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Secret of the Flat Tax: Middle Class Pays More So Rich Pay Less
The middle class pays more so the rich can pay less
November 1, 2011
About Dean Baker:
Dean Baker is codirector of the Center for Economic and Policy Research and has worked for the World Bank, the Joint Economic Committee of the U.S. Congress, and the OECD's Trade Union Advisory Council. His latest book is The End of Loser Liberalism: Making Markets Progressive.
With Herman Cain soaring to the top of the Republican pack on the basis of his 9-9-9 plan, a flat tax is once again at the center of public debate. Texas Gov. Rick Perry, and some days Mitt Romney, are always spouting the virtues of a tax system that is "simpler, flatter, and fairer."
While simplicity is generally desirable in a tax code, it has nothing to do with the tax code being flat. And being flat would be the opposite of being fair, unless people think it is unfair that they don't pay more taxes.
[Vote: Do the Rich Pay Enough in Taxes?]
Confusing a simple tax code with a flat tax is a cheap political stunt. The number of tax brackets doesn't affect simplicity at all. Regardless of the number of brackets, there is only one calculation needed. The instruction is simple. It looks like this: "pay $1,000, plus 15 percent of income above $50,000." You can have a flat tax or 100 tax brackets, it is the same formula. Even a Republican presidential candidate can figure it out.
The other part of the story is that the flat tax means a large tax cut for rich people. Every economist who has examined flat tax proposals over the years comes to that same conclusion: A flat tax means the rich pay less.
And if the rich pay less and we raise the same amount of money, then someone else has to pay more. And the someone in this story is the middle class. It really is that simple.
The flat taxers like to run around with Lake Wobegone economics where we are all going to pay less and still have the same amount of money, but the world doesn't work that way. We have tried reducing taxes to raise revenue. People remember Reagan's tax cuts and the large deficits they led to. They remember Bush's tax cuts and the large deficits they led to.
No one is going to fall for this trick yet again. When we cut taxes on the rich, we get less money and the rest of us will have to make up the shortfall.
For middle-class people, a flat tax means that they will have to pay more taxes. If people think it would be fairer that they pay higher taxes, then the Republican Party has the presidential candidates for you.
- Check out a roundup of editorial cartoons on the economy.
- Read 10 Things You Didn't Know About the Bush Tax Cuts.
- Read how Rick Perry is using the flat tax the boost his campaign.
- Other Arguments
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#112984
Yes — The flat tax saves time, provides choice, and restores fairness to the tax code
MICHAEL C. BURGESS, U.S. Representative
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#211781
Yes — Flat tax makes it more difficult for the government to divide Americans against each other
GROVER NORQUIST, President of Americans for Tax Reform
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#310176
Yes — The Cut, Balance and Grow plan will unleash economic growth
RICK PERRY, Texas Governor and Presidential Candidate
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#47976
Yes — Flat tax would spur foreign investment, job creation, and economic growth
MARY KATE CARY, Former White House Speechwriter for President George H.W. Bush
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#5105112
No — Flat tax would cut taxes only for the rich, which never ends well
JOHN IRONS, Research and Policy Director at the Economic Policy Institute
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#77398
No — Flat tax will benefit only the richest taxpayers
STEVE WAMHOFF, Legislative Director of Citizens for Tax Justice
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#77196
No — A flat tax doesn't solve our problems; it just introduces new ones
KELLY PHILLIPS ERB, Author of Taxgirl Blog at Forbes.com
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#975102
No — Flat tax shifts burden to low- and middle-income taxpayers
CHARLES B. RANGEL, U.S. Representative
