Fair-Weather Flat Taxers
BARTLETT, BRUCE
Fair-Weather Flat Taxers by Bruce Bartlett A foolish consistency is the hobgoblin of little minds." So said Ralph Waldo Emerson back in 1841. Perhaps so. But when two major newspapers change their...
...Back in 1982, the Times also thought a pure flat tax was a great idea...
...The Washington Post of 1996 now attacks advocates who believe "a flat tax will lead simultaneously to greater simplicity and 'fairness' in the system...
...now both oppose it...
...It concluded by calling the Hall-Rabushka plan "a superb idea...
...Now skip ahead to January 19, 1996...
...Moreover, the "progressivity of the current income tax is, in any event, bought at enormous price in inefficiency and unfairness...
...Flat taxes have a glaring fault," the Times opined...
...Back on April 15, 1982, the Washington Post thought the flat tax was a great idea: The ideal income tax would be a flat percentage of all income above an arbitrary threshold of, say, $10,000 per year...
...This, the Post said, "is an idea that, by promising efficiency, equity and simplicity, appeals to all parts of the political spectrum...
...But today the Times sings a different tune...
...Tax reform should also simplify the code, making loopholes harder for Congress to disguise, and enact...
...By contrast, there seems to be serious discussion of the idea today, as shown by the wide support for the Forbes and Armey proposals...
...The Times concluded that tax reform was desirable, but not a "Forbes-style flat tax...
...In fact, in a March 27, 1992, editorial the Times criticized former California governor Jerry Brown for proposing a watered-down flat-tax proposal on the grounds that it was not flat enough...
...Remarkably, there is a reform that achieves all these objectives...
...Jesse Helms and then-congressman Leon Panetta...
...Apparently the Post and Times preferred the flat tax as a curiosity, a theoretical possibility, rather than a real tax system...
...The flat tax is the obvious remedy...
...But now the solution that the Post found "obvious" 14 years ago has suddenly become "a flawed idea, less a serious tax proposal than a slogan in the name of which the advocates claim to be able to accomplish several contradictory things at once...
...The New York Times maintained an interest in the flat tax...
...Specifically, the Times praised the flat tax bills introduced by Sen...
...Once they thought there was an actual chance of enacting a flat tax, both of them turned against their earlier endorsements...
...Who can defend a tax code so complicated that even the most educated family needs a professional to decide how much it owes...
...For example, profit from corporate investment is taxed twice-when earned by the corporation and again when distributed to shareholders...
...And lest anyone dismiss this as the work of a rogue editorial writer, another Post editorial on June 3, 1982, noted that the public "is thoroughly fed up with a tax system that is not only of baroque complexity, but also downright arbitrary in impact...
...They lower tax burdens on the richest families and raise them on many middle-class families...
...That powerfully discourages savings and investment- the exact opposite of what the economy needs to grow...
...It would be simple, quick and easy...
...As it happens, the flat tax presents an opportunity to look at this question...
...In recent months the Washington Post and New York Times have reversed themselves on the issue...
...The remedy is, in a word, integration, meshing personal and corporate codes so that the brunt of taxes falls on consumption, not saving...
...The Times went on to praise the pure Hall-Rabushka proposal, which is the basis for the flat tax plans of both Steve Forbes and Congressman Dick Armey, and criticized Brown's deviations from it...
...Here is the Times's view in 1992: The present tax code is riddled with wasteful contradictions and complexity...
...The solution, according to the Post, was "replacing the system with a low-rate tax on income-with few, if any, exclusions allowed...
...And for reasons of elemental decency, tax reform shouldn't come at the expense of the poor...
...If anything, people are even more frustrated with the complexity and inefficiency of the tax code, and there is even wider acceptance of the flat rate idea...
...In a June 6, 1982, editorial the Times asked, "Who can respect an income tax system that allows many wealthy citizens to pay little or no tax yet claims close to half the marginal earnings of the middle class...
...On January 18, 1996, the Times attacked the flat tax...
...As for fairness, it would be no less fair than the present tangle of exemptions, deductions and credits that are currently producing not equity but a widespread public cynicism and hostility...
...Both previously supported the flat tax...
...It concludes that "a flat tax wouldn't be an improvement...
...The most dramatic fresh start, without changing the total amount collected, would be a flat-rate tax levied on a greatly broadened income tax base...
...Their plan wipes away most deductions and exemptions, permitting a low tax rate of 19 percent...
...But when two major newspapers change their opinions 180 degrees without offering any acknowledgment of their earlier views or any explanation for the change, one has to wonder if there isn't something foolish about inconsistency as well...
...The New York Times underwent a similar metamorphosis...
...Robert Hall and Alvin Rabushka, economists at the Hoover Institution, have proposed an integrated code that applies a single rate to both personal and corporate income...
...One is tempted to conclude that the only difference between the "ideal" tax of 1982 or the "superb idea" of 1992 and the "flawed" tax of 1996 with "a glaring fault" is that in 1982, or even in 1992, no one thought there was any real chance of enacting a flat tax...
...The solution, according to the Times, was a flat tax...
...Furthermore, the integration of corporate and individual taxes, which the Times praised in 1992 as necessary to increase saving and investment, "would shift taxes away from wealthy shareholders...
...Bruce Bartlett is a senior fellow with the Dallas-based National Center for Policy Analysis...
Vol. 1 • February 1996 • No. 22
