GOP Pins Hopes on Flat Taxes, Economic Illiteracy

In which the silver bullet that will save the U.S. economy is raising taxes on the poor.

The race for the Republican presidential nomination has taken a turn for the policy-wonk-y, with three candidates – Texas governor Rick Perry, former Congressional leader Newt Gingrich, and pizza magnate Herman Cain – proposing to introduce a flat tax rate to solve the nation's fiscal woes. Perry takes to the pages of The Wall Street Journal to explain his plan, termed "Cut, Balance, and Grow," which would introduce a flat tax rate of 20 per cent across all income segments. Citizens would have the option of paying the flat tax, or paying under the current framework, whose "mind-boggling complexity ... helps large corporations with lawyers and accountants devise the best tax-avoidance strategies money can buy." Curse those rascally corporations and their lawyers! Although if we understand Perry correctly, those same corporations can continue to exploit the current system as it stands by not opting in to the flat tax. That, and we can't find any reference to taxing capital gains, which is where most of the uber-wealthy make their money, not through work-based income. So the wealthy seem to be getting off pretty lightly, all things considered, despite Perry's call to face up to "the hard decisions of cutting."

Over in Politico, Robert Borosage dismantles the notion that a flat tax rate is the fairest game around, calling it "one that inevitably benefits the rich and raises taxes on working families." In this "reverse Robin Hood" scenario, "if you pledge to lower the top rates of the income tax, raise the rates on the bottom to one rate and eliminate deductions, then, as night follows day, the rich pay less and working and middle-class people pay more," writes Borosage. It's just wrapped up in a pleasing, egalitarian-sounding bow that implies everyone's being taxed the same, regardless of how little or how much they contribute to the economy. Borosage wonders if the GOP has thoroughly missed out on the current zeitgeist, in which everyone from the Occupiers on Wall Street to Warren Buffett are calling for taxes to be raised on the country's wealthiest, not lowered. Perhaps it's not so surprising, then, that Mitt Romney has strategically kept his mouth shut on this proposal du jour.

The Washington Post's E.J. Dionne figures the flat-tax mantra is just one of the byproducts of a Republican culture in which the party "complains resentfully that less prosperous Americans don't pay enough in taxes – overlooking the fact that citizens who don't pay income taxes still shell out a significant share of their earnings in payroll, sales and (directly or through their rents) property taxes." It's a far cry from the GOP of yore that "instituted the Homestead Act and created land grant colleges, the interstate highway system, student loans, the Pure Food and Drug Act and, yes, a prescription drug benefit under Medicare," but if thoroughly debunked taxation schemes aimed at punishing the poor are what Republican card holders want, then that's just what they'll get. Unless, of course, the more astute members of the party come to their senses and distance themselves from the flat tax concept, which they did in 1996 and 2000 by showing businessman Steve Forbes, another flat-tax proselytizer, the door during his ill-fated presidential runs. When it comes to a simple-seeming solution – a flat tax rate – meant to fix a complicated, gargantuan mess - the tax code, deficits, and staggering levels of debt – Republican voters would do well to remember the old saying "it's too good to be true."