Just over 245 years ago, roughly 46 tons of tea were dumped into Boston Harbor to protest British Parliament’s singular tax on tea. Today, there are 97 taxes and fees we pay to the bureaucratic monstrosity called the IRS. There is no better exemplification of this gruesome subject than the mother of all taxes: the federal income tax. This behemoth tax is estimated to be about 10 million words and rising.
In 2008, Money magazine took a hypothetical family’s finances and gave the numbers to 45 tax preparers. Forty-five different estimates came back. In fact, there was a 160% variance between the lowest suggested amount owed and the highest suggested amount owed. Furthermore, less than a fourth of the preparers came within $1,000 of the actual amount owed according to Money. This is from experts who are considered to be the best in the business.
So how should the average citizen who doesn’t have the lobbyists, lawyers, or loopholes navigate through this arduous thoroughfare? Answer: by electing representatives who advocate for a flat tax.
A flat tax would help our country begin to scale back the government that everyone but the Washington bureaucrats anathematizes. As the vast majority of Americans would receive a tax decrease, there would be substantial investments and job creation. We would be facing growth comparable to Reaganomics. Hereafter, it will ironically generate more revenue for the government than the progressive tax we have now. More than 40 countries and jurisdictions have come to this realization and enacted the flat tax.
By eliminating loopholes, a flat tax offers a model of fairness. Right now, according to IRS data, the top 10% of all earners— the people making $150,000 and above— pay 71% of all federal income tax while earning only 43% of all income while those who make $45,000 or less, 47% of all earners, pay little to no income taxes.
I think that there’s something wrong with our democracy when people who pay no or virtually no taxes can vote for tax increases on fellow citizens who already pay taxes.
Under our current progressive tax plan, workers may stop chasing a promotion they once thought they wanted. Why bother if the taxman will take the money anyhow? When workers delay climbing stairs of progressivity, both the worker and government’s capital will be deteriorated. When that person is a business owner, the result of the decision could lead to an uptick in unemployment.
A study by Christina Romer, a professor at the University of California, Berkeley, and the chairman of President Barack Obama’s Council of Economic Advisors, suggests the level of taxation the government might start getting less, not more, revenue, is at 33%. Obviously, conservatives believe rates should be lower than that for faster economic growth. However, even if you are an extreme left winger and your goal is to make government as massive as possible— you should still oppose a tax rate higher than 33%. Sadly, the highest tax bracket has almost always been above this 33% rate. The last time this occurred was in 1992, the last year of George H. W. Bush’s administration.
One of the most common rebuttals to the flat tax is that it is unfair that the rich get a colossal tax break. In fact, the exact opposite is true.
Under the progressive tax system, Americans live under now, becoming rich is chastened. For example, let’s look at a hypothetical situation. Let’s say there is a 50-year-old rich man who is an ER doctor. He probably spent 15 years after high school studying, and at least $300,000 in tuition to become a doctor. Is it right to reward this doctor with a higher tax rate just because he makes $1 million a year? Of course not, and this kind of story is quite common in American life as the majority of millionaires in America are self-made.
So where would America look to for a successful flat tax model? Look no further than Estonia. From 2001 to 2007, Estonia’s GDP grew by an average of 9% per year. In five years, their unemployment rate dropped from 12% to only 4.5%. Estonia has also become high-tech in that over 90% of its population has access to the internet. Latvia, Lithuania, and Russia have also followed suit with similar results.
It’s time for politicians to cease their small talk about the earned income tax credit, the child credit, wealth taxes, and so on, and dismantle our disproportionate income tax and replace it with a flat tax.
The views expressed in this article are the opinion of the author and do not necessarily reflect those of Lone Conservative staff.