Flat Taxes

Around this time of year, I always get in little tiffs with friends over “flat” taxes. Natch, the “fairness” club is hauled out early and often.

Kevin Drum’s got it right: (in reference to this article in the National Review.)

But what really gets me is how they always present these things as if we need a flat tax because the tax code is too damn complex. Well, the tax code is too damn complex, but the least complex thing about it is the part where you look up your adjusted gross income in the tax table to figure out how much you owe. The complex part is figuring out your adjusted gross income in the first place, something that has nothing to do with whether the tax rate for millionaires is higher than the tax rate for those at the poverty line.

It is columns like this that cause me to lose patience with the tax jihadists on the right. It is dishonest to pretend that flattening tax rates has any connection to simplifying the tax code. It is dishonest to pretend that a flat income tax is “fair” while conveniently forgetting to suggest the same for Social Security taxes. It is dishonest to pretend that “income” is the same for everyone while failing to even mention capital gains, tax shelters, corporate perks, deferred compensation, pension contributions, stock options, or the thousand other options the wealthy have for making money that doesn’t quite count as “income.” It is dishonest not to mention that simple arithmetic guarantees that any flat income tax proposal would raise taxes for practically every middle class family in the country.

Semi-related: Back in December, this Plastic article really drove the point home with me about what’s wrong with our current (er, uh, Republican) tax policies (which aren’t flat, but getting there):

(I’m quoting a comment from “esmense” in it’s entirity… it’s worth the read)

The basic misunderstanding about taxes is that they are a transfer of money between individuals. From “the rich” to “the poor.” From “the productive” to the “unproductive.”

But, in reality, what taxes are is a transfer of resources between generations.

The reason this is misunderstood is because most people overlook one extremely important fact; in most societies, and most especially in broadly middle class societies (as ours once was, although it is becoming less so), the factor that most explains disparities in wealth is age.

Older people, in general, are richer than younger people. They earn more, and they possess more assets, including income producing assets.

The reason for this is obvious