Politics/ Flat Tax Express
Norquist, Grover G.
Flat Tax Express by Grover G. Norquist Within months of Ronald Reagan's 1981 inauguration, Congress enacted the Kemp-Roth tax bill, cutting marginal tax rates by 25 percent. Now Alabama Sen....
...T he outline of the two-year drive to pass a flat tax is now taking shape, and a consensus is emerging on at least six principles of tax reform: (1) Income will be taxed only once...
...4) There will be as few tax loopholes as possible...
...Tom DeLay (R-Tex...
...This is a fudge...
...VAT opponents include the entire Republican leadership in the House and presidential candidate Phil Gramm in the Senate...
...Talk show host Michael Reagan says that his listeners are "on fire" for a flat tax, while other hosts report similar support for scrapping the income tax and replacing it with a flat tax or a national sales tax...
...It united the conservative movement and became a consensus position in the Republican Party...
...Jack Kemp to lead the "Economic Growth and Tax Reform Commission...
...The California Flat Tax Initiative would require a vote of two-thirds of the people—not simply the legislature—to increase any tax...
...5) Any new tax or future tax increase will require a congressional supermajority...
...The flat-tax campaign, Shelby observes, is ahead of schedule...
...The establishment left in Washington has wanted a European-style VAT for decades...
...But this is a debate for after the 1996 election, and it is not wholly driven by economics...
...A flat-tax rate is also historically more difficult to raise...
...And, unlike most tuition tax credit or voucher schemes, the larger dependent deduction would also help home-schooled children...
...Now, 198 House members and 31 senators have signed the Taxpayer Protection Pledge against raising income taxes...
...It had tireless promoters in then-Rep...
...The National Education Association, which in the past has fought successfully against modest tuition tax credits for private schools, will lose the fight against a larger per-child deduction that leaves real money available for parents for sending their children to private schools—even religious schools...
...Clinton won his tax-rate hike in 1993," she says, "by telling most Americans to ignore his mugging of the top two percent of income earners, because he was 'only taxing the rich.' And then he came back and raised everyone's gasoline taxes...
...Assemblyman Howard Kaloogian is leading this effort to replace the state sales tax, personal income tax, and bank and corporate taxes with a flat tax of between 1 and 1.5 percent for corporations and 4 and 5 percent for individuals...
...The American Spectator October 1995 63...
...The list includes the entire leadership of the House and Bob Dole and Majority Whip Trent Lott in the Senate...
...Look for him to lose in 1996, much as Rep...
...The Armey-Shelby proposal provides for a personal deduction of $11,350 for individuals, $22,700 for a couple, $14,850 for a single head of household, and $5,300 for each dependent—which means that the first $33,300 of income for a family of four would not be subject to the income tax...
...It is also a kind of back-door tuition tax credit...
...Nevada will vote for the required second time to require a two-thirds vote of the legislature to raise taxes...
...Barbara Anderson, president of the Massachusetts taxpayer group Citizens for Limited Taxation, points out that attempts by the government to raise a flat tax engages all taxpayers, not just certain income groups...
...All Americans will pay the same tax rate—even more importantly, they will know that others are paying the same rate, too...
...The California Civil Rights Initiative to abolish racial preferences will be joined by the California Flat Tax Initiative, the brainchild of economists Arthur Laffer and Victor Canto...
...The Massachusetts state constitution requires a flat-rate income tax, and the left has five times submitted a graduated income tax rate initiative to the voters...
...For years, liberal politicians have spread envy and class hatred by asserting that the "rich" and "corporations" are not paying their 62 The American Spectator October 1995 "fair" share...
...The two most popular tax deductions—charitable contributions and home mortgage interest—might survive in the final analysis...
...Florida will vote in November 1996 to require a two-thirds vote of the legislature to raise taxes or a two-thirds vote of the people to impose new taxes through initiative...
...Every Republican candidate for the presidency has endorsed moving toward a flat tax...
...6) There will be no Value Added Tax (VAT...
...Bob Packwood, chairman of the tax-writing Finance Committee, stressed the importance of such protection when he endorsed a flat tax...
...2) Income will be taxed at only one rate...
...Shelby, who with House Majority Leader Dick Armey is co-sponsor of the first major flat-tax legislation, the Freedom and Fairness Restoration Act of 1995, sees obvious parallels with the campaign for Kemp-Roth...
...Richard Shelby predicts that within eight months of the inauguration of a Republican president in 1997, Congress will enact a flat-rate income tax to replace the current personal and corporate income-tax structure...
...While some rich people, such as Commerce Secretary Ron Brown, have structured their affairs to abuse tax loopholes, most have been paying very high real tax rates...
...has introduced a "McFlat Tax" (M for mortgage, c for charitable) that is much like the Armey-Shelby bill but maintains home mortgage and charitable deductions...
...And the home-mortgage deduction is claimed by fewer than 25 percent of taxpayers, all of whom would benefit greatly from the elimination of the capital-gains and inheritance taxes...
...They know that the income tax is tapped out as a source of more money...
...When taxpayers are divided they can be separated out and mugged one by one: politicians like to divide and conquer...
...Five times it has been defeated...
...Jim Lucier of Citizens Against a National Sales Tax-VAT reports that 178 members of the House and Senate have joined the anti-sales tax/anti-VAT caucus led by Armey and Rep...
...Charitable giving went up dramatically under Reagan when the top rate fell from 70 to 28 percent...
...Mark Souder (R-Ind...
...A VAT could increasethe percentage of the total economy taken in taxes, from the current figure of roughly 30 percent to the European average of 41 percent...
...The Armey-Shelby proposal taxes personal and corporate income at 20 percent, phased down to 17 percent over three years...
...It will be, he says, "a final rejection of the European class-based politics of hate and envy that never had any place in America...
...In any event, Dick Armey will introduce his clean flat tax bill as an alternative amendment to anything that comes through the committee process in 1997...
...Florida Rep...
...They want to be taxed at the same rate, regardless of whether they work on Saturdays, take a second job, or have a working spouse...
...The capital-gains tax will be abolished for individuals, meaning no more taxes on the inflated value of a house...
...There will also be plenty of state-level activity to keep voters focused on this issue...
...3) There will be a generous family allowance...
...The inheritance tax will be abolished, since it is a second tax on income and wealth already taxed during the earner's working life...
...Pro-family and free-market groups support it...
...First, the Republican takeover of Congress gives taxpayers an assurance that "tax reform" will not turn into another increase, as it always has seemed to in the past...
...According to Armey, Republican leaders fully understand that this commission will in no way sidestep or avoid the flat tax...
...Just look who they recruited for it...
...And, in a gesture tantamount to writing a flat tax into the Contract With America for 1996, House Speaker Newt Gingrich and Senate Majority Leader Robert Dole appointed Grover G. Norquist is president of Americans for Tax Reform...
...Most Americans do not donate to church just to get a tax break...
...Despite the advantages of incumbency and the fundraising opportunities available to a Ways and Means chairman, Gibbons won re-election last year by only one percentage point...
...If the Home Builders and Realtors lobbyists play a central role in helping the GOP win an additional twenty-five House seats and six Senate seats, the home-mortgage deduction might survive...
...Arguments for keeping any deductions, however, are weak...
...Taxpayers who own small family businesses or farms will no longer have to sell them to pay inheritance taxes to the Internal Revenue Service...
...This is a serious commission," Armey says...
...Americans are tired of being divided against each other on the basis of race and gender, and they are tired of being divided against each other on the basis of income...
...Newt Gingrich has promised that the House will vote April 15, 1996, and, if necessary, April 15, 1997, on a constitutional amendment to require a supermajority (three-fifths or two-thirds) to raise any tax...
...Shelby, is now inevitable...
...There'll be no more of the double taxation that occurs when corporate earnings are taxed at the corporate level and then as personal income when paid out in dividends...
...A single rate brings "transparency" to the tax code: you don't have to guess what your neighbor is paying...
...Both of these hot-button issues will be on the California ballot in November 1996...
...By placing tax cuts front and center in his 1980 presidential campaign, Reagan generated enough momentum to get Kemp-Roth through a Democrat-controlled Congress and a hostile Washington establishment once he was in the White House...
...Armey added this provision to his legislation this year...
...The enactment of the flat tax, says Sen...
...Sam Gibbons, the ranking Democrat on the House Ways and Means Committee, is a strong advocate of the VAT...
...What's more, the arguments for the flat tax are the same as those that have driven the national rejection of racial preferences and quotas...
...C onsidered utopian only a year ago, the flat tax has moved to the top of the political agenda—and become virtually synonymous with tax reform—for two reasons...
...Its members include Heritage Foundation president Edwin Feulner, Ohio treasurer Ken Blackwell, California treasurer Matt Fong, Jack Faris of the National Federation of Independent Businesses, Dean Kleckner of the American Farm Bureau, and Herman Cain of the National Restaurant Association...
...The 1986 tax reform worked only because the public trusted Reagan to veto any rise in the tax burden...
...Jack Kemp and the Wall Street Journal editorial page...
...Those two promised votes will make the idea of requiring more than a simple majority of Congress to raise taxes a central issue in the 1996 election...
...Al Ullman of Oregon lost to Denny Smith in 1980 after endorsing the VAT...
Vol. 28 • October 1995 • No. 10
