President Obama has a new idea to stimulate the economy, but not raise the national debt. The President is proposing the “Buffett Tax Rule for Millionaires.” Essentially, this means that people making more than $1 million a year will pay a higher percentage of their income in federal and payroll taxes than those who make less. The plan is then to use this new money to create public projects which hopefully will reinvigorate the economy.
Not so surprisingly lots of millionaires are against this plan, as are a lot of other people. Some say, it’s just another band-aid. Some say, it’s not enough. Some say, if you want to raise more taxes, we need to entirely revamp the whole system from top to bottom.
Now, I’m no millionaire and I’m no accountant, but at a gut level this proposal seems flawed. Or maybe the whole concept of a graduated tax is starting to seem flawed to me. In the 1970s, Milton Friedman strongly backed the concept of a flat tax. That is, to tax everyone and every company or corporation at the same rate with no deductions or escape clauses. I seem to remember that Friedman was suggesting a 7 to 12% flat tax for all. At the time I was scandalized! “Twelve percent, it’s not fair! I’m making 9,000 a year and that means I have to pay the government $1080 a year in taxes! It sounds like Socialism to me, and I thought Friedman was a Libertarian, not a Communist!”
Today, a flat tax makes a lot of sense to me. In fact, I’d gladly give the government 20% to 25% of my gross income, if that included social security and Medicare. Heck, by the time the Feds are through with me each year I feel I’m sending them about 40% of my gross income.
I know a lot of lawyers and accountants would be out of work if there were a flat tax. But think about it, if Exxon Mobil, GM, Ford, IBM, Apple, etc. etc., all had to pay a flat tax rate, wouldn’t we all be better off? Couldn’t we create jobs, save our infrastructure, and send our kids to good schools if everybody shared the burden equally?
Frankly, I’m really not sure, but we’ve pretty much tried everything else! Why not give it a shot?