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POLICY BRIEF FROM AMERICANS FOR TAX REFORM
The Flat Tax:
Three Key Principles
There is an emerging consensus that
America needs real tax Reform. Ways and Means Chairman Bill Archer and
Congressman Billy Tauzin have called for abolishing the 16th
Amendment, ending the income tax and establishing a retail sales tax
in its place. Majority Leader Dick Armey of Texas and Steve Forbes have
called for a flat rate income tax to replace the present system.
Whether we move to a flat tax or retail
sales tax, there three key principles taxpayers must insist on for real
tax reform.
Income Should Be Taxed Only Once
Today we pay taxes when we earn our
paychecks, when we save, when we invest, when we buy products and services
and when we are foolish enough to die, the government wants half of
what is left. Real tax reform taxes income only once. The flat rate
income tax would tax income only once and then leave us alone. Speaker
Newt Gingrich has called for the elimination of the capital gains tax
and the death tax-both these taxes simply tax money that has already
been taxed before.
Income Should be Taxed at One Single
Rate
Both the flat rate income tax and the
retail sales tax tax income at one rate. This is important for two reasons.
First, it is only equitable that everyone pay the same rate. No one
should be punished by being taxed at a higher rate because they work
hard, take a second job or work overtime or on Saturdays. All income
should be treated equally. Second, if everyone pays the same rate, it
keeps the politicians from playing their favorite tax game: divide and
conquer. We remember when Bill Clinton said he was only going to raise
taxes on the wealthiest two percent of Americans. He told the rest of
us to pay no attention. When he was done mugging that two percent-mostly
small businessmen and women-Clinton then mugged social security recipients,
people who drive cars and he and Al Gore tried to tax your heating fuel.
If everyone is taxed at the same rate,
the politicians must face a united taxpayer front when they want to
raise taxes. My home state of Massachusetts has a flat rate income tax
mandated by the state constitution. Five times the liberal big government
forces have put a measure on the ballot to allow a graduated or progressive
income tax structure. Five times "liberal", "McGovern"
"Ted Kennedy" "Taxachusetts" Massachusetts voted
down any effort to move away from a flat tax. So when people ask if
a flat tax is politically possible, the answer is that even in Massachusetts
you cannot get taxpayers to move away from a flat tax. It is very popular.
There Must be a Constitutional Amendment
Requiring a Two-Thirds Supermajority Vote For Any New Tax or Tax Hike
A constitutional amendment requiring
a supermajority of two-thirds to raise taxes will protect taxpayers
from tax hikes. Today there are 14 states that require a supermajority
to raise taxes. This is a very helpful protection. Not perfect, but
much better than allowing a simple majority of 51 percent to raise taxes.
House Speaker Newt Gingrich and Senator Trent Lott have promised a vote
on this constitutional amendment each April 15. Congressman Joe Barton
of Texas and Senator Jon Kyl of Arizona sponsor the House and Senate
versions of this constitutional amendment. Any tax reform that doesn’t
have this constitutional protection against taxes creeping back up or
old taxes coming back from the dead is dangerous.
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