not going to go over well with sellers, realtors (whose commission is a percentage of the sale price) and current homeowners who are already shocked at the precipitous fall in their neighborhood comps.
One man’s tax loophole is another man’s cherished exemption.
The rich will always get their exemptions, I don’t care what the candidates promise.
So if the rich get them, then the rest of us should too.
The complicated tax code will never go away, which is why any non-ignorant voter should just ignore any politician who talks about simplifying the tax code.
wrb
Yes, that is one tax reform the economy can’t handle right now.
r€nato
as someone else said earlier… when people talk about their enthusiasm for ‘flat tax rate’ or ‘simplified tax code’, what they really mean is, “I WANT TO PAY LESS TAXES!”
if you told someone that a simplified or flat tax would end up in a not-trivial rise in their tax bill, they’d either pretend not to hear you or find someone else’s flat tax plan that would promise them free beer fountains and vagina trees.
harlana
The great thing about Cain being president is, I won’t have to pay taxes on used food!
r€nato
@harlana: Yeah, did you hear about the new tax the Kenyan so.cial.ist tyrant imposed on feces??? NOBAMA!
slag
@El Cid: No. Simple isn’t always better. But if you can make something simpler for people without sacrificing a great deal in the process, then you should. Having respect for people’s time and work outlay isn’t always a bad thing.
FlipYrWhig
@slag: It was only after buying a house and my wife starting a business that tax prep seemed particularly hard to me. As a married couple with no children and two salaried jobs, there was little that was in question. Under those circumstances, you save some papers, copy numbers from those papers into boxes on the form, then follow step-by-step directions. The complexity all arises from the incentives tied to children, mortgages, investments, student loans, energy-saving equipment, and that kind of thing. I don’t know how many people have complicated tax returns. My guess is that it’s rather few, but that there’s a mythology around how closely everything is scrutinized that freaks people out far more than warranted by the paperwork itself.
Martin
@slag: Well, you’re talking about a different set of problems. As noted above, almost none of that stuff gets eliminated with a flat tax since you still need almost all of it to determine your AGI.
Something the IRS could do is do most of that nastiness for you. Everyone sending you a 1099 or W-2 has to file it with the IRS on their end, so why not just have the IRS offer up a website that presents you with their various forms, with the appropriate information already filled in? Everything is already attached to your SSN/TIN as it is. The problem is that you’re running around trying to tell the IRS information that the IRS already knows. That shouldn’t be a hard problem to solve, even on the scale of the IRS, yet it’s been almost impossible to get done.
The IRS should cut a deal with Apple. Apple can repatriate their foreign profits (saving 35% tax) in exchange for building this system for free. All HTML5. All you need is a modern web browser. No charge to the taxpayer. Apple’s awesome at this kind of stuff.
Lysana
No tax reform would be complete, IMNSHO, without a 99% tax levied on corporations that participate in lobbying or PACs. But I’m Obama-esque about this. I’ll lead high and take a lower number. How’s 90% sound?
pragmatism
i can’t get a good answer from my rightie friends why right now is the proper time to ensure that taxes are “fair”. same friends have deficit reduction fever when it suits them.
FlipYrWhig
@Martin:
Yeah, this hasn’t made sense for me for a long time. And it helps to create that sense of “Oh my God, I feel like I’m taking a test that I’m not ready for!” I like the idea of treating it as a EULA: here’s what you’re agreeing to, so check it, and click a box once you’re sure.
But the optics are a little sketchy: it certainly would produce the effect of reminding everyone that The Government has been keeping tabs on you and already knows everything important about you.
slag
@Martin: Agreed on all counts (with the possible exception of charitable deductions, which the IRS doesn’t necessarily already know about but probably should). As you and others have rightfully noted above, flat tax and tax system simplification are not meaningfully connected in any way. And I like this idea a lot:
The only concern I would have with it is security. Which is not insurmountable and probably no more difficult than securing the mongrel system we have now.
FlipYrWhig
@pragmatism:
Because the fundamental conservative principle is that Democrats want to take your hard-earned money and give it to lazy, greedy moochers — via taxation. They’re worried about “fairness” because they think Obama’s stealing their money to give free medical care to illegals and gangbangers.
Martin
@FlipYrWhig: Well, the process has lots of branches in it: standard or itemized deductions, etc. Most people can always choose the simpler route, but does that favor them? That’s where the complexity comes in.
Making choices involves work. Always. Get rid of choices, get rid of work.
pragmatism
@FlipYrWhig: most of these people aren’t as forthcoming as you, and I think you’re right. when I suggest that a flattening of the structure may be better received at a time when the deficit is more manageable (something they purport to care deeply about and ZOMG someone think of the children???!?) the frantic pivoting away starts.
pragmatism
OT–went to Portishead show last night at Shrine Theater on USC campus. In a word, AWESOME. I’m not that huge of a fan (my wife is) but I thoroughly enjoyed it. Also, too, the joint was chock full o’ hipsters but it was one of the most polite crowds ever. Highly recommend. Think they’re in Bezerkeley next.
slag
@Martin:
Very true. I’ve experimented with these choices at various times, and one year, I filled out three different tax forms just to find out where each one would land me. The process yielded three different outcomes.
Besides involving work, making these choices can lead to uncertainty and stress. Especially if you’re not a wealthy gambling man.
les
We can’t have a simple tax system, because we use it to provide personal and business incentives to get to desired investment and industrial goals. To be simple, we’d have to collect the simple tax and give money directly to accomplish preferred national goals, which we’d have to decide out loud and up front. And that, my friends, is fucking soci!ism. And we can’t have that. Or nice things.
Uncle Clarence Thomas
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The Footlong Plan is very popular with Ginni.
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Warren Terra
Rejoice!
uila
Perry should propose the 8-8-8 plan and see if he can get Cain to snap like the hitchhiker in Something About Mary.
“Step into my office… cuz your fuckin fired!”
Roger Moore
@Warren Terra:
I think this is good news for
John McCainBarack Obama. I don’t think there’s any better advertizing for Obama than letting the Republican candidates let their freak flag fly trying to attract the wingnut vote. We want them to spend as much time as possible advocating vicious, stupid, counterproductive strategies in an attempt to woo the 27%ers so there will be plenty of incriminating evidence to tar them with to the sane people.PurpleGirl
@catclub: Washing and drying machine, vacuums, stuff like that. The thing is that because they were producing hydroelectric power from the fjords, the power was being produced all day and at night wasn’t needed for industry or commercial uses… therefore residences got the overnight power free.
BBA
The tax-return-on-a-postcard thing has almost nothing to do with “flat” taxes. Most other civilized countries already just calculate taxes based on reported income and mail out a simple tax bill or refund.
But it will never happen in America, thanks to lobbying from H&R Block (whose business model would be ruined) and Grover Norquist (who wants to keep our taxes as annoying as possible to boost support for his anti-tax campaigns).
El Cid
@slag: See, that’s the thing: “simple” in this sense should mean being efficient and comprehensible at supporting a sane & just tax system.
Simplicity for its own sake isn’t a value. Simplicity of design when justified, yes; simple-fetishism, no.
So the ‘flat tax’ is a fetish of “simple,” “simple” as an ignorant substitute.
People rave about the simplicity of design of an iPod or iPhone — but it’s not like you are then connected to an iTunes account with a dull selection and are charged enormously for songs you don’t need but which happen to come in an envisioned pre-established “iTunes Fair Music Package”. Which certainly would be “simple”.
I am a people. I respect my own time.
I do not want to save time in filing my taxes if it means screwing me over. I do not value a tax system so simple it’s instinctual if the tax plan itself is a bad thing to do.
John O
The Dems are going to lose on this one eventually, being incompetent since they could actually WIN it if they were smart enough. People feel they’re getting ripped off whether they do their taxes fairly or not. They hate it, both sides of the aisle in a 10 year sample.
All you need to do to a flat tax is make it progressive. You do this by giving everyone from Joe Unemployed to Bill Gates an exemption on a livable wage, say $36,000/yr. Have two or three levels of “flat,” i.e., after $X (36K in this example) you pay 20% up to say a quarter million and so on. Voila.
The Tax Code is an abomination of rich people giveaways. Mark my words, the Dems lose the debate as it is currently framed.
Thymezone
There will not be a flat tax system for a variety of reasons. The biggest one is that the tax code is an instrument for manipulating votes, and it is not likely that people in congress are going to give that away.
The second one is that a flat tax cannot work and provide a sufficient revenue stream to the government.
The third one is that it is not fair because it is regressive. Progressive taxation is fair, and will eventually prevail out of political necessity. One percent of the population cannot indefinitely sway the other 99% to tax themselves against their true interests. Already popular opinion is being clearly seen as favoring progressive taxation. Progressive taxation wins the PR contest after 50 years of being beaten mercilessly and relentlessly by the right and by the rich. That’s pretty impressive when you think about it.
Thymezone
That’s right. Just correct the flatness, and it works. What will you call it? The Curvy Flat Tax? The Optical Illusion Tax? Keep working on it.
John O
A progressive flat tax is fine. Call it whatever you want, it would beat the crap out of what we have now. There’s no faith in the system, and a lot of it is missing because of the Code.
What’s the matter with it besides the name? And I’ll stipulate that it will never happen for the reasons Thymezone lays out nicely above. But it will be an issue the Dems will lose on because people want something simpler.
AA+ Bonds
Hahahahah THE FLAT TAX, a totally successful Republican idea endorsed by such luminaries as perennial presidential candidate Steve Forbes, and perennial presidential candidate Steve Forbes.
AA+ Bonds
@John O:
Putting everyone on FULL BLOGWARS ALERT that John O is a libertarian blogosaur who last appeared on here to tell us that we all have a little Libertarian inside of us if we listen to that calm still voice.
I mean, go read his stuff. I especially like the piece where he complains that the abortionists are stealing “pro-choice” from the libertarians.
AA+ Bonds
@uila:
I would love it if they became the first round of The Price is Right for a whole month, it’s going to be hard to make it more entertaining than it is now, that last debate was so mind-bogglingly bad for the Republicans that I went back and watched it and I only read transcripts as a rule.
How the fuck do you transcribe minor assault of one candidate by another, riddle me that Batman.
Jay in Oregon
@El Cid:
FTFY.
John O
@AA+ Bonds:
Awww, jeez, tell me what’s unfair about my basic outline. And everyone DOES have a little libertarian in them.
AA+ Bonds
I honestly would not be surprised if Karl Rove himself told Mitt Romney to do that and actually demonstrated what to do on Mitt Romney’s own shoulder so he would absorb it.
Rove is well aware of what the pseudo-fascist base wants to see happen to a man in a sudden position of weakness like Perry: he must be subjugated and humiliated.
Among other things, the inevitable still it produced demonstrates that Romney is physically taller than Perry. You can’t beat that kind of free publicity.
AA+ Bonds
@John O:
John O
I’m aware that libertarian is a dirty word out here, AA, but you hanging it around my neck like that is weirdly hostile. I’m about as libertarian as I am socialist and conservative, I guess. Depends on the issue.
Why don’t you tell me what’s wrong with my tax idea besides its impossibility and stop with the silly ad homs?
Roger Moore
@John O:
Only in the sense that the libertarians are fucking the rest of us in the ass. And yes, it is very little.
John O
@Roger Moore:
I’m by NO means a capital-Libertarian, but I certainly feel pretty libertarian about a lot of things, like, say, the 4th Amendment.
Lots of substantive criticism of the tax overhaul idea, I’ll give you that.
Thymezone
“People want something simpler” is one of the myth-puffing ideas that has no basis in reality. Nobody wants any tax breaks, except for the ones they themselves are getting. That’s why tax breaks will never go away.
John O
@Thymezone:
I think there are more people who would give up their tax breaks, the ones they know about, anyway, for a generous lump sum exemption than you think, and I think the Dems are being unnecessarily outflanked on this when simplifying the Code could be tackled from the left just as easy as it is from the right. That’s all I’m saying.
Thymezone
@John O:
People will give up tax breaks, in return for larger, prettier tax breaks.
Okay, if you insist.
Pretty radical thinking, I must say. Let me chew on it.
The thing is, tax reform right now lives only in the rhetorical realm. Call me when there is a bill, and it has whipped votes sufficient for passage on the floor of either house of congress. No reform will happen which kills everyones’ favorite deductions. Deductions are “tax cuts” and everybody wants one. Removal of tax cuts is a NIMBY idea. Everybody wants it … somewhere else.
John O
@Thymezone:
It lives in the rhetorical realm of the Right exclusively as it stands today, and it appeals for a reason, and it isn’t because people want to pay more taxes than they do today. The concept is just being flushed out, and the Dems are on the wrong side of it by taking a “no” only approach.
0-$36K, no income tax
$36K-250K(?) tax it at 20%, or whatever.
One more tax rate above $250, or two if you prefer, but no other breaks. $36K tax free, on us, for everyone. Start it out so the top rate is revenue neutral to prior years, and promise the top bracket first dibs on any future tax rate decreases.
Something for everyone.
(I’m still stipulating it will never happen, just as you said, but mostly because the entrenched monied interests won’t let it happen, not individual taxpayers.)
Thymezone
@John O:
Your points are well taken. But remember that today’s Dems are basically theatrical kabuki players who have little connection to the real world of Dems out here like us. They are whores, they are politicians, they are beholden to moneyed interests, they are self interested. In other words, they are a lot like Republicans, but with a few more redeeming values that they manage to keep hidden most of the time. Heh. So they are not going to really reform tax codes, and the Republicans aren’t either. The ones who really want to don’t know how to, and the longer they stay in congress, those TP newcomers, the more like the other hacks they will become. The whole idea is made for tv, not for Capitol Hill. That’s my take on it.
Wilson Heath
Sections 1 and 11 of the Tax Code are nowhere near 3 million words. Between those two sections and section 61, you’ve in essence got all of the income taxing provisions. The bulk of the remaining income provisions one might think of as “exceptions.” Non-recognition, deduction, credit, special treatment for character or timing. When not to tax (or to tax later) or to tax less. Sections 1 and 11 are ridiculously simple compared to the rest. Flat taxers screaming “simplification” are looking in the wrong place. Using the tax table is dead easy. If you had over $100k in adjusted gross income, Mazel Tov; now go buy a calculator and follow the very simple 1040 Instructions.
Paul in KY
@r€nato: Good. I feel better now, r€nato :-)