The News Connection ran an article in this week's paper that has been circulating by Newt Gingrich and Rep. Michael Burgess in favor of the
flat tax.
The complexity of today's tax code is a consequence of countless deductions and exemptions aimed at promoting a variety of congressionally determined policy agendas. The result is federal law loaded with opportunities for avoiding taxes and exploiting loopholes at the expense of fellow Americans. Behind every loophole there is a lobbyist.
Very well said, but we'll come back to this.
No argument for GOP policy is complete, of course, unless it invokes the memory of the mythical one.
When President Reagan cut taxes in 1981, several good things happened. The economy grew, revenues increased, and jobs were created. It's hard to think of better medicine for our ailing economy than replicating successful reform of the tax code on an even greater scale. How do we do it? Flatten tax rates; simplify the code; and, shift the burden away from our families and small businesses.
This argument is a little hard to follow. Is the congressman implying that a tax cut is tax reform? If so, we have just experienced the most sweeping tax "reforms" in recent history. President Bush's
tax cuts for the rich, which Burgess wholeheartedly supported, have been roundly
condemned, adding trillions to our staggering national debt. We simply can't afford any more reforms like this.
The optional flat tax that Gingrich and Burgess propose would establish a deduction somewhere above the poverty level to exempt poor families, and eliminate the Alternative Minimum Tax. So far, so good. Remember that first paragraph? Now consider this statement.
And if a person had twice as much income as another, he or she would be taxed twice as much. Furthermore, a single rate tax structure would eliminate taxes on savings, capital gains and dividends.
The flat tax targets
income, but the rich don't make their money through salaries, they make it through investments. There's the loophole. The crisis in the
subprime mortgage sector left thousands on the brink of foreclosure, but one hedge fund manager made over
three billion dollars shorting the housing market. Under Burgess' flat tax proposal, he would not pay one cent of taxes on that money. According to
Robert Reich, Clinton's former Secretary of Labor:
The 25 highest-paid hedge-fund managers are earning more than the CEOs of the largest 500 companies in the Standard and Poor's 500 combined. While CEO pay is outrageous, hedge-fund and private-equity pay is way beyond outrageous. Several of these fund managers are taking home more than a billion dollars a year.
Under the current tax code these fund managers pay a reduced tax rate of 15 percent. Burgess and Gingrich think that's too much. Burgess' entire tenure on capitol hill has been one huge valentine to the ruling class, but at least he is consistent. Gingrich is hoping no one will remember that when he was running for president he criticized fellow candidate Steve Forbes, who made the flat tax the central theme of his campaign. Consider the following
quote from 1996.Gingrich was particularly dismissive of the part of the Forbes plan that exempts interest and other unearned income from taxation while taxing wages and salaries at 17 percent. "That's nonsense," Gingrich said. "That's not going to happen."
Gingrich suffered from a failure of imagination. He couldn't conceive that a policy so flagrantly biased toward the wealthy would ever be seriously considered in the public discourse. What a difference a decade makes.
“The Reagan-Bush years,” he declared, “have exalted private gain over public obligation, special interests over the common good, wealth and fame over work and family. The 1980s ushered in a Gilded Age of greed and selfishness, of irresponsibility and excess, and of neglect.”
That was just a test drive. The current occupier of the oval office no longer even tries to hide the
GOP's agenda. With loyal servants like Burgess to do his bidding, why bother?
The last sop in the Gingrich-Burgess proposal is for the business world. Their proposal "dramatically" reduces the corporate income tax rate. Now ask yourselves, if the poorest people, the richest people and corporations are all paying less taxes, who makes up the difference? Logically, the flat tax may mean a larger tax bill for the
middle class, or
additional debt due to reduced revenues. The authors were hoping you'd be so dazzled by that reference to the
Gipper that you wouldn't notice.
Update:
Whosplayin insists this proposal is a tax hike for the middle class. Click
here for more.
A D.C. woman was arrested Saturday for 
Secretary of State Condoleezza Rice has suggested that she 
Well, 
