Wednesday, June 25, 2003

Been Down So Long, It Looks Like Flat To Me

This column drew a letter to the editor today, who said I was all wet because the rich pay more in income taxes--the same old misdirection, that no taxes could possibly matter other than income taxes, suckers. Remember when those guys wanted to privatize Social Security but now just consider it an investment and not a tax so they can make these ridiculous arguments?

East Valley Tribune, Jun. 22, 2003

My side will miss a pretty big bet if we don’t support a “flat tax” at the state and local level.

Right-wingers are upset with Gov. Janet Napolitano’s citizen’s fiscal study commission because of its decision not to consider a so-called flat tax. The commissioners prefer to spend their time studying more “politically feasible” alternatives.

But during the past 50 years, the percentage of income paid by those in the top tier has been steadily reduced. In the 1960’s, millionaires paid a much larger share in taxes than did the middle class, without too much complaining. Today, millionaires pay basically the same percentage as do the middle and lower classes, and the whining of the rich never ceases.

The federal tax system is now only slightly progressive, while state and local taxes fall more heavily, in percentage terms, on those below the top. Whatever progressivity remains in the federal tax code -- even before these latest tax cuts, which gave the vast majority of benefits to those at the very top -- is overcome by the regressivity of state and local taxes. We already have a flat tax in this country; everybody basically pays the same percentage.

So a flat tax at the state and local level would be an improvement. If people at different percentiles paid the same share of their incomes to the state and cities, we’d have a more progressive tax system -- unlike today’s arrangement in Arizona, which asks more of working families and the middle class than the rich. Going “flat” at the state and local level might help compensate for these federal tax breaks to top-tier earners, making the overall system not quite so unfair to those not already rich.

Pointing out the “class warfare” aspects of GOP tax policy -- how we’re changing the system so that the top 1 percent pay a lesser share and the “bottom 99 percent” pay more -- is supposedly (according to polls!) not effective, because people always overestimate their own percentile. Just as every child in Lake Wobegon is above average, apparently some 40 percent of Americans think they are (or will be) in the top 1 percent.

I admire that kind of optimism. So instead of percentages, let’s talk actual numbers. Our current tax system is like an airport ticket counter. There are incredibly long lines, and nobody understands ticket pricing due to bizarrely complex and constantly changing fares.

The vast majority -- the “bottom 99 percent” -- must wait in long, slow-moving lines. There’s a much shorter “first class” line, where people get whisked through security in style, but first class requires an annual income greater than $400,000. That’s what it takes to join the top 1 percent and to truly enjoy the recent tax cut. If you make less than $400,000, welcome to the long, slow line with the rest of the “lucky duckies.”

People traveling coach soon discover that while they’re still paying about the same for their tickets as before -- after all, for the person making $100,000 or less, the tax cuts meant only “chump change” -- this particular airline has slashed the cost of first class travel. It still costs more to fly first class, but a lot less than it did. It also means that first class travelers now pay a much smaller percentage of their incomes than do coach flyers for the same trip.

That’s “Bush Tax-Cut Airlines” for you. The skies are friendlier for people making at least $400,000. But the vast majority get long lines, high prices, and bad service. So keep your seatbelts buckled, and don’t even think about using that first class lavatory.

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