A Uniform Fair Tax Proposal
1. A Short History of our Recent Economic Past
As any new budget comes out it carries forth with it all the old erroneous assumptions. For the last quarter century we have been operating under a system loosely termed “supply side” economics. Of course, there has always been a supply side to economics so this was not a new discovery. And to suggest that supply is more important than demand when self-evidently they are entirely symbiotic, is odd to the point of disingenuity, rather like saying that one side of a coin is not entirely dependent on the other. Nor was the general designation “supply side” ever meant in concept to be confined to a very narrowly defined part of general economy activity.
So when the adherents of this particular hybrid brand of economic theory chose to focus on the extreme upper end of the supply spectrum to the exclusion of all the rest it resonated much more of prejudice than insight. Supply side as it has been employed in this case then is not even a whole “side” but just a small minority (ten percent) of the population which qualifies due to the weight of their large net worth and superior political connections, to the exclusion of all the rest of the side. This is similar to saying that the only valuable part of a penny is concentrated up Lincoln’s nose and if the rest of the surface area is removed, the penny, even as it grows smaller, will increase in value.
Therefore, in 1980 when this theory first manifested itself, its proponents said that they wished to cut the size of government and return the money saved in tax cuts to the American “people”. This was a concept with wide appeal since most Americans - being neither animal nor mineral- naturally thought they would be included in this generality. Of course, they were wrong. Because when it all washed out the “supply side” tax “relief” was redirected by the politicians in charge in a large across the top tax cut that went only to the wealthiest Americans. This in lieu of a far more honest and effective across the board tax cut which would have helped the general population equally.
From this first fiscally irresponsible sleight of hand many other frauds have followed. Concomitantly, supply side supporters have never effectively nor honestly tried to cut the size of the government. To achieve the reductions they promised they have assiduously tried to cut all social programs which profit others and leave only things which profit them - like corporate welfare - in place. Apparently to their deep surprise, they have found that the majority of the people who actually own the government (and never got the tax cuts which would have justified the trade off in cuts in services) wanted social programs to continue and continue to be effective.
The Mexican standoff between theory and actuality has led to the worst of all possible worlds. The majority of the population has not only not seen their taxes decrease they have seen the services these taxes were meant to pay for atrophy and be denied. Meanwhile declining revenues coupled with increasing expenditures have created a huge shortfall between the two which have led to enormous yearly budget deficits.
No problem, supply siders said, this magic money in the hands of their special friends among the wealthy would generate remarkable growth never predicted or proven by any economic model in history and allow diminishing revenues to outstrip growing expenditures. This voodoo would allow government even at a lower rate of taxation to accumulate so much more revenue that deficits would never occur! In other words, the less tax you assess, the more tax revenues you collect! Holy Houdini! If this alchemy had occurred it would truly have been an economic miracle. To honor them for their discovery perhaps we should practice what their theories preach and decrease their wages in order to increase their pay.
To compensate for their failures in theory and simultaneously indulge their crass greed and deep class prejudice, supply siders have employed what might be called a “starve the cat” theory of reform. This is, having decided that the tail of a cat must be unnecessary (since it doesn’t specifically benefit them) they decided to cut it off. This, however, they soon found was something the cat wouldn’t stand still for. Therefore they determined to starve the cat by restricting its food supply, thinking that the offending tail will fall off on its own. Months later as the cat lay near death, with an occasional futile wave in the air like a flag on a calm day, the tail is about the only sign of life remaining. This is how politicians in charge have tried to cut social spending, in the crudest and most mendacious way imaginable, by starving the entire government of its revenues. In so doing they have destroyed the effectiveness, accountability, fairness and sense of shared purpose that has always characterized our government and left us only the wages of political divisiveness for their efforts.
To illustrate just how well all these supply side theories have panned out in macro economics you have only to look at the numbers. In the first 200 years of our country’s history, through a civil war, two world wars, the Korean and Viet Nam and Cold Wars, the Great Depression, settling an entire unsettled continent, sending men to the moon, through engineering feats of transportation, communication and manufacturing and scientific, cultural and economic advancement; we have gone from thirteen small colonies huddled on the eastern seaboard to the greatest and most powerful nation in the history of the world. It was not without some effort and cost. In 1980 the national debt stood at approximately one trillion dollars. Arguably, though not all of it was justifiable, this might be termed good debt, debt gathered for a purpose of investment in the future of the country which could be expected to show a healthy return on this investment.
Since 1980 however, we have added an incredible additional 8 ½ trillion dollars to the annual federal budget deficit (three trillion since 2000) and seem to have achieved nothing enduring to show for it. This debt is gratuitous, contemptuous and contentious debt, redolent of government incompetence, corruption and avarice. It is hard to find one area of government or American life that can be called improved since 1980 or identify any other positive expenditure on behalf of the nation which could have possibly been worth the massive amounts of fiscal profligacy, rampant borrowing and negative accumulation of ruinous debt, graft and waste which can only be counted as a heavy debit against our future prosperity.
In the process of these 25 wasted years we have moved from being the world’s greatest creditor to the world’s greatest debtor and our balance of payments deficit with the rest of the world grows every year – a healthy 6 ½ % this last year. These rapacious policies have skewed the disparity between rich and poor in this country to record levels, suppressed the prosperity of and created a more debt ridden middle class than at any time in our history and given us a more indigent, less well educated, less medically well cared for and more homeless lower class than has been seen since the Great Depression. At the same time this elaborate economic Ponzi scheme has created a new upper class of the likes not seen in this country since the glory days of the robber barons. Taken together this has put us on the long, painful and well traveled road from being world leaders toward world has beens and once weres.
All of these endemic tentacles of corruption reach their culmination in an unscrupulously unfair tax code which must continue to grow in increasing complexity to account for its ever expanding decrease in fairness. Yet even in the face of all this negative proof, dishonest supporters of these discredited “supply side” tax policies continue to ignore the facts and try to irresponsibly cut taxes on the wealthy and further drive a wedge between rich and poor, underfund their social and regulatory responsibilities, continue to pursue unfair tax policy and fiscal irresponsibility and to drive the country further onward toward irretrievable debt and ruin. At the same time they continue to foster widespread distrust, division and disrespect for the democratic institutions placed in their care.
2. The Caste Structure of the Economy
Naturally the most absurd element of this collection of economic untruths begins and ends with the bizarre suggestion that the wealthy were ever taxed disproportionately higher than the rest of us to begin with. This is wildly and demonstrably untrue.
To start with you have to ask when such a startling tax code tilt to the poor and middle class could have possibly occurred. Since many in Congress happen to be much wealthier than the national average, you must wonder what the likelihood is that they would have intentionally disadvantaged themselves to benefit all the rest of us. It belies our experience of them to believe they would have ever been so altruistic as to overtax themselves in terms of either work or wages. They may be institutionally sloppy and incompetent and lack diligence in many areas but never in those that infringe on their own self interest. Then, if you recall that they are rather notoriously beholden to big money and special interests for campaign contributions, the odds that these same privileged interests would have ever been assessed a larger proportional tax burden than the rest of us becomes microscopically small.
In truth, the wealthier you are in this country the lighter the burden of our tax code falls upon you not the other way around. It takes a complete suspension of logic and the evidence of your own eyes to believe otherwise. This was true in 1980 and it is even more so today after a quarter century of fraudulent tax code manipulation. Since 1980 when “excess” government spending was returned only to the upper caste of society their incomes have exploded while the rest of society has labored on in idle or actual decline. Though the wealthiest 1% of households in the United States control nearly 40% of all wealth in the country, between 1980 and 2000, while seeing their incomes double they have seen their tax burden drop by over 25%.
Yet in fact, only in the very shallow and artificially defined area of newly acquired money (the income tax) have the very wealthy had a tax rate marginally higher than the rest of society. But as the income tax only taxes new money or income derived from capital or investment rather than principle (if it can’t otherwise be hidden or deferred), and not actual wealth or true net worth, this should not be thought of as an especially significant burden to the huge mass of rarified and nearly untouched wealth which comprises the great accumulated fortunes of the upper crust of our economic pie.
On the contrary, the “new money” income tax self-evidently falls to a disproportionate degree on those whose incomes are congruent to their net worth, who live on their yearly incomes, paycheck to paycheck; as opposed to those with inherited wealth, trust funds or capital previously acquired. As this former category comprises most people and all wage earners in the country, even a mildly graduated income tax has not been written as a monument to democratic fairness but primarily to honor the age old, old money prejudices of a permanent leisure class.
In this, people who are not economists or used to dealing with large sums of money are easily misled. If a billionaire pays a million dollars in income tax, because most of us could live easily and well the rest of our lives on a million dollars, it is easy to be mesmerized by all the zeros. Yet a million amounts to only 1/1000 or .001% of the net worth of a billionaire. At the same time, a person or couple who makes $50,000 a year may pay a confiscatory rate of 20% of his, her or their entire net worth to the government every year. This is an insanely unfair system of taxation. To pay 1/5 of all one owns every year to the government guarantees that you are being far more generous to government than it will ever to be you in return.
Conversely, if you reverse the example just used, and apply the billionaire’s rate of taxation to the individual who earns fifty thousand dollars a year, his basic tax bill would drop to $1.00 rather than $10,000. This difference in proportional severity in our tax code between rich and poor might be compared to the difference in a billionaire’s having his toenails clipped versus a solid member of the middle class who makes fifty thousand dollars a year having a leg (or two) amputated. Yet our Representatives and Senators wallow in rivers of self-righteousness as they alleviate the tax burden on those who don’t need it so the middle class and poor can continue to subsidize ruinously unjust tax relief to the wealthy.
And the income tax is meant to be the progressive area of our tax code. All other taxes, from property to sales tax to user fees for services, are meant to be flat with no inbred negative assessment against wealth. By definition this makes them regressive, as the percentage of their net worth a poorer person must pay for basic needs is far higher than one who has much more money. At the same time those with more money are still easily able to afford all the wants and amenities that are priced far beyond a poorer person’s reach. Other taxes as well, like the payroll tax, are stridently regressive and fall only on those least able to pay.
Even the capital gains tax (which is just a deferred income tax) which used to be weighted slightly against new money earned by old wealth has been reduced by corrupt and craven tax manipulation to a rate below the rate of the normal income tax’s medium bracket. This means that a billionaire investor whose income is registered principally in capital gains may intermittently pay a tax rate on their declared millions lower than that paid annually by their own cook or gardener (provided they are not illegal and are paid anything more than the minimum wage) on their few thousands.
In this way the income tax has always worked as a giant thumb on the scales in favor of old indolent wealth versus new, striving enterprise. It disrupts economic decision making at its most productive point, where the tire of endeavor hits the road of enterprise. Disposable income for people just starting out is the key determinant of the future shape of their lives, in terms of investment, housing, education, lifestyle, opportunity and the health of their children. The income tax taxes enterprise and creativity right at its incipiency. As a steep tax at a crucial point on those striving to get a leg up in life, from young couples to small and start up businesses, it is as cruel as it is self-defeating.
In this way the income tax hits families with an additional burden right at their most vulnerable point before they are strong enough to put money aside to withstand such shocks and adds an additional unjust burden on the back of the very process of getting ahead in life, solely in order to protect the advantages of those who have already arrived. At the same time the income tax exempts those well established and secure in life from having to pay their fair share for the support of the nation whose laws and freedoms have made their prosperity possible.
The only additional equalizing tax meant to redress the massive and growing imbalance between rich and poor in this country is the inheritance tax. An inheritance tax on “old” previously acquired money was put in place by previous, more honest generations of Americans as the sole lever and leveler to ensure some modest measure of tax equality by capturing some tiny proportion of capital back into the general economy after years of exclusion from all other applicable taxes, at its passing into the hands of its heirs.
Remarkably, in yet another sign of bad faith, since 1980 even this far from comprehensive or even very effective after the fact stab at income equality and tax fairness has been under consistent, pernicious assault by today’s disreputable politicians. The inheritance tax has somehow been mischaracterized by its duplicitous detractors as “double” taxation. Though how, since this is generally the first and only time a wealthy person will ever pay any tax on the new wealth they have just inherited, this can be called a “double” tax is unknown. For each person to be taxed once in their lifetime for such large accumulated masses of unearned capital as it first passes into their possession seems not too much to ask.
As to why it is either fair or logical or in the nation’s interest, after exempting most true wealth from most legitimate taxation merely because of the caste and connections of its owner, to then reward the unborn children of billionaires with tax relief prior to their having ever even been burdened with any taxes, is hard to fathom. For as soon as this money is inherited it will immediately become “old” money again and cannot be taxed until some new heir inherits.
To not tax inheritance means massive clouds of capital may remain free and unsecured from taxation forever, passing over our citizens’ heads from generation to generation. We are apparently meant to bow down as subserviently as our Congress in awe at the godlike influence such money wields over our lives.
By now the record is clear, supply siders have fixated on the only parts of our tax code which were actually equitable and progressive (income, inheritance and capital gains) and tried like Midas to destroy them. In doing this they have proven themselves careless of the unity and shared responsibility of the nation. They have, in return for pay-offs and kick-backs, worked to enslave democracy to a new preferential and elitist nobility based merely on accidents of birth and accumulation (by whatever means) of wealth.
3. Our anti-Democratic Tax Code
On the expenditure side of government, the supply siders’ chief operating principle has been that, whenever possible, public money should never go to the direct assistance of the public. Instead, proponents of this fatally skewed theory of democracy say that public money should be redirected by politicians to “private” interests, like publicly held multinational conglomerates and special interests to which our public officials are especially beholden. That tax payer money must be first filtered through private entities’ bank accounts and only returned to the public, if at all, by the most circuitous and indirect routes, is fertile with corruption and is a throwback to age old elitist and fervently anti-democratic prejudices.
That this theory invariably works in service to wealth in order to allow these wealthy interests to become wealthier by now should be no surprise. As if by conscious design these practices not only perpetuate previous injustices but create a variety of new societal ills. This rewards a Congress that continually prostitutes our government to favor private profits over public interests.
Tax relief for giant corporations victimizes the public twice by enriching wealthy shareholders and managers and CEO’s of these corporations (over and above the sizeable personal tax relief they have already received) with across the top income increases which never bleed down to benefit the worker or consumer. As this also feeds the basic toxic amorality of capital, which on its own shows little consciousness of either social justice or patriotic impulse, it is highly destructive to the general cohesion and prosperity of the population. These government sponsored practices harm small business and create predatory pricing and anti-competitive or monopolistic backwaters in our market place which victimize the consumer as well as these preferred businesses’ competitors.
As well as helping Congress, the funneling of wealth upward into fewer and fewer hands helps Wall Street which makes the macro economic numbers look good while not necessarily helping Main Street or your street or pushing the micro benefits of this tax stimulated wealth down to the rest of the country. Therefore Congress thinks nothing of giving billions in unnecessary incentives to multinational corporations at the same time it begrudges nickels to help fund hot lunches for poor children and shows no consciousness or guilt at the total lack of ethical proportion such prejudices illustrate.
The original explanation of this insidious corporate welfare was that these corporations need to be helped by the taxpayer because they create jobs. Yes, they do, but today and for several decades gone, they have been as likely to create these jobs in Indonesia or India or China as America. It is hard to find benefit for the American taxpayer in seeing their wages suppressed and their jobs outsourced to subsidize the wholesale relocation of large parts of our economy overseas. In return, to show their gratitude for the astonishing largess Congress lavishes their way, these moneyed interests invidiously encourage the worst instincts of our political class by redirecting a tiny bit of this money back in their direction via small kick backs and payoffs either in private or public (via campaign finances) ways often hidden from public view. This helps ensure that the worst of our politicians can continue to hold onto the very offices they are corrupting.
All of these things go hand in hand and have led to a startling and largely intentional redirection of wealth in this country away from the middle class toward a permanently privileged class. This fiscal reorganization of wealth threatens democracy itself by giving too few people too much control over the operations of what was designed to be a money blind system of government and has helped it turn into its opposite, i.e. a system blinded by money. It steals control of our democracy, whose strength and success have always resided in the ideals, hard work and primacy of the individual, and puts it into the hands of its least democratic and egalitarian elements - inherited wealth, bribed politicians and large institutions.
Accompanying all this double and triple dipping, tax “relief” fraud and economic redirection and political corruption is an unprecedented propaganda apparatus. This bought and paid for mouthpiece automatically derides anyone who actually wants programs to fulfill the traditional responsibilities of government toward its own people as “do-gooders” as if doing good were somehow a bad thing, or “tree-huggers” as if trees weren’t beneficial, or “anti-religious” as if Christ hated the struggling class as much as they do or… well you get the tendency. People who really need the help, hereafter called Americans because most of us will need the help of good government at one time or one way or another, are criticized and reviled as being weak and sniveling and not good enough to deserve the benefits of true democratic representation that those with more money are preternaturally entitled to.
That idea that money collected from and held in trust for the public should not be used solely for the public or for the good of the nation is a truly deviant and polarizing contention. It attacks democratic government at its premise. By perverting the apparatus of democracy to create unequal or preferential treatment for the few, our government intentionally sows distrust and division in the very people it is constituted to serve. The current government and its tax code, as conceived by these practitioners of decidedly undemocratic leanings, should no longer be thought of as an entity to maintain democracy, but one determined to destroy its premise through the agency of its own operations.
As the original supply siders have been steadily discredited by the failure of the divide and plunder policies they’ve championed, fewer and fewer continue to refer to themselves by that appellation. But if, as they say, the only leader among livestock is the one at the head of the column, the rest of the cattle are still following along the same tracks that these policies set in play years ago whether the new herd understands where they are leading or not, no matter what they now choose to call themselves. In support of the most recent set of unjust tax cuts in 2001, for instance, politicians have said it “is your money” by which, of course, they still mean theirs. They then proceeded to steal yet another huge, undeserved, anti-democratic tax break for themselves and the interests that control them at the expense of the rest of us and in the process shamelessly added another three trillion dollars to our annual budget deficit.
The supply side theory has also occasionally been termed the “trickle down” theory of economics. This term too, has been discredited since it’s become apparent to everyone that well dressed and highly paid accountants, economists and money managers in service of big money were crawling around on hands and knees with mops and sponges, making certain that no capital, once it entered the sacrosanct realm of old money, ever left again. Old money, defined by our tax code as money held by a wealthy person for more than a year, has its own prerogatives and when it is thus mysteriously rendered untaxable – very seldom dribbles anywhere but up.
Since then the political class has begun using yet another malicious metaphor to justify their depredations on democracy. This is the “rising tide lifts all boats” theorem of anti-democratic economics. Of course the rising tide theory is risible when levees and dams and locks have been especially constructed in our tax code to help those with yachts more than those with rowboats and canoes and kayaks. And many of those lucky to have boats don’t have oars or have boats with holes in their bottoms. And still others, who have only rafts or passing logs to desperately cling to, are not so much helped by a rising tide of economic vicissitude as yachts go yachting by, as swamped by them.
The rank, accumulating injustice of all these trends and tendencies is both enshrined and buried in the complex depths of our tax code. The net result of its design at this point in its existence is to disproportionately harm those less well off while disproportionately aiding those who need the least help and already had the most to begin with. At the same time the avarice it institutionalizes through bribery and unfair competitive advantage undercuts the national work ethic, rewards political corruption and disadvantages honesty, creativity and hard work. When you consider that their practices of government also are devoutly anti-democratic and have created mountains of debt that steal the very future out from under the feet of our own children you realize that those we have put in place to serve all Americans fairly under our laws by this time barely any longer even pretend to. It becomes clear that by this time in our history no one cares less about the future of our country than those currently in charge of it.
4. The Uniform Fair Tax Reform
In response to the conscious disquiet many Americans have begun to feel at the surfacing of all these negative trends in our nation, some of these supply siders suddenly, as if it had somehow been created by elves one night against their will while they were sleeping, professed to be shocked at the growing complexity and unfairness of our tax code. Typical to their record, they proposed a highly disingenuous solution to correct the problems they had created. They discussed instituting a flat tax or a national sales tax. The only thing these had in common is that they both would continue to lighten the tax burden on the very, very wealthy while shifting its weight onto overtaxed shoulders of everyone else.
A flat rate applied to an income tax would merely emphasize and enhance its corrosive unfairness. Needless by now to say, a flat tax was attractive to them in the first place not because it was fair but precisely because it was so unfair. A flat tax applied only to income, which is a small proportion of wealth in this country, is actually far more regressive than any other tax imaginable or proposed so far. A flat rate tax on income would literally have lowered the tax rate for the wealthy again but this time, to maintain the same revenue flow, would have significantly and blatantly raised it on everyone else.
That’s why the phantom flat tax or national sales tax have often been referred to in passing without being seriously introduced or debated in Congress. These proposals were so brazen in their intention to redistribute income upward, not even the con men could see how to sneak them by public scrutiny. For its part too, a national sales tax would be even more startlingly regressive than any other tax we’ve seen to date, pricing necessary goods out of the reach of large parts of the population least able to afford them.
To show the lengths to which some would go, several Senators, annoyed that their rapacity was being checked by democracy, even suggested a sunset clause be applied to the income tax which would have required its elimination in the year 2000. Then Congress, their theory went, in its wisdom could redesign the entire code in haste and on the fly and impose it on the people as a fait accompli. This is a little like choosing to trust an old enemy of yours who, after he kindly offers to hold your valuables for you for safekeeping, suggests you jump off a cliff, assuring you that he will meet you half way down with a parachute.
Naturally, they really wanted to impose a flat income tax or a national sales tax but didn’t have the guts to tell the increasingly strapped middle class who have seen their taxes and wages flatline even while their expenses and government provided services decline, what they were really intending to do.
When all such efforts failed, enemies of tax justice started to code their intentions rhetorically and called for a push toward a “fairer, flatter” tax code by which they really meant a more corrupt and complex tax code or a meaner and less lean tax code, all even more expressly and unambiguously bent toward protecting and expanding huge tax exemptions that the rest of us are not entitled to.
The virtue and necessity of maintaining progressivity in our tax code need not be defended here. The principle of progressivity was instituted in our tax system by much better politicians than we are blessed with today and it coincided with the strengthening prosperity of the middle class which has led to the greatest long term surge in general prosperity in American history. Its quasi repeal since 1980 has accompanied our greatest short term decline.
It is notable that even amidst all these nefarious assaults on fairness in our tax code no one has dared attack the essential economic equity and benefit of a graduated system of taxation. Even those purely corrupt tax reformers, while doing everything they could to destroy actual progressivity in our tax code are loathe to attack the principle of progressivity directly, preferring to erode it surreptitiously, by methods as oblique as the ones referred to above.
To make a long story short, since the numbers were never introduced many Americans were initially drawn to the idea of a flat tax because of its simplicity and the fact that it sounded fair. This open attitude betrays the natural democratic fair-mindedness which runs deeply through the population. Even if it seemed to disadvantage them the American public was more than willing to be just in service to the greater good. Unfortunately, selflessness is not a trait shared with the supply siders and their obsequious adherents in Congress, who are involved in the greatest undemocratic retrenchment of the ancient prerogatives of wealth in our history. They covet unfairness and self-advantage as an end in itself and think of little else. Every proposal put forward since 1980 by supply siders, from educational choice, to social security, to tort reform, to denial of climate change, to their “starve the cat” economics etc., has had as its fundamental, primary goal the cooption of democracy and the reorientation of wealth upwards into fewer and fewer hands.
Today, as the corrupt contraption of our tax code becomes every day more onerous and deleterious to the nation’s good, as if to spite themselves, supply siders may have inadvertently hit on a solution. Even if they didn’t really mean what they were saying, perhaps we should take these tax reformers at their word. Because they have prepared the ground and made the intellectual debate for reform, which they did not intend, for supply side tax cuts via a flatter, fairer and simpler tax, they may have accidentally opened the back door on a rare opportunity for real reform.
The only way a flatter tax could actually be fairer (as in our current tax code these goals are mutually exclusive) is if the income tax were replaced by a tax broadened to incorporate true net worth. This would tax every dollar every year the same, regardless of who owned the dollar or how long they had it in their possession. The distinction between new money (income) and old money (capital) has always been specious, invented, selfish, elitist and entirely anti-democratic. A flatter tax of this sort might actually be a much fairer tax than the income tax we have today but only when it is made much more comprehensive by drawing in all the money that is currently exempted from annual taxation solely due to the preexisting wealth of its owners.
To paraphrase a famous legal axiom “our constitution is money (as well as color) blind and neither knows nor tolerates classes among citizens.” The essential proposition then is that there is and never has been any economic difference between money and capital, between new income and old investment and that “supply side” must comprise the whole supply side not just that part of the side which best illicitly profits our politicians and upper caste. Money is fungible in our economy and in our democracy, money is money is money, regardless of who its owner currently is and must be thought of and taxed the same way. In our old caste economy great wealth is segregated and kept untouchable within our tax code.
An equitable, integrated tax on all money, irrespective or owner or activity in which it is engaged would be the least obtrusive, least negative and least deleterious to enterprise and economic activity which today is often warped into odd shapes and distorted into irrational preferences and advantages by the sheer ingrained complexity and prejudices of our tax code. To tax money uniformly throughout the whole system will mitigate the bunches and peaks and valleys in our tax code and collection system and not favor illegitimate economic activities unfairly over legitimate ones.
A broader based tax on all money would not only be more justly applicable but would diffuse the negative tax burden over a wider area of the economy and alleviate its pressure at the point of the greatest economic activity. Disposable income, defined as money left over in wages after necessary expenses, is where the economy fires. It is at that point where billions of crucial economic decisions are made, and yet it is precisely that small margin of expendable income that the income tax is most efficient in soaking up. Dismantling the income tax would be a tremendous psychological and actual boost to economic activity at its root point.
This reform would not exactly result in a tax on a postcard as was disingenuously put forward as a byproduct of a flat income tax by any means, but it would be far simpler and would present much less uncertainty and prove less of a hindrance to economic vitality than the current code provides. The capital gains tax, for one instance, might be reduced or eliminated completely.
A uniform fair tax on its face would serve as a standing indictment of the extraordinary unfairness of the current tax code. The fact is that, even if revenue neutral, a much flatter tax on real net worth and real money in the economy would provide in many cases a highly deserved and long overdue tax break for many Americans who have been left behind by previous tax cuts tailored primarily to enhance and secure preexisting wealth. If properly instituted and calibrated, even a flat tax imposed on the actual money in society, on net worth, rather than a graduated tax on just income, would be so much more equitable that a full 90% of the population would benefit from tax relief. This would be the supply side tax cut long promised but never delivered. Everyone who has been shut out of tax relief for the last twenty-five years would now finally receive the middle class tax that has been often dangled like bait before them and then just as frequently reneged on and pulled away.
Even if a slight progressivity were entailed, as it would be a tax not on people but on money itself, this tax would be fitted much more perfectly to everyone’s true ability to pay, and therefore be by far the most fair and democratic tax ever levied in the United States.
For bringing us to this point the supply siders really do deserve a great deal of credit. This is what they have always really wanted to do – this is the invisible hand behind their actions, always shoved aside by greedier instincts. They have always professed to want much greater tax fairness. And they have been right, they just never knew how to achieve it. This will fulfill all the empty promises of tax reform they have never delivered on. A flatter, fairer tax which will put money back in the hands of the middle class and the majority of America’s public, providing tax reduction across the board, excluding only those, the very wealthy, who are currently under-assessed from paying their fair share on all their assets, will shore up domestic economic activity and prove enormously stimulative and constructive to the entire economy. Ground up economic activity rather than trickle down is what has always propelled the nation forward.
People who today have been seeing their wages depressed, who are being buffeted by the economic pressures of globalization, will be able to approach their future with greater security that can only be healthy for the entire nation. In this era of declining social services, weakening unions and bargaining power for workers and increasing costs for fundamental quality of life issues like health care and higher education, it will be like giving most of America a well earned raise. It will allow the average middle class worker to receive a boost, perhaps even allow them to begin to pay off debts and put money aside for the education of their children and actually begin to acquire savings and investments. It will allow those who are not permanently wealthy to better shore up their futures against the ravages of uncertainty that come with the loosening of former economic security structures that has been a negative byproduct of downsizing and globalization.
A Uniform Fair Tax will also be far more transparent and egalitarian and therefore far less open to political manipulation against the public good than the impenetrable morass we call our tax code today. It will afford great wealth less leverage to bribe our public employees for unfair advantage over the rest of us. If you are afraid of losing the evil we know for the benefits we can only imagine, you shouldn’t be. Those who would mourn the discomfiture of its loss and miss the sheer complexity of its omniscience in our lives, need to recall that every line in the current tax code has been bought and paid for by special interests that don’t necessarily mean either us or the country well.
Meanwhile, the existing tax code has grown so complex that even those with no money now have to hire accountants to figure out how to prepare a simple return, another undue burden on those who haven’t the wherewithal to pay the taxes they will eventually be assessed.
Some will decry the loss of the special benefits and advantages they imagine our present corrupt tax code affords them while others will lament the thousands of cross incentives and disincentives built into its structure. But anyone who believes that these inefficiencies don’t just cancel each other out over time and lead to more net losses than gains has not been paying full attention. Rest assured, we lose far more in the inefficiencies our tax code creates than we are afforded advantages through the wisdom, genius and justness of its design.
Though tax reform alone will hardly solve all the ills of society it will still go far to reestablish trust in the equality of our tax code and therefore our institutions and all our operations of government by making them far more equitable and democratic. It will at ground level, far more than any hollow rhetoric ever could, reemphasize our shared responsibility for taking the country into the uncertain future strong, prosperous and unafraid.
