A "Flat Tax" Is Just a Giveaway to the Rich
Libertarian-esque wet dream Rand Paul is still considered a “serious” candidate for president, in part because people have not had time to fully digest his policy prescriptions. For example: today he proposed a massive tax cut for the rich!
This is not what Rand Paul called his tax proposal, of course; he calls it a “flat tax.” In an op-ed for the Wall Street Journal, Paul tells us his new tax is not just flat—but fair!
So on Thursday I am announcing an over $2 trillion tax cut that would repeal the entire IRS tax code—more than 70,000 pages—and replace it with a low, broad-based tax of 14.5% on individuals and businesses. I would eliminate nearly every special-interest loophole. The plan also eliminates the payroll tax on workers and several federal taxes outright, including gift and estate taxes, telephone taxes, and all duties and tariffs. I call this “The Fair and Flat Tax.”
Aha. The good ol’ flat tax. What flat tax advocates never seem to note about their own proposals is that they would represent a severe regression of our tax code against the interests of the poor and in favor of the interests of the wealthy. Our whole progressive tax code, in which tax rates go up as income rises (broadly speaking), is based on the idea that as people get richer and richer, they can afford to contribute more to the public good, whereas people who are very poor cannot afford to contribute as great a percentage, because they need that money in a much more acute way. The progressive tax code, in other words, is based upon reality. A flat tax is based upon a fantasy that a millionaire and a minimum wage earner can both afford to pay the same percentage their salary towards the public treasury. The flat tax’s appeal is a millimeter deep— “the percentage is the same, therefore fairness exists!”—but a moment’s contemplation of it will reveal that it is a terrible policy for the poor. A tax rate of 14.5% on the rich is lower even than the effective tax rate that the richest people in the world pay now, which includes the exploitation of all of the loopholes in the tax code that Rand Paul is bragging about getting rid of. Who cares if you get rid of the loopholes, if you offer billionaires a lower tax rate in return?
This flat tax amounts to giving a huge tax cut to the rich. Is this what America needs during an unprecedented period of economic inequality? (No.)
President Obama talks about “middle-class economics,” but his redistribution policies have led to rising income inequality and negative income gains for families.
This is in fact a lie! America’s booming economic inequality began with Reagan, and continued unabated ever since. If you think inequality is bad with a redistributive tax code, wait until you see how bad it gets without one. This is essentially like advocating for a paralyzed person to give up their wheelchair because it hasn’t made them walk again.
Want to get rid of the payroll tax? Great! The payroll tax is a regressive tax that hurts the poor and middle class more than the rich. But you want to get rid of the estate tax along with it? The richest people in the world would happily take that trade! It could save them a fortune!
Polls show that “fairness” is a top goal for Americans in our tax system. I envision a traditionally All-American solution: Everyone plays by the same rules. This means no one of privilege, wealth or with an arsenal of lobbyists can game the system to pay a lower rate than working Americans.
The rich won’t have to hire an arsenal of lobbyists to lower their taxes; Rand Paul is offering to do it for them.
There are still (very few) candidates for the middle class.
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