Second That Emotion by Jeremy D. Holden

Second That Emotion by Jeremy D. Holden

Author:Jeremy D. Holden [Holden, Jeremy D.]
Language: eng
Format: epub
Publisher: Prometheus Books
Published: 0101-01-01T00:00:00+00:00

If the goals are to reduce corporate welfare and instead, to enable household tax returns to fit on a postcard, then a true flat tax best achieves those goals. The flat rate would then be applied to the entire taxable income and profits, without any exception or exemption. Under such a tax, it could be argued that nobody gets to enjoy a preferential or unfair tax treatment, no industry receives any special treatment, large households are not advantaged at the expense of small ones, etc. Moreover, the cost of tax filing for citizens and the cost of tax administration for the government would be drastically reduced, as under a true flat tax only businesses and the self-employed would need to actively interact with the tax authorities.16

In arguing for a true flat rate of taxation, Steve Forbes gained enormous traction, at one point becoming the front-runner in the 1996 Republican primaries, largely by campaigning on this single issue. And on the face of it, the flat tax is hard to argue against. It appears to offer simplicity, certainty, less bureaucracy, smaller government, and is a true expression of equality and democracy in practice. But critics of a flat tax have argued that if everyone pays the same, the marginal dollar for people with lower incomes is vastly more important than it is to people with high incomes, and that this is especially true for those at or below the poverty level.17 True flat-tax proponents contest the notion that a marginal dollar should be taxed differently, and so the debate inevitably continues.

Yet at every presidential election, including in 2012, candidates have run largely on a platform of instigating a flat-tax rate and have gained traction in the polls because of it. Indeed, in the Republican primary most of the leading candidates put a spotlight on tax reform including Ron Paul, Rick Perry, Hermann Cain, Newt Gingrich, and Mitt Romney.18 That's because the basic premise of a flat tax has almost universal appeal due to the certainty and simplicity it appears to offer. Who wouldn't want to be able to calculate their taxes in about one minute and send in their return on a postcard, or not even be required to file at all? Advocates can also point to successes in the former Communist states of Eastern Europe such as Lithuania, Estonia, and Hungary, which claim to have benefited from instituting a version of the flat-tax-based system.

So it's evident why the flat tax continues to hold mass appeal, particularly for those on the conservative right of politics in the United States, and for a period of time it seemed as though Steve Forbes had successfully established a social contract, as the basis for a culture shift with supporters, driven by his flat-tax advocacy. Forbes's social contract stated: You are the owner of Forbes magazine and a respected businessman and financier, so you must know what you're talking about when it comes to tax systems. We all pay the same, we can basically file our returns on a postcard, and the government and its bureaucracy shrinks.


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