A Flat Tax? That’s So 1992!

via Flickr/MoneyBlogNewz under Create Commons license

Have you noticed that tax policy is the new new thing for the GOP presidential candidates? Not thoughtful, analytical or well-reasoned tax policy, mind you.  But some of the Republican presidential wannabes are embracing the idea of a federal flat tax scheme thanks to Herman Cain and his now infamous “9-9-9″ plan.

Sadly, that plan by Cain, the former head of Godfather’s Pizza, is not one for 9 pizzas with 9 toppings for $9 — something Americans probably could use to help stretch their food dollars right about now.

9-9-9 is catchy.  So it’s got our attention and it has Americans looking at Cain as a serious contender, even though the whole idea of a federal flat tax is a non-starter.  And if one candidate is getting attention on a topic, you know others will follow.  Rick “I’m fading into the sunset” Perry has announced his own flat tax plan to counter the popularity of Cain’s.  And Mitt Romney is weighing his options.  It’s nothing new to have candidates follow where the attention is, but I’m concerned that this is the start of a trend that could wrongly convince voters that a simple sounding tax plan is in their best interests.

Cain, who at least has an outline for his vision, thinks that turning our labyrinthine tax code into a paragraph or so will solve all our fiscal woes, save the American economy and that it won’t raise taxes on the poorest Americans.  Nothing to worry about, he exclaims — he’s a man interested only in fairness.  And he’s been assured by his financial advisory team an accountant somewhere in the Midwest that this is a good idea.  Except he’s wrong.  You don’t have to take my word for it –the organization Politifact gives Cain’s assertions that his 9-9-9 plan won’t raise taxes on the poorest Americans a “False” rating (the only rating worse is called “Pants on Fire“).

So why does Cain keep banging the drum about the supposed equity of his scheme when so many economists say there’s nothing fair about it?  Because 9-9-9 is a good soundbite.  Short, sweet, and TV and radio friendly! All presidential candidates luvz them some good soundbites.  Politicians craft 15 to 20 second blurbs to polish their talking point skills not only so voters can understand what they’re saying on the issues.  They also craft their messages that way to get the most media attention.  You know — like in commercials.

The vast majority of economists agree that flat taxes are regressive — meaning that the poor end up paying more taxes as a percentage of their income than the rich.  And if you look at the numbers as they would play out, the uber-rich would save a bundle with Cain.

I know tax policy is complicated and we all yearn for something a little easier every April.  Heck, I got an ‘A’ in Federal Income Tax in law school and I can’t get past about the first two pages of our income tax returns without needing the accountant to do some serious explaining.  And while there’s a whole lot that can and should be done to make our tax system fairer, a flat tax isn’t the way.

And the candidates know that.

So why do the candidates want to fool us like this?  They’re pretending this will be a good thing for us schlubs, even though it would really only benefit their big corporate political donors?  Because that’s a win/win for politicians — they get voter support because their soundbite-y plans seem on the surface to be all about treating everyone the same, but their political donors are happy because they know in they end they win and we lose.

As Cain, Perry and, possibly, Romney, get increased attention for these tax gimmicks, you can be sure the likes of Michele Bachmann (if she has any staff left) and Newt Gingrich will jump on that talking point to squeeze out just a little more mileage for their campaigns.  But don’t be fooled — just because they’re all saying it, doesn’t make it true.

Joanne Bamberger is the author of Mothers of Intention: How Women and Social Media are Revolutionizing Politics in America (Bright Sky Press), the first book to examine the rise of the political motherhood movement.

  • “meaning that the poor end up paying more taxes as a percentage of their income than the rich.”

    Isn’t this true of any tax law in the US? I mean, when you consider that the poor are concerned with the basics of the hierarchy of needs: food, shelter, clothing while the rich are buying luxury goods with their vast disposable income then yeah, of course any tax law is unfair from that perspective. I have yet to hear of any politician with any plan who has a solution to that issue. The only way out for poor Americans is to struggle upward — but do they even get ahead if they keep rising in tax brackets as they move upward? Or worse and very common, losing their public health insurance benefits for special needs and low income kids because they’ve been promoted out of poverty, only to find themselves much poorer by their rise in gross income. My husband recently got an $8,000 raise and we basically didn’t a penny of it because we moved from one tax bracket to the next. My friend’s special needs and non-special needs kids just got kicked off of their state health insurance plan because they made too much money by about $2,000, but now their catastrophic health insurance is going to cost them $1,000 a month AND they have to pay a higher percentage of taxes. It’s a move backwards economically. How is that an incentive for the lower-middle classes to keep up a motivated ambitious struggle upward?

  • Tracee, In a way, you’re right. But the way the tax code is set up now, many people with very low incomes don’t pay any federal income taxes precisely because they make so little money. A flat tax would require everyone to pay something. The very rich, while having many loopholes, are in the highest tax brackets. To allow them to pay a much lower federal income tax is a windfall for them. As for an across the board federal sales tax, there isn’t one now, that’s more money out of the poor’s pockets than they are paying now.

    I hear what you are saying and you are right about how the tax code impacts the middle class and there is a need to restructure. But a flat tax will only benefit the rich contributors of politicians, not the people who need to keep a few extra dollars in their pockets.

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