By Travis H. Brown |
Do you agree that "billionaires should pay the same as janitors," as President Obama has been saying on the campaign trail? If you do, then the flat tax is for you. It's also for you if you find our current tax code to be complicated, unfair, inadequate in terms of bringing in enough revenues, and a burden on both families and businesses. These days, that's just about everybody—conservatives, liberals, and independents.
It's time to revamp our tax code in a way that spurs foreign investment, job creation, and economic growth. The flat tax would fuel all three, in large part because it would end double taxation of saving and investing. Eliminating loopholes and deductions would lighten the bureaucratic and financial burden on businesses and families—do you know anyone who doesn't either pay an accountant or buy software to do their taxes? Americans currently spend $300 billion a year in tax preparation costs, to navigate a tax code that is thousands of pages long.
A flat marginal rate of, say, 16 or 17 percent would put billionaires on the same footing as janitors, and ensure that the rich pay the same marginal rate as the rest of us. Giving families of four an allowance, for example, for the first $50,000 of income would protect the most vulnerable in our society while making sure that everyone else would pay the same level above that. Unlike the current tax code, a flat tax is fair, easy to understand, and restores people's faith in government by eliminating "crony capitalism" in Washington.
Seventeen foreign countries have adopted a flat tax since 1994, because they want the economic growth and opportunity that have come to low-tax nations. Hopefully Washington will see what other foreign capitals see: that higher marginal tax rates result in less revenue collected, not more. Lower tax rates and a simpler, fairer system may not be a silver bullet, but it's certainly an idea that's catching on around the world.
About Mary Kate Cary Former White House Speechwriter for President George H.W. Bush
Dean Baker Author of 'The End of Loser Liberalism: Making Markets Progressive'