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May 15, 2013 12:25 PM The Coming Flat Tax Resurgence

By Ed Kilgore

Whatever else comes out of the “scandal” over IRS scrutiny of 501(c)(4) applicants (and it’s already clear it will be harnessed to the GOP’s Great White Whale obsession with repealing Obamacare, on which the House will hold its 37th vote this week), one byproduct is certain. Sooner probably than later, we will see a resurgence of “flat tax” proposals, which have always advertised the abolition of the IRS as their most attractive feature.

Indeed, the conservative “base” may be ahead of the pols and bloviators on this one. If you Google “IRS Scandal Flat Tax” right now, you mostly turn up letters-to-the-editor and Freeper commentary (though the Atlanta Journal-Constitution’s conservative columnist Kyle Wingfield briefly mentioned it). But it’s going to be a bottomless crack pipe for talk radio types (who have always been the bedrock of support for flat-tax schemes, and will probably continue to be so now that Herman Cain is among their ranks) who view progressive income taxation as the ultimate enemy.

If I’m right, it will provide an interesting challenge for GOP congressmen, who have pretty much eschewed Big Tax Ideas for the smaller model of regressive taxation that involves lowering top rates and abolishing corporate taxation, and paying for it all by “closing loopholes” (many of which will inevitably affect the middle class). It would take something a lot more radical to enable the closure of the IRS. But since said congressmen aren’t really interested in reaching any sort of “grand bargain” with the Obama administration or congressional Democrats on taxes or fiscal policy generally, why not go the whole hog and give “the base” what it really wants?

The peril with “flat tax” schemes (or for the closely related “consumption tax” schemes), of course, is that they typically rely on significantly higher taxes for the poor and the middle class. They are ultimately not that different from the state-level GOP “tax reform initiatives” involving higher sales taxes combined with much lower or abolished income taxes that have gotten Bobby Jindal (and to some extent, Sam Brownback) in political hot water.

So federal-level conservatives may regret re-embracing “flat taxes” generally or some version of the “Fair Tax” specifically. But they probably won’t be able to help themselves in the current environment.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • Anonymous on May 15, 2013 12:51 PM:

    "ten years of expanding government powers, much of it under the guise of national security, selective enforcement of the law has increasingly become a norm rather than an aberration.

    why are conservatives so surprised (and outraged) by this news when Muslim nonprofits and their leaders have been under intense scrutiny for over a decade? And when so many Muslim groups and individuals have faced scrutiny simply for the religion they follow?

    Within months after 9/11, the U.S. government shut down the three largest Muslim American charities as part of a broader scorched earth strategy that sent a chill across American Muslim communities nationwide. Their boards of directors were arrested and many were prosecuted on pretextual violations of immigration or tax laws. None of the charities had anything to do with the 9/11 attacks, al Qaeda, or the Taliban. That they were Islamic charities was all the government needed to seal their fate before a suspicious and traumatized American public.
    Since then, new Muslim charitable organizations have faced heightened scrutiny from the IRS, with applications for many seeking nonprofit status taking years to process. My experience representing some of these organizations, and the anecdotes I hear from other attorneys in the same boat, have turned up example after example of selective targeting."

    an article from CNN

  • democrat on May 15, 2013 1:08 PM:

    as terrible as these series of scandals coming out these days, it is probably good to finally get the truth. most of the core problems are going on for more than a decade.

    benghazi reveals security and intelligent info communication failures by state and cia bureaucrats.

    IRS scandal reveal hypocrisy of the tax exempt status of "social welfare organization".

    justice dept proving journalists leak on informants illegally probably should get to reformation (restoration) of judicial reviews on national security information.

    sex scandal in army and neglect for veterans' benefits actually have been problems since korean war.

    i'm afraid that journalists and politicians can't get all these things together and some things may never change ( i dont think there will be real "tax reform") but i hope at least army scandals are getting fixed finally.
    i'm also discouraged that this will delay or destroy immigration reform and budget deal.

    well, at least obama can implement obamacare, end Afghan war, enforce greenhouse emission through EPA in his second term.

  • Peter C on May 15, 2013 1:11 PM:

    It isn't the progressivity of the tax code which makes it complicated; it's the arcane deductions and loopholes.

  • c u n d gulag on May 15, 2013 1:26 PM:

    Conservatives are simple people (or, simpletons), so, they want everything simple and easy - except voting of course. Or, at least for those who aren't white.

    They don't like life's complexities.
    And having a progressive tax code is complicated. So, naturally they want a flat tax.

    The other, and perhaps greatest, appeal of a flat tax for Conservatives, is that it unduly punishes the poor and middle class - so, that's the feature, not the bug.

  • paul on May 15, 2013 1:28 PM:

    What Peter C said. In fact, every time I've talked with someone in favor of a "flat tax" or a "fair tax" or one of the other regressive piles of malarkey, it's turned out that the "flat" foundation is piled with credits and rebates and exemptions to mitigate the horribly regressive structure. And if you look a little closer, actually administering those exceptions requires a level of surveillance over people's earning and spending that makes the current IRS look like a couple of guys snoozing in their office chairs.

    Of course all the burden of making the flat tax less regressive falls on poor working-class types, who currently just file a 1040EZ, as opposed to the current system, where the burden of complicated tax rules falls on middle and upper earners.

  • Richard W. Crews on May 15, 2013 1:29 PM:

    Liberal Flat Tax

    The Tea Bag Republican nonsense about their so-called “fair tax” is exactly opposite of fair. The less you make. The more it hurts.

    Here's a Liberal fair flat tax plan.

    First, the lower incomes must be buffered; those that already spend it all just to live. The break even and barely making it people. There will be a deduction of $15K for each earner, and $10K for each dependent. Most deductions, except single home mortgage interests, other taxes, and charities, will be eliminated.

    Then, each two year Congress must set the Tax Rate as well as the budget. Each tax plan is passed in the first year and runs for two. These legislated rates and policies can include directed credits/deductions for desired social policy actions. You know, social engineering, like rewarding for buying American.

    Another policy to save Social Security and help America : tax all income with a deduction at the bottom. Opposite of current policy. A $30K taxation start point would be an immediate 7.65% pay raise to every income up to $30K. There would be so much revenue that another higher break, or a wholesale rate lowering, would be possible.

  • mrgavel on May 15, 2013 2:20 PM:

    What Dems should do is embrace a progressive flat tax, i.e., one that goes up as income goes up, but has no deductions or exemptions. Then, what we could also propose is that people get a tax credit for charitable deductions, home mortgage interest, and children and dependent adults. that is equal to a percentage of their tax, and that could also be progressive, meaning that as you go up in income brackets, the credit increases. Also have such a tax treat all income the same and raise the limit on the payroll and medicare tax.

  • emjayay on May 15, 2013 3:16 PM:

    Right wingers I think imagine "flat tax" is the same as "greatly simplified income tax you submit on a post card" when there is really no relationship. Various schemes like in comments above have their plusses and minuses, but where is the actual debate where it matters, in Congress? Oh, they are busy repealing the ACA again and ginning up one tempest in a teapot about things that are all Obama's fault that have been going on in one way or another for decades.

    In an actual debate right wingers will want to keep all the complicated ways corporations hide their income and use deductions to pay little or nothing on millions in profits. And small non-corporarte businesses they love so much are where a whole lot of taxes are avoided. Simple things like the owner's Audi is a business expense and going out to dinner with friends, collecting their cash and running it through the company credit card is a business expense etc. Oh but we have to create jobs at restaurants by handing out expensive meals at taxpayer expense to business owners and corporate employees. No, really, that is the arguement.

    And when it comes to any deductions that they personally enjoy like that mortgage deduction that goes much more to higher earning non-urban people like themselves well fahgeddibaudit. Sorry mrgavel, but talk about government social engineering the right wing hates so much except when they benefit: the mortgage deduction is grossly unfair to a large percentage of Americans, in order to encourage behavior that is unavailable to a lot of us. or as it turned out, a big mistake.

  • emjayay on May 15, 2013 3:20 PM:

    I know (now), "after another" was left out of the third sentence in the comment above. I assume your brain inserted it where it is supposed to go.