Conservatives, I have a bone to pick with my brethren. It’s over a favorite piece of red meat that politicians like to throw at us, one that we enthusiastically support, and one that will never happen. I am of course, referring to the flat tax. First off, let me be up front about my own views – I favor a flat tax. More specifically, I favor simplifying our tax code. As I’ve pointed out to our leftist friends in this post’s companion piece, tax rates are irrelevant – amounts collected are all that matters. Simplifying our tax code and making it cheaper to pay taxes will naturally result in more companies and individuals choosing to simply pay the tax rather than pay to avoid said taxes. A flat tax would be ideal – and it is never going to happen.
Before getting into the subject, let’s step back and look at a great example of how a drastic change to the law of the land gets passed. I am of course, referring to Obamacare. While conservatives were very well united in their opposition, the left were pretty much united as well in their efforts to allow all Americans to enjoy higher premiums, doctor shortages, and rationing of health care. Their main bone to pick with the law is that it does not go far enough to kill off the private health insurance as quickly as they would have liked, but at the end of the day, to quote the most eloquent voice of the left, it was their "Big F***ing Deal".
Now look at the proposals for a flat tax. Many conservatives will agree that a simple across the board tax rate of something like 20% for all Americans (a number I am arbitrarily throwing out) would be fair. Yes, the family making $50,000 per year is paying the same rate as the guy making $10 million, but at the end of the day the family is paying $20,000 in taxes while the millionaire is paying $2 million. How’s that for fair? Just as conservatives were pretty well united against Obamacare, the left will be against anything that tries to simplify the tax code that might lead to people actually giving up the same percentage of their income. Take away abortion funding, green energy subsidy sinkholes, or cut off funding to various members of the NGO-Nonprofit industrial complex (the only place of employment for many leftists without any useful skills) and there is no way anyone on the left can get behind a fair tax.
Wait a minute, that’s the same problem with conservatives. No, not the same causes – the same principle. Don’t believe me? we’ve already seen it. Early on in his administration President Obama proposed reducing the charitable deduction tax credit, suggesting that the government instead use that money toward helping to fund charities of its choosing (faith based initiatives, anyone?). Study after study has shown that conservatives give more of their time and money to charity than leftists do. And this makes sense. While I believe that leftists care about helping others as much as conservatives do the approaches sum up the two sides’ philosophies – "I am responsible" versus "Someone else should be responsible". Naturally conservatives were none too happy about this potential change to how charities were to be treated.
For most individuals this would not affect their giving too much. Many people give to causes of charities because they want to support them, not for personal financial reasons. Most of the charitable giving patterns for Sister Babe and me won’t be altered if this change were to go into effect. But we’re not the ones that charities are worried about. They are more worried about the larger donations that they get from wealthy individuals and corporations that make up a larger percentage of their operating budgets. As almost anyone can tell you when something gets more expensive you will see less of it. Philanthropists and companies will naturally look at what their best financial strategies are, and if the now more expensive charitable giving is not the best option it won’t happen. No, large charitable donations won’t disappear, but they will decrease. Being that we conservatives are more closely tied to charities in general we’re going to stand up for them, whether by maintaining the tax loopholes if not asking for direct government subsidy.
How about if we hit a little bit closer to home, literally? Conservatives don’t like the idea of doing away with the mortgage interest tax deduction, either. And lest you think that I’m only running an exercise in finger pointing, you can count me into this category. When Sister Babe and I bought our house last year I went through our finances in depth and laid out a few scenarios for what we could afford and how much we wanted to spend and lay down as a down payment. The interest tax deduction was one of the factors that went into the grand equation, and if this deduction were to go away it would hurt us, too. Granted, if someone can make the case for how an overall simplification would either be helpful or moderately painful at best, I’ll be the first in line to support it. But I’m not ready to sacrifice our budget if others are getting to keep their loopholes.
These are only two examples, and ones that are easy to illustrate. For every deduction in our tax code there is a special interest that will fight tooth and nail to preserve it. Sadly, politicians don’t have the will to stand up since it’s a lot easier to show how someone will be directly hurt by a closed loophole than it is to show how we as a society would benefit by simplifying the code. Still don’t believe me? How many presidential candidates walk through Iowa and talk about ending corn subsidies?
And that’s the reality we face. As conservatives we’re supposed to be the adults in the room, the ones who not only are willing to acknowledge that we have a problem, but understand that we have to actually take action to get off of our current path to destruction. If we can’t rely on the conservative base to rally around this cause, what hope is there of rallying enough independents to defeat the lefties on this?
Are you listening, Herman Cain? You’re exactly the kind of guy who can articulate a realistic tax reform approach to economically illiterate journalists and reach the American people. 9-9-9 sounds good in theory, but in reality it has no chance of happening. And this is coming from someone who was one of Herman’s Cainaanites back when he was in the race. While I didn’t think that 9-9-9 should have been his answer to most of the questions posed to him, I am grateful for the fact that he got the GOP primary debate questions pointed toward a subject as critical as our tax code as opposed to "boxers or briefs?" pabulum. The flat tax can be useful as an extreme position for bargaining from, just as the left used the single payer health care system during that debate. Obama was able to pretend he was a moderate by passing a law that would only gently strangle private health insurance to death rather than the immediate decapitation his base wanted.
All hope isn’t lost, though. Our tax code is going to have to be simplified in the next decade or two because it has to. We’ll either do it because we have the maturity to make painful decisions or because painful consequences will force us to. Who knows? Maybe watching what happens to Europe might even wake our leftist friends up! I’m not counting on it, but if we’re going to wake them up we have to ensure that our objectives are grounded in reality.