Republican Presidential candidate Rick Perry is releasing his economic plan today, which includes the option of a 20% voluntary flat tax.
Perry is another Texas idiot who is simply not qualified to be President. He is one of the worst of the contenders.
However, this does not mean that a flat tax would be a bad idea.
Personally, I would like this option. At tax time, I choose the simplest option available. My goal is to minimize the time I spend filling out taxes. A 20% flat tax would make it easy. I may pay more, but the higher amount will be more than made up for in time saved and reduced stress.
This points to way in which our current hyper-complex tax code is actually built by the rich for the rich.
These deductions that they write into the code are substantially available only to somebody with the resources to hunt them down and take advantage of them, and for whom it would be profitable to do so. Those of us who do not have a tax consultant staff are likely missing opportunities every year to take deductions we qualify for. We are also losing out on opportunities to do things in such a way that we can qualify for those deductions. The vast majority of us simply do not know all of the tax implications of the options we have each year.
A second way in which the hyper-complex tax code serves the rich can be found by asking, "How did those deductions get written into the tax code anyway?"
They were put there by people who had the resources to lobby politicians for the deductions - special interest groups. These are the activities that go on behind the scenes and beneath the radar of regular voters like you and me. We don't notice them - but the special interest group with the campaign contributions and other resources the candidate might draw on sure know about them.
From the point of view of the special interest group, loophole purchasing is just another business investment. For example, they invest, say, $5 million in lobbyists, public relations, and campaign contributions to manufacture a new tax loophole that, according to the accountants, has a $50 million payoff. That is an excellent investment opportunity – a company or organization would be foolish to pass it up.
However, you and I do not have the resources to invest in loophole manufacturing. So, the loopholes tend, by and large, to serve the interests of those who can afford to have them built.
A third expense comes from the opportunities lost when companies invest in the manufacture of legal loopholes rather than productive goods and services. The $5 million that my hypothetical special interest group invested in loophole manufacturing above could have invested that money someplace else – product development, updating infrastructure, employee education.
We waste untold billions of potential research and development dollars every year in the loophole manufacturing industry. If we closed that industry down, we would free all of that economic potential to pursue other, more productive options.
Furthermore, the loophole manufacturing industry corrupts our political system. A lot of loophole manufacturing involves simply buying and selling political favors. The loophole manufacturer (politician, regulator) sells his product to the highest bidder, who pays for it by providing the manufacturer with something of value in return. Our political system would be a lot cleaner if the loophole manufacturing industry did not exist.
A fourth cost is found in all of the costs associated with filling our taxes and trying to figure out in advance what it is that we owe - and what options exist for minimizing those costs. These resources, like the resources spent in loophole manufacturing itself, could have gone into something a lot more productive or enjoyable - something that actually had value to the agent rather than handing around (or trying to prevent the handing around) the wealth already created.
One problem is that, a simple flat tax would benefit the rich at the expense of the middle class and working poor. However, this problem is easily fixed. Let households deduct the first $40,000 or so. This would take us toward the principle that the first dollars for public welfare be the dollars that fulfill the fewest and weakest desires. Include interest income and capital gains as income.
That would be it.
(1) How much money did you make last year?
(2) Subtract $40,000 from line (1).
(3) Multiply (2) by 0.2.
(4) How much was withheld from your paycheck last year?
(5) Subtract (4) from (3)
(6) If (5) is a positive number, send in that amount. If (5) is a negative number, you qualify for a refund of that amount.
Sign and date here:
End of story.