A flat income tax — say, 15 percent for all Americans — is a brilliant idea. Right?
No way. The flat tax proposal, in the economy as we know it, evades two very, very important facts. No proposal which evades relevant facts can — or should — win.
First of all, according to all the numbers available, half of Americans pay no income tax whatsoever. The Tax Policy Center, for example, reported that in 2011, 46 percent of all Americans either paid no income tax, or received more from the federal government than they paid in.
What this means is that half of the American population is invested in the status quo. This is why a liberal, Democratic president is (at least) slightly favored to win every presidential election, as Obama presently is for 2012. Note that in every approval rating you read for Obama, he rarely if ever dips below 46-50 percent. That’s no accident. Obama stands for the status quo of the redistribution state as we know it. Obama has fortified and expanded that state, and there’s no way that this half of the population will ever let it go.
It’s also why the best the Republicans can come up with is a liberal Republican (on economic issues), or a Republican who stands for nothing in particular, such as Mitt Romney (and if he does ever take a stand, will change it in a month or a year, in favor of Democratic socialism, of course.)
There’s no way an advocate of truly limited government could ever survive in today’s political and social climate, given the reality. A Thomas Jefferson, an Ayn Rand, a Milton Friedman or even a Ron Paul could never win the presidency in such a climate. Ronald Reagan would probably not win today. Half of all Americans are personally invested in continuing to pay no income taxes — all the while demanding even more government handouts, freebies and subsidies or benefits than they already receive. Obama is their advocate, and — unlike Republicans — he can be counted on to stand for something, even if it’s the wrong thing.
In such a context, there’s no way to pass a flat tax. Passing a flat tax would mean telling the 46 percent of Americans, “Up to now, you’ve been paying no income taxes. Now you’re going to have to pay 15 percent of what you earn.” Imagine Barack Obama, Mitt Romney or Newt Gingrich selling that. There’s absolutely no possibility, whatsoever, this will happen.
Proposing a flat tax also means evading another huge issue: The size and scope of government. In other words, should government be doing most of what it’s doing now, or not? The 46 percent absolutely think government should be doing all that it’s currently doing; and even much more, so long as it brings them more benefits or subsidies. Probably more than 46 percent believe this. It’s impossible to imagine that a flat 15 percent income tax rate — even if imposed on the 46 percent, which it never will be — would cover all that government currently does, to say nothing of what’s yet to come (don’t forget ObamaCare). And this is without even taking into account the deficit and national debt, which have exponentially grown in the minutes since you started to read this column.
Many proponents of a flat tax mean well. In one sense, my heart is with them. But reason, facts and logic must always trump the heart. Reason and reality tell us that you cannot reduce the size of government by proposing that those paying the most for it pay less for it. All that will get you is an even more bankrupt Big Government. You can only reduce the size of government by making the moral and political case that government has no right forcing those who do have money to hand it over to politicians and their pressure groups or constituents. More than that, it does nothing to benefit the 46 percent who receive those wealth transfers (at $0 price tag) in the long run. Doesn’t the continuing failure of the economy to grow and thrive prove this? If the private economy and the hated profit-makers go down the tubes, government handouts will go away along with them.
We keep hearing about the 1 percent who make most of the money in America. The socialist media establishment never lets us hear the end of it. But what about the 46 percent who pay nothing in income tax?
The current Great Recession is more than a recession. It’s a symptom. It’s a symptom of what happens when government forces the most productive to pay for the political benefits and the personal power needs of those who redistribute, but never produce. There’s a class warfare in America all right, but it’s not between rich and poor. It’s between the power class and the productive class. These are the terms on which any battle must be fought and won. If they ever are, then of course we’ll have a flat tax. And it will be way, way lower than 15 percent.