Doug Henwood wrote:
> Brown's plan was written by Arthur Laffer, the author of the famous curve
> on a cocktail napkin. It combines two different right-wing dreams, a
> consumption tax and a flat income tax. Both spare capital and sting labor.
> William Seidman, the Republican politico who's now CNBC's chief
> commentator, said of Brown's plan that it was the biggest gift to the
> wealthy in history.
Seidman is an former accountant. To him, a fat tax will ruin the profession. Seidman specialized in attacking the left with the left's unintended consequences, that is why CNBC loves him. He had only one idea: prevent moral harsard at all cost.
>
> Brown ally Alex Cockburn defended the tax scheme on NPR in 1992 by saying that
> "a flat tax can be progressive." Milton Friedman, who was on the other line,
> said he welcomed support wherever it came from, but he'd prefer people
> understood what they were supporting.
>
> Taxing minks & Mercedes would still spare the rich, since the very upper
> brackets save 30% or more of their income.
>
We can take care of that with a savings tax.
> >The major advantage of a flat tax written by progressives would be to exempt
> completely the lower 80% of the income scale.
>
> What you're talking about is conceptually a steeply progressive income tax,
> just like in the Communist Manifesto! Why sacrifice the principle and embrace
> the "flat" name?
Because a flat tax will sell in America and the CM won't.
> Whenever I've done talk radio about flat tax schemes, I find that most
> people think the federal system is regressive on balance, when it's
> progressive, and most people object to complexity and loopholes, not the
> rate structure. So they embrace flatness because they think it'd actually
> *increase* taxes on the rich, and because they like the simplicity of it.
> These beliefs, though, seem structured at the level of fantasy, and it's
> hard to break them up with rational argument.
But, Doug, the current complexity and loopholes, are inseparably tied to the rate structure. That was how the tax bill was negotiated. To get rid of one, your have to get rid of the other.
Since most of the rich are only paying AMT (Alternative Minimum Tax) anyway, a flat tax will not redcue their taxes further if AMT is kept.
God is in the details.
Henry