By Travis H. Brown |
America should move toward a single-rate income tax that taxes consumed income one time at one rate as rapidly as politically possible.
A single tax rate puts all citizens in the same relationship with their government. It makes it more difficult for the government to divide us against each other.
I grew up in Massachusetts, where the state constitution requires a single rate, flat tax. Five times the advocates of bigger government in Massachusetts have placed a measure on the ballot to allow a graduated or "progressive" tax. Five times liberal, Democrat, blue, Ted Kennedy Massachusetts has voted this down. Voters were quite sophisticated in their reasoning and understood that dividing Bay Staters into different groups would allow them to be mugged one at a time.
We saw this with the politics of President Bill Clinton, who promised to tax only the top 2 percent. Once elected, he moved to raise gasoline taxes—a tax paid by everyone. Obama promised to tax only those earning more than $250,000. That moved magically to $200,000. And 16 days into his presidency, he signed a bill raising taxes on cigarette smokers. The only person in America who smokes cigarettes and earns more than $250,000 is named Barack Obama. Other taxes on the middle class, including taxes on your health insurance, followed.
In making the transition to a flatter, fairer, simpler tax, the idea put forward by Texas Gov. Rick Perry, is strategically wise. Set up a parallel system alongside the present mess. Allow Americans to choose to stay where they are or move to the lower rate, fewer deductions system. No one should be forced to shift. Let them choose.
Perry was also wise to avoid the creation of any new taxes during a transition period such as a retail sales tax or VAT. In Europe, when they added the VAT with promises that other taxes would be reduced, they saw the VATs grow and the income taxes stay. Connecticut and New Jersey accepted an income tax with promises the property taxes would come down. Now they have high income taxes and high property taxes.
Let us take the present system and prune it back without creating any new tapeworms with the promise/hope that they will behave.
About Grover Norquist President of Americans for Tax Reform
Dean Baker Author of 'The End of Loser Liberalism: Making Markets Progressive'