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Tax Simplification and the Flat Tax

By Matthew Yglesias  

"Tax Simplification and the Flat Tax"

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Chris Edwards has an op-ed in The Washington Post pivoting off the tax problems of some prominent Democrats to argue for major tax reform. Since I knew Edwards was a flat tax proponent, I knew he was going to wind up touting the flat tax as the solution. And I was all prepared to fire back with a blog post making the point that what makes the tax code complicated isn’t its non-flat, progressive nature but it’s very complicated definition of the tax base. But he winds up conceding that point in the course of the argument:

The solution to all these problems — from the Enron debacle to Obama’s tax-troubled nominees — is to reform the tax code. With a simple and consistent base, taxpayers would know what they owe, and the IRS could easily enforce it. That is the promise of the “flat tax,” which would tax all income once and create a level playing field with no tax-free loopholes. The notion of a flat tax debuted three decades ago and was initially championed by Democrats such as Obama’s pick for CIA director, former congressman Leon Panetta. The flat tax later became a Republican cause, but there is no reason why Democrats couldn’t rediscover their tax-reform roots. In fact, this nomination season would appear to give them ample reason to do so. [...]

In the past, flat-tax lovers and haters have clashed over the desirability of a single rate. But it is the simple base of the flat tax that is really revolutionary. The simple base — free of exemptions, deductions and credits — would vanquish the 1040 instruction book, which has swollen from 112 to 161 pages in just the past 10 years and keeps on growing.

Well there we go then! But at this point, I’m not even sure what we’re disagreeing about. Liberals aren’t hostile to the idea of expanding the tax base and lowering tax rates. But expanding the base and lowering the rates isn’t what a flat tax is. A flat tax is about reducing the number of tax brackets. That’s what progressives don’t like, and it has nothing to do with the complexity of the tax code.

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