Apparently, Utah is considering a flat income tax. Or should I say, was considering. Here’s an editorial cheering its demise. I want to focus on one segment which gets the argument wrong. Okay, so the entire editorial gets it wrong, but I only want to focus on one. Unfortunately, I can’t decide which gets it more wrong. Thus, I offer them together. Consider:
But even if the tax rate is the same, and the dollars paid by the rich are more than those paid by the poor, a flat tax is not a fair tax. A tiny reduction in the income of a working family stings much more than the same percentage, or even a much larger one, charged to a higher-income household.
Besides, nobody pays only income tax. As part of the mix with property taxes and, of greatest impact, sales taxes, a flat income tax rate only serves to make the total tax structure more regressive, more burdensome on the lower-income brackets.
There are exemptions and rebates that could ameliorate the burden on the working class. But every one of them would reduce total revenue and require higher rates to make up the difference.
Keeping the charitable deduction, as the [Latter-day Saints] Church wants, is reasonable. The real solution, of course, is a truly progressive income tax structure, one that would increase the burden as a household’s ability to pay increases.
A flat tax on personal incomes combines a threshold (that is, an exempt amount) with a single rate of tax on all income above it. The progressivity of such a system can be varied within wide limits using just these two variables.
As I said, I believe we should remove as much progressivity as possible from the tax code. Completely removing it, though, isn’t practical or reasonable for the most basic reason listed in the editorial. But we can’t pretend like it’s logical for a household’s burden to increase as it’s ability to pay increases. That’s so anti-success as to be downright socialistic. I hide under no delusion about the editorial author’s likely inclination to socialism, however, given the ideas thrust forward in the editorial.
The editorial suffers from two particular flaws. First, in its argument for progressive taxes, it highlights the existing tax burden, consisting of property, income, and sales taxes. This burden is not the fault of the flat tax, but instead suggests that Utah needs tax reform. The author points to the sales tax as the greatest trouble for the poor. My interpretation of the author’s failure to attack this instead of the flat tax suggests an animosity for the so-called rich rather than concern for the poor. That’s an ideology rather than a solution.
According to this article about the Utah flat tax proposal, the flat tax appears to reduce the burden for the poor(er). Is this wrong? If so, explain why. If it doesn’t imply the correct income level for “poor”, explain why and consider a modified plan. Solve the problem or get out of the way for those attempting to do so.
That, of course, reveals the editorial’s second problem. The author dismisses the flat tax, calling for a “truly progressive income tax structure”. Fine. I disagree, but I’m listening. Show me why it makes more sense to increase a household’s burden as its income increases. Do the rich not take care of the poor if they’re allowed to keep the money they earn? Should they? I don’t know because the editorial never says. As I said, I’m left to interpret the author’s intentions as a socialistic “soak the rich” mentality. If that’s right, say so. If it’s not, enlighten me. I’m waiting.
Until then, the flat tax is the right answer, for all the reasons I’ve listed.