Fiscal cliffs avoidable by a flat tax

Monday, January 7th, 2013 By

Steve Forbes

Steve Forbes was a miserable failure as a presidential candidate, but had a great idea in advocating a flat tax, which would solve a lot of problems. Photo Credit: Mlcblj/Wikimedia Commons/CC-BY-SA

About 20 years ago, a Republican candidate for president, Steve Forbes, proposed a “flat tax,” under which everyone would pay the same rate. It’s been associated with him since though he was hardly the first to propose it and this recent fiscal cliff garbage proves he was onto something.

Donald Trump of the 1990s had good idea with flat tax

Steve Forbes is known for two things. One is being current patriarch of the Forbes clan, which includes ownership of “Forbes” magazine. It’s one of the better business publications though like all business publications, slavishly kisses the butts of the wealthy and powerful in print. A lot.

Forbes also ran for president twice on the Republican ticket on his business experience despite not having served in office, just like Donald Trump. He went nowhere in his campaigns, just like Donald Trump. He did, though, have a great idea, called the “flat tax,” a 17 percent income tax across the board. He wasn’t the first, as economists Robert Ernest Hall and Alvin Rabushka proposed it in 1985, according to Forbes, as did others, but it’s a darn good idea.

Simple enough

Forbes’ flat tax, according to his speech advocating it posted on PBS, called for all income above $36,000 to be taxed at 17 percent. No deductions, no credits, no loopholes. Granted he also wanted to eliminate all capital gains taxes, which would seriously benefit the wealthy. Loopholes and deductions would be eliminated, all individuals and corporations would pay 17 percent and that would be it.

NASCAR track owners wouldn’t deduct depreciation on their race tracks – their cost of doing business  we’re all paying for – and certainly wouldn’t allow Bruce Springsteen the tax deduction for leasing land to the organic farm he doesn’t run, according to the New York Times. Yep, the Boss uses a rich person’s loophole to get a tax break.

Yet Mitt Romney got slammed for doing the same thing.

It also would mean the University of Washington would get tax breaks for building a new football stadium, nor donors for donating money toward it, which they currently are, according to the Seattle Times.

Time for a flat tax

Then there was that recent fiscal cliff nonsense. Wouldn’t have been one with a flat tax.

Then there’s the manner of the current tax code. According to Forbes, even National Taxpayer Advocate Nina Olson has pointed out the IRS doesn’t have the resources to enforce the code due to its complexity. Congress had to pass legislation every few years to alter Alternative Minimum Tax; they had to go through the fiscal cliff nonsense to peg it to inflation.

There is concern a flat tax could saddle the poor with higher tax burdens, which, as economist Alan Blinder points out in the Wall Street Journal, is certainly true. However, a flat tax exemption on income below a certain threshold, say Forbes’ proposed $36,000, would help ease that burden. Taking 17 percent off $50,000 per year for a family of four is close to devastating; however, 17 percent off $14,000 is much easier to live with.

Filling out a 1040 would be so easy. The rich would pay less in dollars, but the same as everyone else by rate. It wouldn’t serve the left-wing agenda to tax the rich to death to look good to some people but it would be at least fair.

Sources

Forbes

PBS

Forbes

Wall Street Journalhttp://online.wsj.com/article/SB10001424052970204358004577032311610518008.html

New York Times: http://www.nytimes.com/2012/06/10/realestate/new-jersey-in-the-region-weeding-out-fake-farmers.html?_r=0

Seattle Times: http://seattletimes.com/html/localnews/2019965721_uwstadium23.html

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