Re: Flat Tax?
When you posted about Forbes and the flat tax, I remembered having seen Kinsley's article in the Times and thought I would post it as a counterpoint to yours by Forbes. I agree with you that it wasn't Kinsley's best effort. And I thank you for your compliment to me.
Two points that Kinsley did make with which I agree are 1) income isn't simple to determine; and 2) "flat" tax is usually a euphemism for "lower" tax.
Lots of the complexity in the tax system is there because of special privileges granted to special people who have special influence on not so special legislators. The tax code is largely written by those who benefit the most from it. It's a political instrument as much as an economic one.
But simple is not always better. The point Kinsley made was that Steve Forbes himself could never use the simple card he's shown with on the cover of his book. If you make all your income from a payroll check, then it would be easy. Complications set in when you have other types of income, when you're self-employed, when you run a business, etc.
It's no coincidence that 17% is much lower than today's top bracket figure. I have no hard evidence on which to base my sense that conservative Republicans like the flat tax because it means a lower tax for their rich friends. But I also have no evidence on which to base my sense that liberal Democrats dislike the flat tax because it means a lower maximum marginal tax rate. Still my money's on both assertions being true.
The other thing I would add is that modification or simplification or overhaul of the income tax system wouldn't be worth much unless we look at our entire tax system. I still maintain that our tax system is already much flatter than people assume, when the impact of all taxes, not just the income tax, is taken into account. I'm in favor of a progressive tax system, so the flat tax, in and of itself, is an idea with which I disagree. Simplication of the tax code, which is a mess (and here I agree with President Bush and Steve Forbes), is an idea behind which I can stand. But Forbes' plan seems too simple.
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