The Flat Tax

Yes, I understand most times when I blog I am just stating my opinion on random stuff. On this entry, I would actually like a phone call or an email with your opinions.

I don’t know one person in America who truly understands the tax system. What’s a W2? Okay… Then what is a W4? What does it mean we say roll back the Bush tax cuts? My point is, when it comes to the tax system, I am completely confused. That is why when it comes to economic policy, of all the candidates, I think Mike Huckabee’s platform makes the most sense. You might be thinking that I am crazy agreeing with an Evangelical, right wing conservative. Well, not when his economic policies make the most amount of sense. Huckabee supports the fair tax. I do too.

The fair tax, aka, the flat tax, aka, the no income tax is the new economic model that I support. In the simplest of terms, it means that the whole American system would be thrown away and replaced by a flat, income tax. Huckabee is proposing a 23% flat tax. The flat tax model was made famous by billionaire Steve Forbes and conservative radio host, Neal Boortz. With the flat tax, according to CNN, You wouldn't pay income tax, Social Security and Medicare payroll taxes, the alternative minimum tax, a capital gains tax or estate tax. No more IRS. No more complex tax returns to fill out, either. Instead, everyone would pay a flat sales tax on almost everything they buy: Food, clothes, new cars, diapers, even health care and financial services. When I first head the idea, I was amazed that this was not a liberal idea. I thought, okay, well the rich people buy more then the poor people so they should have to pay more taxes. This will help the poor because they could just not buy as much. It was only after conversations with friends of mine who have great economic minds, that I realized why conservatives like the idea. Let’s say, a hedge fund manager has a great year makes 100 million dollars a year. Even if he is very loose with the checkbook, at most, he will spend 20 million dollars a year, or 20% of his income. If someone is dirt poor, they will likely spend 80% of their income because they still need gas, food, diapers, just as rich people do. Plus, rich people would save a fortune not paying income taxes, and they could leave more money to their kids in estate taxes. Which is why if a flat tax were to work, there would have to be exceptions made to protect the poor. There should be no taxes on the necessities: Food being the main item. Other necessities would have to be debated. Another thing I would like about this is all of the corporate fat cats that have their “headquarters” in the Cayman Islands and all of these other tax loopholes would vanish. This of course would help the poor since they are not aware of all the loop holes that the rich know about. Just imagine not having to figure out those complicated fax forms anymore.
However, you might be wondering why a program like this hasn’t worked. Here are a couple of reasons I have complied:

1. The IRS would be eliminated. Well, the IRS employs more then 100,000 employees who would be royally pissed off if they lost their job.
2. You better believe that companies like Turbo Tax, and all of the accountants and tax attorneys who specialize in decoding the American tax system have more lobbyists then you could imagine who will not be too happy if they lose their jobs. The more complicated the tax system, the more these wealthy tax attorneys can charge. And don’t think they are afraid to bribe any politician who crosses their path.
3. The politicians themselves will lose. Nobody is more aware of the tax loopholes then the politicians themselves. After all, they wrote the tax laws! If all of these off-shore, borderline illegal accounts were lost due to the flat tax. The politicians would lose millions. Even if there are some benevolent statesmen out there would view the flat tax as necessary, he or she would never amount a campaign strong enough to get enough votes to throw away the archaic tax system that is in place.
4. There will be thousands of companies that will be unhappy about the flat tax. For instance, take a Toyota Camry. On the lot, a Camry might be listed at $25,000, but once you buy it, you find out that you actually have to pay $30,750. Maybe you don’t buy the car anymore. Or a $100 pair of jeans would now be $123. You better believe that all of these companies have a lot of lobbyists and politicians who love their campaign donation as long as they promise to vote against the flat tax.

Basically, I would never vote for Mike Huckabee but I very much respect his chutzpah for at least trying to get the conversation about a flat tax going.

What do you think?