Saturday, October 15, 2011

Plan 999 from Outer Space

A flat tax is nothing new. Forbes proposed a flat tax- I believe it was 12%- during his run for the presidency some years ago. Few took him seriously. But, the fact that anyone would take this proposal seriously, and the fact that the main street media, Fox News excepted, is covering and analyzing it, makes me ashamed to be an American.

All sitting presidents, both Republicans and Democrats, including Reagan, and especially Eisenhower, understood the fairness and necessity of a graduated income tax. The vast majority of Americans hold as truth the notion that those who profit the most from America, should pay the most.

The notion of a flat Federal sales tax is insane, pure and simple. Without discussing elasticity of demand, there is an obvious difference between the impact of a sales tax and an income tax. The working classes and poor must spend most or all of their income to survive, unlike the upper classes. So, in effect, this tax burden will fall squarely on the backs of the lower classes. The upper classes will loose incentive to spend and create jobs because of the tax. They're doing it now without the tax. Now flash back, during George Bush's tenure, consumer spending accounted for 70% of all economic activity. The tax, especially without deductions to encourage spending, will disincentivize spending except for those that must to survive. Welcome to the jungle.

Purely as a didactic exercise, Will, poor and lame, proposes a 15-30-60 graduated flat tax. Households will pay a 15% flat rate on incomes up to 50,000$. This should appease Tea Partiers. A 30% rate will be applied to that portion of income that is above 50,000$ and below 200,000$. And a 60% rate will be applied to that portion of a household's income that is above 200,000. With some slight cuts and modifications to Social Security and Medicare as well as greater regulations and oversight to prevent guys like Rick Scott from ripping off the system; and without a federal sales tax, we are on our way. Heck we might even be able to make less defense cuts. My Boston Terrier is barking with joy.

In closing, the Wall Street protest has given this old guy some hope; something I haven't had since Stewart's Rally to Restore Sanity. And the innocuous, unbridled passion of the rallies makes me reminisce. They are focused on the institutions that, with the help of the oil patch boys and Republicans, played a major role in bringing about the state we Americans are in.

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