tax frustrating for a few reasons. First, Mr. Rush, an author from
New York, writes in to small newspapers across the country to argue
his point. I did a bit of searching and found identical letters
written by Mr. Rush published in small papers across the country,
including one from Canada.
Guest columnist’s proposed flat tax model is ridiculous
I found Peter Rush’s column on arguing for a flat tax frustrating for a few reasons. First, Mr. Rush, an author from New York, writes in to small newspapers across the country to argue his point. I did a bit of searching and found identical letters written by Mr. Rush published in small papers across the country, including one from Canada.
Second, while in theory I have nothing against a flat tax if done properly, the model Mr. Rush proposes – 1 percent across the board maxing out at 7 percent is ridiculous.
I completely agree with Mr. Rush that the current tax code is obnoxious. It’s big, clunky, and has way too many loopholes. This should be fixed. But a flat tax is not a good way to do this. The only country using a flat tax with anything resembling a healthy economy is Russia. And Russia is a poor case study for Mr. Rush because, rampant corruption and heavy handed government involvement in the private sector aside, it has nothing in common with is model. Russia has a flat income tax that starts at 13 percent, an 18 percent VAT, a regressive pension tax that starts at 26 percent and corporate tax rates about 30 percent.
This is not the 1 percent tax that Mr. Rush proposes. Russia has the 11th strongest economy (by GDP) because of state controlled oil companies (Gazprom contributes 10 percent of Russia’s GDP), not tax policy. After Russia, you won’t find flat tax countries until you get down into the mid-50s on the “list by GDP” page on Wiki. And these either have unemployment pushing 50 percent like Turkmenistan, or have no economy, like Iceland.
However, the really frustrating part of Mr. Rush’s column is the giant red herring. He argues that the current tax policy is too confusing for Joe Sixpack and that a flat tax would be simpler. Yet what his tax model really does is drastically lower the tax rate for the wealthy under the guise of making Joe’s life a bit easier. Sure, Joe will also be paying a bit less tax, but Joe gets a pretty good return for his tax dollars. His kids go to public schools, he drives on highways paid for by federal money. Joe has never had to bribe a cop or corrupt official like his buddy Ivan from Russia. Joe’s clothes are made far away, yet are still affordable because of trade agreements negotiated by the State Department and seas kept free of pirates by the U.S. Navy. Joe is even relying on Social Security and Medicare to help him out when he gets old. And if Joe Sixpack is still confused about how to do his taxes and makes less than 49K, his filling assistance is provided free of charge by the IRS. Mr. Rush’s flat tax would bankrupt the government and all of the services that Joe (and Mr. Rush) rely on will stop existing.
Aaron Palm, Morgan Hill