I’ve written about Senator Ron Wyden’s proposed Fair Flat Tax in the past, so I’m not going to rehash much of that. The plan was ill-conceived in the beginning, and Sen. Wyden is still promoting it without correcting the mistakes. Unfortunately, he’s swayed one editorial board enough that the board wrote a glowing recommendation for Sen. Wyden’s “screw the rich” plan. A few passages are worth comment, so here goes:
Taxpayers with incomes under $100,000 for an individual or $150,000 for a couple would see their taxes go down, Wyden says, stressing that his plan benefits the middle class. Taxes on the wealthy would go up, and he believes the plan would raise enough revenue to move the nation a bit closer to a balanced budget.
Let’s pretend for a moment that such a clear penalty for marriage could ever survive a showdown in the Senate, why do supposedly smart people buy into the notion that taxes must go up to balance the budget? Has anyone ever contemplated a single spending cut, which should be included in every tax reform discussion? Finally, why should those who receive the fewest direct benefits pay the most in taxes? Are they not paying enough?
Wyden’s plan probably won’t fly. But President Bush’s approach is built on tax cuts that go disproportionately to the wealthy and a budget that leaves the country with wildly growing debt. This is unfair and irresponsible.
The problem with President Bush’s plan, like most other plans under consideration, is that he’s accepted the worst assumption raised in this issue. Revenue–neutral almost guarantees we’ll end up screwing someone, probably on purpose. Laying it out as an untouchable only encourages the rent-seekers to organize now. Sen. Wyden’s plan is heavy on this part. Brilliant.
The Senate is scheduled to take up tax reform in the fall. Wyden has given Democrats something to talk about other than how bad the Republican plan is. He is right to question whether, in a nation where the gap between the rich and everyone else keeps increasing, the national policy should be to tax work at a far higher rate than wealth.
Much of the editorial board’s analysis is like its conclusion above, so I’ll just stop with a request. Explain why we should tax wealth, if that’s preferable to income.