Capitol Ideas: A Flat Tax Is Gonna Come
Bethell, Tom
"Capitol Ideas: A Flat Tax Is Gonna Come" by Tom Bethel' A Flat Tax Is Gonna Come The Communist Manifesto contained a ten-point program thought by Marx and Engels to be suitable for "the most advanced countries." Most of...
...I asked him if he had anything to add on the media and the flat tax...
...That is immediately identified as negative campaigning...
...This application of "price theory" to government finance was greatly vexing to Keynesians, who were as angry about supply-side then as they are about the flat-tax now...
...According to unreliable polls, the country is now about evenly split between defenders of the present tax system and advocates of a flat tax (with a rate between 15 and 19 percent...
...Why have we failed to respond to the vile appeals to envy that are used to defend the present system...
...let a grassroots movement grow, with a little help from talk radio, and then have congressmen bring it back to Washington themselves with their own enthusiasm built in...
...The flat tax was at the heart of the amazing Engberg-Goldberg episode...
...In fact, that would be a defensible tax system, one that I would prefer...
...Bob Dole dubbed the flat tax "snake oil," reminiscent of George Bush's reference to supply-side ideas as "voodoo economics...
...We must use them too...
...into the camera...
...18 April 1996 The American Spectator had been interviewed on camera for a whole hour by Aaron Brown from ABC's "World News Tonight," but the segment never aired...
...As far as I know, no politician, no matter how "extreme," has yet criticized "free" education...
...I refused a lot of interviews, TV and radio, especially short ones...
...A lot of "big-time reporters" don't like the flat tax, Goldberg allowed...
...What they mean is that they don't want anyone interfering with their own ideologically honed campaigns...
...Dick Armey hastened to New Hampshire to protect his prematurely exposed offspring...
...To get the Rabushka flavor you have to read that back at top speed with no inflection and no punctuation pauses whatever...
...Leisure, for example...
...Looked at that way, the flat rate proposed by Steve Forbes and other Republicans takes on the appearance of a "progressive" tax—which of course it is...
...The supply-siders drew attention to the costs of the graduated system in terms of lost production and tax avoidance—perhaps adding up to half the revenue collected...
...and all over the world...
...What this means, translated, is that if a flat tax were ever to be implemented it would immediately be popular, except among a few disgruntled liberals and old-fashioned economists...
...But tax reform wouldn't come until 1997, he said: "People wantchange, but in moderation...
...I've been inundated with media interviews, and they're not interested in the flat tax," he said...
...Off he went again (his tone is more amused and detached than his words suggest): "What surprises me is the Pinocchiolike behavior of the media and the critics...
...CAPITOL IDEAS by Tom Bethel' A Flat Tax Is Gonna Come The Communist Manifesto contained a ten-point program thought by Marx and Engels to be suitable for "the most advanced countries...
...The supply-side case focused on efficiency...
...The underlying presumption is that you do not really own what you are paid...
...Most of its provisions were implemented in Communist countries and are not now considered to have been good ideas: the abolition of private property in land, the centralization of credit, and the centralization of the means of communication...
...The liberal slant of the media is so blatant that it is "hardly worth discussing any more," Goldberg wrote...
...wrong to force some people to pay for the support of others, threatening them with jail if they refuse (are in "noncompliance...
...Engberg is the angry referee who shouts "Time out...
...I phoned him recently and asked if the press had been in touch with him, in view of all the flat-tax publicity...
...If you have not had the pleasure of hearing Rabushka in full flight on a public policy issue he cares about, then you have missed one of life's more obscure pleasures...
...No way would we ever go back to the present system...
...Soon after the 1994 election, Armey told me that the flat tax had tremendous appeal, but his Fabian (gradualist) strategy was to "sell it to America first...
...Nonetheless, Engberg had "set new standards for bias...
...There's a talk show here called "Inside Washington," and one day the regulars were sitting around agreeing with one another that all this negative campaigning was "turning off" the voters...
...You're just trying to hammer Steve Forbes by getting me to say that it would be a big tax increase on the middle class—that's all he wanted out of me, five words, 'tax increase on middle class.' I wouldn't give it to him, so he spent an hour looking for it in every conceivable way and then denied that was what he was doing...
...Tax policy is one of his specialties...
...The flat tax proposal is a revival of the supply-side economics that began in about 1978, when a small group (Paul Craig Roberts, Arthur Laffer, Jack Kemp, and others) began discussing the disincentive effects of high marginal tax rates...
...That is what we must be willing to say...
...Oh, it would be so bad for the Republicans...
...Marx used nothing but disguised morality-play arguments, and the same is true of his heirs today...
...Ay t came to the boil much sooner than anyone wanted," says Alvin Rabushka, a senior fellow at the Hoover Institution, and a good fellow to boot...
...But it always struck me that the supply-side idea needed morality on its side in addition to efficiency...
...Now that he was doing well, Evan Thomas of Newsweek disclosed, the press was getting ready to unload a "ton of dirt" on him...
...In this year's presidential campaign, the graduated tax—item number two on Marx's list—has come under attack...
...Lower the price of something, even government, and you will "sell" more of it...
...Lamar Alexander, the phony former college president masquerading as a lumberjack, ridiculed the flat tax as a "truly nutty idea...
...They set out to lie about the flat tax rather than discuss it on its merits...
...Donaldson's nonplussed reaction showed that he had not understood it until then...
...Most people probably still don't, so here is the key point: If you earn ten times as much money, you pay ten times as much in taxes...
...Then we had a conversation for 20 minutes and I said you have no interest in the flat tax...
...And yes, the lower rates did collect higher revenues— $200 billion more in the course of the 1980's, even as the top tax rate was reduced to 28 percent from 70 percent...
...The more you earn, the more you pay...
...The media talk sententiously about "negative campaigning...
...And the present, graduated system begins to look confiscatory and perhaps (dare I say) Communist-inspired...
...It had taken forty years to build up the welfare-regulatory state, and it couldn't be swiftly undone...
...Next Bernard Goldberg, also of CBS News, counterattacked in the Wall Street Journal...
...It's just not right...
...One of the good things about the flat tax discussion this year is that it has begun to bring this much needed element into the debate...
...Democratic ads will show Republicans attacking the one bright idea of the campaign so far...
...Last year I happened to be watching David Brinkley's Sunday morning TV show Tom BETHELL is The American Spectator's Washington correspondent...
...Possibly, then, the sudden burst of Forbes-inspired publicity upset this timetable...
...It takes an hour to explain the flat tax...
...when George Will explained to Sam Donaldson the essential feature of the flat tax...
...The movement was successful, in that the top tax rate was reduced, both in the U.S...
...In the fall, we may expect to see GOP ads showing Clinton apologizing to businessmen for raising their taxes...
...A few days earlier he The current tax system is unfair—and doomed...
...And then taxed again, if invested...
...Then the subject turned to Pat Buchanan, who had just come in second in the Iowa primary...
...Keynesianism had triumphed thirty-five years earlier...
...Forbes's proposal — a 17 percent rate and no mortgage interest deduction—was the brainchild of House Majority Leader Dick Armey...
...earn a hundred times as much, and you pay a hundred times as much...
...Everyone in the country would pay the same "dues" or annual fee, just as condo-dwellers pay the same fee irrespective of their income...
...The resentment and sheer spite of the anti-Forbes campaign was nowhere more plain than in the oft-repeated hint: Hey, he is only proposing this tax change because he would benefit from it himself...
...Its defenders have attacked back...
...How can you have a debate in six minutes with someone on the left...
...But the "greedy" in our midst still have to be treated punitively...
...I guess we hadsuspected that, but it was nice to hear it from the inside...
...In all the years I've been involved in it, the ugliness, the deceit, the dishonesty, the misrepresentation, the distortion and outright lying has reached all-time record levels and I guess I should take it as a good sign because it probably means the system, the establishment, the media, are scared to death that we're actually looking at something like this...
...The American Spectator • April 19 9 6 1 9...
...Early in February, Eric Engberg attacked Forbes's flat tax in his "Reality Check" segment on the "CBS Evening News...
...Hill and Rabushka's book has a chapter entitled, "What's Fair About Taxes...
...There is no upper limit on what the state can take...
...With Robert E. Hall he first proposed the flat-tax idea in an article in the Wall Street Journal in 1981...
...Forbes runs an ad drawing attention to Bob Dole's record of raising taxes...
...That is true cynicism...
...It's the rate that stays the same on all incomes (above a certain allowance for all...
...It rubs them the wrong way...
...If 7o cents of the next dollar you earn must go to the government, you probably won't bother to earn it...
...He did everything he could to put words in my mouth and I absolutely refused to let him," Rabushka said...
...Graduated, confiscatory taxation is unjust...
...In the 1980's it was reluctantly acknowledged that humans are not entirely like ants, and so must be given an incentive to keep working hard...
...The Wall Street Journal found four Nohelists who disagreed with Alexander...
...But that too will come, suggesting more extremism in our future...
...It is wrong to take half or more of what people earn...
...More goods would be created, and people would work harder, if the tax laws were changed...
...Donaldson obviously had been under the impression that a flat tax meant that everyone paid the same tax, irrespective of income...
...Translation: The press wasn't planning to reveal that information about Bob Dole, who worries Washington insiders about as much as George Bush did in 1992...
...They're interested in getting me to say something they can use against Steve Forbes...
...The second edition of their book, The Flat Tax, was published by Hoover last year...
...Economics is the study of choice with respect to wealth, and people do have choices other than sending money to the Washington trough...
...When a certain millionaire publisher managed to invade the airways with his flat-tax proposal, it elicited both immediate support and enraged reaction...
...The battle with liberals cannot be won on budgetary terrain, nor on grounds of efficiency alone...
...Which of course it is...
...They had quietly assumed that incentives weren't affected by tax rates, and they didn't expect this assumption to be questioned so late in the day...
...Meanwhile, the current tax structure is a Marxian relic and just one aspect of the war on property that has been waged on many fronts throughout the twentieth century...
...Two provisions only were implemented in all Western democracies, and they are still very much with us today: a "heavy progressive or graduated income tax" and "free" education...
...and both Forbes and the Wall Street Journal have questioned why savings, which have already been taxed once, should be taxed again...
...Think about it...
Vol. 29 • April 1996 • No. 4
