Althouse: "I think you need to have a tax system that basically is flat, fair and simple."

October 25, 2011

"I think you need to have a tax system that basically is flat, fair and simple."

"And that you can put on a postcard. Americans, I hope, aspire to be wealthy."

Rick Perry, answering — in the affirmative — the question whether he's against a progressive tax system.

61 comments:

gadfly said...: As long as there is a progressive income tax to compare against, flat taxes will not stand a chance with lower income folks.

Look for an ugly VAT alternative -- if any change to a consumption-based tax is adopted. Folks just cannot deal with knowing what real tax rates are.; 10/25/11, 6:43 PM
Peano said...: Rick Perry, answering — in the affirmative — the question whether he's against a progressive tax system.

Good for him. The "progressive" in "progressive" tax arose from the same mistaken premises that animated the "progressive" movement of the early 20th century.

A flat tax would make a long step toward obliterating that miserable ideology.; 10/25/11, 6:44 PM
Anonymous said...: "Americans, I hope, aspire to be wealthy."

But if you happen to be wealthy and running against Perry, he'll slam you and call you a fat cat!; 10/25/11, 6:46 PM
rhhardin said...: A flat tax solves the marriage penalty issue too.; 10/25/11, 6:47 PM
John Althouse Cohen said...: Multiple tax brackets can be easily written on a postcard! So that's a red herring.

Also, flat taxes often have deductions. For instance, Steve Forbes exempted everyone making less than $35,000 or so. I don't know if that's part of Perry's or Cain's proposals, but I wouldn't be surprised. They're unlikely to focus on the exemptions because this interferes with their simplicity mantra. An extremely simple tax code sounds nice, but it isn't going to happen.; 10/25/11, 6:51 PM
John Kindley said...: The Single Tax on the unimproved value of land, proposed by Henry George, is as fair and simple as it gets.; 10/25/11, 6:51 PM
gbarto said...: I want a system where you have to file, no matter how little you make, and where you have to make a $5 payment once a year, by check or by filling out an online form, even if you get it back in the EITC. Everybody... and I mean everybody... should be reminded at least once a year that for the government to send out checks, people have to send them in. I'd be curious to see if anything happened to attitudes that allowed for real change if that large percentage of people who pay no taxes got a periodic reminder that government isn't free.; 10/25/11, 7:06 PM
Lucien said...: As long as we talk as if the only tax out there is the federal income taxwe can neither see nor solve the problems raised by a tax system.

Real people face a tax burden comprised of different taxes in different jurisdictions: property, sales, income, use, Social Security, Medicare and "sin" taxes burden us all, but in different ways & different places.

Some of these are regressive, some neutral and some progressive. Many on the left who claim to champion the working poor nevertheless tax them disporportionately because of their use of alcohol, tobacco and gasoline in terms of a share of overall income.

To say that the federal income tax, which is probably the easiest type of tax to make progressive,should be neutral (flat)is almost certainly to say that the overall tax burden will be regressive.

I'm not sure anyone has a good, equity-based argument in favor of that.

To leave the income tax as the major source of federal revenue is to say that the only lever the federal government has to pull on when it wants to stimulate the economy, which means that do so will disproportionately help those with high incomes, who will also then use less of it on the consupmtion that governments usually want to stimulate.

That's not a real good idea either.

To fix the overall system will involve changing the interplay of our methods of taxation and our understanding of federalism.; 10/25/11, 7:09 PM
coketown said...: An extremely simple tax code sounds nice, but it isn't going to happen.

What was it Obama kept saying about the Affordable Care Act? "Don't let the perfect be the enemy of the good."

Extreme simplicity is impossible, but that shouldn't stop us from seeking a drastically simpler tax code than we have at present.; 10/25/11, 7:14 PM
Anga2010 said...: Progressive/Regressive... I suppose it depends on your perspective.
The more I make the more you take sounds regressive to me.; 10/25/11, 7:26 PM
Bob Ellison said...: Perry's "use this new law if you like it; use the old law if you prefer that" concept is death to his childish tax proposal. This is not law or policy; it's flattery.; 10/25/11, 7:28 PM
traditionalguy said...: The Flat Tax protects the earners from the top brackets. That is good.

The wealthy are already protected with shelters from depreciation and capital gains rates.

The missing reform that will "expand the base" is taxing the cash economy off the books from income taxes with the sales tax.

Perry has trouble discussing anything to do with Forbes's plan. He only wants credit for Jobs, Jobs and Jobs. But both 9-9-9 and Flat Tax do that.

Do I believe Perry will do the Forbes Plan at all...not really.; 10/25/11, 7:30 PM
Zachary Sire said...: LOL...keep making the poor believe that "someday" they can be rich. As if Rick Perry would be able to survive without all the poor people catering to his needs.

George Carlin said it best:

"It's called the American Dream cause you have to be asleep to believe it."; 10/25/11, 7:35 PM
cubanbob said...: A flat tax is the overall best way to go. Taxes should levied for the purposes of raising revenues, not for social engineering or allocation of capital. That is in large part why we have the mess we have. That monkey is for the congress, let them justify their spending.

For what its worth if I had a flat tax proposal I would eliminate all deductions and credits with a few specific exceptions: a personal exemption equal to the minimum wage and a tax credit for employee paid portion of FICA. Now I can see a three tier level, 10% after the personal deduction up to $30k, 15% from over $30k to $100k and 20% from over $100k.
No tax exempt muni's, no charitable deductions, mortgages deductions none whatsoever other than the specific mentioned ones. And I would eliminate the corporate income and capital gains tax as well. Tax the shareholders on the passthrough irrespective if the shareholder is a living person or a living entity. Again taxes are for the purposes of raising revenues and nothing else.; 10/25/11, 7:57 PM
Michael Haz said...: George Carlin said it best:

"It's called the American Dream cause you have to be asleep to believe it."

George Carlin made a lot of money.; 10/25/11, 8:02 PM
Paddy O said...: "Many on the left who claim to champion the working poor nevertheless tax them disporportionately"

ain't that the truth. People who use rhetoric for the poor often work against the poor, because they have no idea what is like to be poor, so they package all the pet progressive causes together and the real poor almost always get the brunt of it. It's almost like the goal is to keep the poor poor so that those many (not all) on the left can keep up using the poor for whatever progressive cause comes up next.; 10/25/11, 8:05 PM
rcocean said...: Lets have a flat, fair tax with PROGRESSIVE rates. Poor people pay less, rich people pay more.

Something every middle class person should be able to support - unless you're stupid, or related to a rich person.; 10/25/11, 8:06 PM
Paddy O said...: "George Carlin said it best:"

Nah, I think Herman Cain said, and lived, it best.; 10/25/11, 8:06 PM
garage mahal said...: We need a flat tax, and a lot more tear gas to enforce.

/Freedom Lover; 10/25/11, 8:08 PM
traditionalguy said...: This has been a hard week on Cheer Leader Rick.

His skills do not include learning complicated new stuff...and Steve Forbes can barely explain it himself. That is hard on Rick who in the same week has had to interpret the complexities of Birtherism which Trump had trouble mastering.

All of this memory work is hard. Governor Perry's memory has already been filled by the Pay to Play promises among his trangulated donors...and it is dangerous to write that stuff down.; 10/25/11, 8:11 PM
Curious George said...: "John Althouse Cohen said...
Multiple tax brackets can be easily written on a postcard! So that's a red herring.

Also, flat taxes often have deductions. For instance, Steve Forbes exempted everyone making less than $35,000 or so. I don't know if that's part of Perry's or Cain's proposals, but I wouldn't be surprised. They're unlikely to focus on the exemptions because this interferes with their simplicity mantra. An extremely simple tax code sounds nice, but it isn't going to happen."

You may want to actually read the article before you post. Of course, I'm not discounting that you may have actually read it and can't make a truthful and/or logical rebuttal.

Perry did not say that a flat tax system could be put on a post card (and a progressive couldn't). He said "And that you can put on a postcard." This means that it should not be loaded with deductions, exemptions, etc. This is certainly not true of our current progressive tax code which is so complicated that even tax professionals and the IRS struggle with it.

With your first misconception behind us, let's deal with this:

"Also, flat taxes often have deductions."

This is moronic. First, the only example you bring up is a decade old proposal by someone else. What actual "flat tax" are you referring to? In any event, actual (good luck) or proposed flat taxes by others cannot be used as an argument to Perry's proposed flat tax. That's dishonest and stupid.

Finally, you confuse deductions and exemptions. They're different. But if you think that saying you pay x% on all earnings above x dollars is some how complicated...well I can see why now.; 10/25/11, 8:26 PM
edutcher said...: This is better than the income tax, which was always intended as a soak-the-rich thing. My only problem with it is the rate should be 10%.

Frankly, anybody who wants to cut spending is going to have to starve the beast.

Zachary Paul Sire said...

LOL...keep making the poor believe that "someday" they can be rich. As if Rick Perry would be able to survive without all the poor people catering to his needs.

That's the Lefty lie - that the poor must always stay poor and only the government can save them. The history of the 20th century shows what a crock it is.

Not to mention the life story of Herman Cain.

George Carlin said it best:

"It's called the American Dream cause you have to be asleep to believe it."

Don't let the door hit you on the way to North Korea or whichever People's Paradise you choose.; 10/25/11, 8:28 PM
MayBee said...: Not to mention the life story of Herman Cain.

Not to mention the life story of George Carlin.; 10/25/11, 8:45 PM
Brian G. Heyer said...: More than anything, it just proves he has zero interest in actually cutting spending and gov't abusive control of the economy. The budget doesn't balance until, what 2020? Does Perry have fantasy GDP projections like Paul Ryan's 'fastest economic growth evar!" hoax.

It's shameful that the GOP doesn't have more strong leaders to press for $1Trillion in cuts in year #1, which in Washington, is the only year that matters.; 10/25/11, 9:26 PM
rcommal said...: It's not hard to find the plan at the source (and yes, there is a standard exemption [AKA deduction] within an option for "lower- and middle-income families"):

Lower- and middle-income families will be able to take advantage of an optional 20% flat tax rate that includes generous standard exemptions of $12,500 for individuals and their dependents, as well as deductions for mortgage interest, charitable contributions, and state and local taxes.

Read the whole thing (click hyperlink directly above).; 10/25/11, 9:33 PM
rcommal said...: [Sometimes linking is just linking, not advocating, not disavowing, just linking]; 10/25/11, 9:36 PM
1775OGG said...: Both Cain and Perry have interesting ideas about how to change our federal tax code and its subordinate processes. However, IMHAO, a Fair Tax along with a well defined and consistent "prebate" implementation would be the best way to change our federal taxes.

Of course, enacting a fair tax or a flat tax would require repealing the 16th amendment plus also having a balanced budget amendment.

Changes to Social Security also need much discussion along with implementing changes that keep SoSec solvent, perhaps in a modified form.

Interesting times we're in, both here and throughout the world.

wv: matinoni replaces macaroni as the choice for discriminating headwear.; 10/25/11, 9:38 PM
Palladian said...: "George Carlin made a lot of money."

Zachary Paul Sire was a loser who lived with his mom well into his twenties. Then he found a way to turn his economy-class talent into a lucrative gig writing thinly-disguised promotional copy on a blog for and about the gay pornography industry. If that isn't living the American Dream, I'm not sure what is...; 10/25/11, 9:38 PM
Palladian said...: I just hope you're reaping some of the "fringe benefits" of your job, Zach baby!

Do you have to collect 1099's from your, uh... subcontractors? Can you write off Valtrex as a business expense?; 10/25/11, 9:43 PM
Eric said...: Multiple tax brackets can be easily written on a postcard! So that's a red herring.

This. People who advocate the flat tax are trying to simplify the part of the system that's already simple. What makes taxes complicated is the myriad of deductions.

And virtually everyone who advocates a flat tax advocates it with "no deductions, except...", well, except the ones that person takes advantage of. People with kids think we should keep the per-child deductions. People with houses want to keep the mortgage interest deduction. People in states with income taxes want to be able to deduct their state income taxes...

I'd bet my last dollar the flat tax will either a) never happen, or b) be just as complicated as the current system.

Perry's proposal is a bit cynically disingenuous as well, since it wouldn't generate as much money as the current system, and while he says the shortfall would be made up by "cuts" he doesn't get any more specific than that. So it's basically fiscal pixie dust.; 10/25/11, 9:59 PM
Alex said...: Multiple tax brackets can be easily written on a postcard! So that's a red herring.

Yes, we must have class warfare at all costs.; 10/25/11, 11:18 PM
Alex said...: Why not just a flat tax with no deductions, no exceptions. I don't like the idea that some people are not part of the franchise.; 10/25/11, 11:19 PM
Ralph L said...: The important thing is to make tax rates low for everyone. This reduces the incentive to buy politicians for special breaks, which is why the Democratic party likes high rates.

My employer bought 2 40' dump trailers this week. They were about $40k each, plus over $5k in federal excise tax and $700 for a state license.; 10/26/11, 1:54 AM
G Joubert said...: One thing Perry is doing here is delivering on Obama's own promise: "Everybody's going to have to have some skin in the game."; 10/26/11, 2:19 AM
J said...: Flat tax -> quack-o-tarian. So much for CA and southwest, Tex Perry-- and collegetown. Yll take the klan bunkers tho, and Steve Forbes supporters.; 10/26/11, 5:21 AM
Toad Trend said...: "LOL...keep making the poor believe that "someday" they can be rich. As if Rick Perry would be able to survive without all the poor people catering to his needs."

Well, I don't know where this 'everyone will be rich' meme thats been trotted out came from.

Economic mobility is related to the individual effort(s) of the participants, and the time spent at one's chosen path, assuming one chooses a path other than a simple processor of food to waste.

If one chooses to be poor, then one will be poor.

If one is born poor, then one, once aware of his/her circumstances, has the opportunity to change that.

If one is born poor, and is convinced from birth that they will remain poor, then the psychological hack job done on them will likely work due to a lack of perspective. And those that provide aid and comfort to this thought process will be culpable.

BTW a fair tax is progressive. Liberals, try to follow along:

Sample tax Rate = 10% of income.

Person #1 - income is $0 - tax is $0
Person #2 - income is $10000 - tax is $1000
Person $3 - income is $100000 - tax is $10000

Progressive, and understandable. Those that make more, pay more.; 10/26/11, 6:27 AM
damikesc said...: Limit the franchise to income tax payers. Otherwise you get no vote. Limit the choices to people who pay for these programs.; 10/26/11, 7:10 AM
Anonymous said...: Why not just a flat tax with no deductions, no exceptions. I don't like the idea that some people are not part of the franchise.

Because the Federal income tax is not the only tax people pay.

As has been repeatedly pointed out, with real facts and figures, the regressive taxes out there (e.g., sales, Social Security, gasoline, etc.) fall disproportionally on lower income people. And the rich, especially who derive a large part of their income from capital gains rather than productive work, pay a lower tax on that income (provided it is a long term gain) than all but the lowest two brackets.; 10/26/11, 7:58 AM
Anonymous said...: BTW a fair tax is progressive. Liberals, try to follow along:

That's right, redefine words to make them mean what you want them to mean. And btw, most "flat tax" proposals, including Perry's, eliminate the capital gains tax completely. So only paid employment is taxed. How is that progressive, even under your bogus definition? Why should someone living off a trust fund pay no taxes while, say a doctor who makes the exact same amount from actually doing something, have to pay taxes on his income.; 10/26/11, 8:09 AM
Anonymous said...: Limit the franchise to income tax payers.

It's amazing how many people on this blog hate this country, its constitution, and its form of government, and especially the less well off.

Talk about class warfare, all these proposals are nothing but a declaration of war on the less well off in this country. And now you want to take away the right to vote, too.; 10/26/11, 8:12 AM
Brian Brown said...: Freder Frederson said...
.

As has been repeatedly pointed out, with real facts and figures, the regressive taxes out there (e.g., sales, Social Security, gasoline, etc.) fall disproportionally on lower income people.

And any time any Republican has proposed changing those regressive taxes, the party you vote for demagogues the issue to death.

It is almost as if you're a silly hypocrite or something.; 10/26/11, 8:14 AM
cubanbob said...: Freder Frederson said...
Limit the franchise to income tax payers.

It's amazing how many people on this blog hate this country, its constitution, and its form of government, and especially the less well off.

Talk about class warfare, all these proposals are nothing but a declaration of war on the less well off in this country. And now you want to take away the right to vote, too.

10/26/11 8:12 AM

Yeah right. They are doing taxpayers a favor with their money. And your are right about the vote, no pay, no play. Yes we hate this country and its constitution that nowhere has a socialist redistribution clause. Yep, you are just another loser who wants someone else to pay their 'fair share' so you can get your free share.

In the meantime how about progressive voting, the more you pay the more your vote counts.; 10/26/11, 8:28 AM
Ken B said...: Flat and progressive are not opposites.

This is just a fundamental and foolish error.; 10/26/11, 8:59 AM
damikesc said...: Freder, as it stands, a minority who actually pay for the idiotic crap you support actually have skin in the game. If you aren't contributing...and most of "the poor" are net drains on money...then what gives you any right to somebody else's money?

Your side SUPPORTS the "regressive taxes" quite adamantly. And the capital gains the rich have provide the jobs that the poor pay little to no taxes on.

It is very easy for the likes of you to be generous with other people's money...yet your side is notoriously stingy with your own funds.; 10/26/11, 9:06 AM
damikesc said...: Hey, Freder, I have a proposal I know you will like. How about all government contracts wth unions or companies must be passed by popular vote of the citizenry? Sure it will kill public unions and crony companies dead...but who could oppose it really?; 10/26/11, 9:13 AM
Known Unknown said...: . And the rich, especially who derive a large part of their income from capital gains rather than productive work

Where do the capital gains originally come from?

Investing is not productive?; 10/26/11, 9:21 AM
Anonymous said...: Where do the capital gains originally come from?

From the productive work of others.

Investing is not productive?

Some is, some isn't. Investing in credit default swaps or short selling is not productive in any meaningful sense. Investing in a new factory or invention is productive. But capital gains are not investments, they are the fruit of investments. What you do with your capital gains is what constitutes investment. You can spend your capital gains on anything from hookers and cocaine to gambling in Monaco to building a new factory. Much of what goes on on Wall Street is more akin to gambling at a casino than the production of wealth--which is entirely different than making money.; 10/26/11, 9:53 AM
damikesc said...: Short selling isn't productive? So when a stock starts to plummet it is preferrable to have no brakes on its decline? The research the sellers do, which helped kill Enron dead, is unproductive? Do you even know what short sellers do? _; 10/26/11, 10:02 AM
Fr Martin Fox said...: One problem with so-called "progressive" taxes is what we are witnessing right now in this country: the endless debate, dripping with moral indignation, about what constitutes "fairness."

Arguing about how to take more from him, no!--more from her!--is necessarily a distraction from both he and she working and increasing the aggregate pile of stuff we're fighting over.

A flat tax (that means 1 rate for everyone) means giving up on that argument.

The same thing with deductions: the reason to eliminate all of them, if you can, or else, eliminate as many as possible, is that they "unflatten" the flat tax. It takes us back to, "mommy, his piece is bigger!" type arguments that we're having now.

The argument--not politically saleable--is that the government really shouldn't be concerned with, and thus reward or punish you for, what you do with your money.

But it's all too theoretical. What would really happen to charitable donations if the deduction were eliminated? Who wants to chance it?

As far as taxes being "regressive," is that a bug or a feature?

You'll never hear any politician make this argument, but regressive taxes have two potential benefits:

> They give the poor a reason to question a politician's giveaway; it's a check on bigger government.

> They give an additional motivation (if needed), for someone to get out of poverty.

Of course, that all sounds really cold and I understand that. My real point is that it all hinges on your fundamental stance about government and how activist it needs to be and how much power you want to give it.

If you despair of human flourishing without an activist government propping up, rewarding, punishing, and managing hither and thither, then of course you want progressive taxes, so that the activist party can get the votes from a majority who pays relatively little, and then soak the vote-poor who have tons of money.

We do a lot of this now, and the arguments between Ds and Rs isn't over the merits of this, but over how much of it, to do.

However, if you believe (as Libertarians generally do) that human flourishing, including rising from poverty, is better fostered with limited government, then flat, and even regressive, taxes, ultimately serve the best interests of all, in the long run. Only there are plenty of sympathetic folks (like me) who have "buts" to this theory. It's incomplete.; 10/26/11, 10:14 AM
Known Unknown said...: Where do the capital gains originally come from?

From the productive work of others.

So, my investment into a company to produce more goods, perhaps hire more workers, and be more successful is not considered productive?; 10/26/11, 10:23 AM
Anonymous said...: So, my investment into a company to produce more goods, perhaps hire more workers, and be more successful is not considered productive?

You are confusing investment and capital gains. As I pointed out earlier, you can take your capital gains and spend it on hookers, cocaine, and gambling in Vegas--none of those uses of capital gains are particularly productive.; 10/26/11, 10:52 AM
Anonymous said...: Short selling isn't productive?

No it isn't. It is using borrowed money to gamble. Whether or not research conducted by short sellers helps to keep some companies honest, doesn't mean that short selling itself is productive.; 10/26/11, 10:57 AM
damikesc said...: Short sellers are the ones keeping the market from badly overheating it crashing too horribly. They are productive in the way cops are productive.; 10/26/11, 11:24 AM
Anonymous said...: They are productive in the way cops are productive.

This analogy only works if you believe that cops encourage people to commit crimes so they can earn overtime.; 10/26/11, 11:31 AM
damikesc said...: They are unproductive only in the view that the problem with crime is that cops notice it in the first place. Short sellers know companies better than anybody as they have massive liabilities if they are incorrect.; 10/26/11, 11:55 AM
Anonymous said...: Before any president gets a tax reform bill to sign, they are going to have to address what to do what do about the Bush tax cuts set to expire December 31, 2012. The 2001 and 2003 acts significantly lowered the marginal tax rates for nearly all U.S. taxpayers, not just the rich as the press would have us believe. Obama apparently wants to extend these cuts for everyone except those with higher level incomes. He has not, however, proposed any offsets for the revenue losses. Last time around the Republicans were able to get Obama to sign an across-the-board extension of the Bush tax cuts without any offsets for revenue losses. We will know how serious the candidates are about deficit reduction when they tell us not only if and how the Bush tax cuts should be extended but whether or not offsets should be required for any resulting revenue losses.; 10/26/11, 12:17 PM
sorepaw said...: This comment has been removed by the author.; 10/26/11, 1:57 PM
Known Unknown said...: You are confusing investment and capital gains. As I pointed out earlier, you can take your capital gains and spend it on hookers, cocaine, and gambling in Vegas--none of those uses of capital gains are particularly productive.

Capital gains are the results of investment. Hard to have one without the other.; 10/26/11, 2:13 PM
Known Unknown said...: hookers, cocaine, and gambling in Vegas

The hooker spends her (my) money on cigarettes, and pays taxes on the cigarettes.

The dealer spends his (my) money on a new car, which in turn, he pays taxes on.

The casino spends their (my) money on more employees, who in turn spend their money on goods and services and sales taxes and income taxes.

You're obviously correct. Capital gains are not productive at all.; 10/26/11, 2:17 PM
Known Unknown said...: Also, aren't capital gains the FUCKING REWARD for risking my money on business development?; 10/26/11, 2:19 PM
Toad Trend said...: EM

'Asking' a socialist contrarian like Mr. 'Frederson' about cap gains and so forth is like asking the mailman about how to split an atom.

What little knowledge he may have tripped over about the subject doesn't amount to much.

Honestly the libs are locked in a death spiral and I am content about that. One can only do so much to help people. Even with the productivity that still remains, we will still hear the shrill cry of 'I WANT' from the office of this president right on down to the maggot-infested types loitering on Wall St.

'Battle stations!'; 10/26/11, 3:05 PM