Wednesday, October 21, 2015

Here's an Idea!!

When the subject of politics comes up in life I have always had many more questions than answers. Instead of knowing, with anything approaching certainty, what should be done to alleviate poverty, I wonder why it is that the 22 trillion dollars we have already spent fighting the War of Poverty declared by Lyndon Johnson fifty years ago hasn't done the job. Lots of questions, precious few answers.

But today, for the sake of argument, let us suppose that Progressives are right when they assert that the real problem is that the government doesn't spend enough. Let us assume first that every social pathology that currently plagues us in these United States, in fact, has a workable remedy that can be brought to bear if only we had the resources to proceed. Then, the question much money would be enough, and what will have to become of tax rates in order to provide enough?

Much is made among the left about the 90% top tax rate during the booming 50's. The question is often posed, "The economy boomed when the rich had to pay 90%!! That proves that it's possible to soak the rich!" What isn't mentioned is the fact that virtually nobody actually ended up paying 90%, because rich people could afford to hire very clever accountants who found loopholes in our impossibly complex tax code to avoid the best intentions of policy makers. Not much has changed in that regard since the 50's. When the state of Maryland tried a millionaires tax a few years back, proponents promised it would raise 100 million dollars in revenue. In fact, it resulted in a decrease of 257 million instead, since the specter of the new tax reduced the number of Maryland's millionaires from 8,000 to 6,000. Apparently, rich people aren't complete idiots.

So, if Progressives really want more revenue with which to solve our problems, they need to offer up some sort of workable plan of how much they want and how they plan to collect it. Their answer can't involve the words, "raise taxes on the rich", without some guarantee that the rich won't merely avoid those taxes with world class accounting. In my opinion...there is only one way to accomplish this and that is with a complete ellimination of our tax code and the adoption of a flat tax with no deductions for anyone. We can debate what that flat rate should be. We can even debate whether to include everyone or carve out exceptions for people under the poverty line etc..., but our current Rube Goldberg contraption of a tax code is beyond repair and any attempts to wrangle more revenue from the rich from it will be futile. 

But here is my hunch. Even if it could be proven beyond debate that a flat tax rate of say...17% would increase revenue beyond the wildest dreams of every big government leftist alive on this planet, they would still be against it. My hunch is that the only thing more important to the left than more money for government is their desire to punish the rich. What's the point of taxation if it cannot be used as a cudgel against the "winners of life's lottery" as President Obama likes to call them. The existence of income inequality in America requires the leveling hand of wealth redistribution by a benevolent state. The only trouble is, under our current tax system, nothing is getting leveled except economic growth.

In my opinion, a flat tax with no deductions solves two big problems. First, it gets the government out of the business of dispensing favors through tax policy, and secondly, if done right, will increase revenue to the Treasury...which should satisfy the left and the right. Would I be willing to pay more in taxes under a flat tax? In a New York minute, primarily because while my tax bill might go up, my accounting bills would disappear...sorry Carl. But more importantly, Washington would no longer be a magnet for lobbyists. And that would be worth it, no matter the cost!