Monday, August 08, 2005

Politics: The Pen is Mightier Than the Sliderule

John Cole uses this column by Michael Kinsley as a chance to bash Paul Krugman. Well, Cole is right—Kinsley is a much better writer than Krugman—but that should go without saying. Kinsley is a seasoned writer and veteran editor, while Krugman is an egghead economist. Kinsley uses pretty words to dissect topics, Krugman uses statistics, numbers and blunt language. In fact, it is amazing that Kinsley can write an entire column effectively ripping apart the flat tax without once relying on any substantive numbers to make his case.
Poking Holes in the Flat Tax
[...] The so-called flat tax is another hobby horse of the right that swept the nation, then got swept away. But someone forgot to tell Steve Forbes, the amiably blank-faced magazine heir, who ran for president on the issue in 1996 and 2000. Now he has a book out: "Flat Tax Revolution." It's getting the full fair-and-balanced treatment — that is, unashamed open-throated puffery — on Fox News and other conservative outlets. So even though the idea looks pretty dead right now, a stake through its heart might still be prudent.

The flat tax is a game of three-card monte that deliberately confuses the issues of simplicity, fairness and the total tax burden on society. A simpler tax system would be a very good thing: good for the economy, and good for everyone's sanity. But contrary to what Forbes would have you believe, progressive tax rates — higher taxes on higher incomes — aren't what make the current system so complicated. It's as easy to multiply by 40% as it is to multiply by 17%. Even Republicans can easily do it — or hire someone to do it for them, if necessary.

[...] Forbes figures that almost everybody would pay less under his proposal than under the current system. And just to make sure, he would let you opt to calculate your taxes under current rules, if you prefer. So everybody would pay less. That is swell. But it has nothing to do with the flatness or otherwise of the tax system. You could just as well combine a tax cut with a proposal to release all the animals from the National Zoo. People might like that too. A simpler tax system would be very nice. But find me some folks who would choose a flat tax over the current system even if it meant that they would pay more, not less. Then I'd be impressed.

Then Kinsley channels Hannibal Lecter and gently disembowels Forbes...
Debate on this quickly becomes theological, so let's note only that tax rates were higher than they are now when Forbes had the inspiration to be born into a wealthy family, and higher still when his father, Malcolm, first built the family fortune.

1 comment:

Deoxy said...

The flat tax is about several things:

1) Simplicity. Check
2) Fairness. Check
3) Total tax burden on society. NO. Total burden of BEING taxed on society, perhaps, but that falls under #1.
4) Transparency. This speaks in some ways to both #1 and #2.

Right or wrong, one of the reasons the "flat tax" is supported is that the current system is viewed as not prograssive (despite the graduated percentage rate), asht very wealthy simply "shelter" thir money somehow. Is that true? I'm not an expert, but some (stupid) rich people have publicly claimed so.

Part of the "flat tax" system would be that there are no "write-offs", "deductions" (other than a standard, cost-of-living type of deduction for everyone), or "tax credits". The reason the final rate is expected to be lower is that it is believed that many of "the rich" aren't really paying a whole lot now.

Simplicity itself would probably be enough for most people, though.

(The other thing that gets people's favor is sales tax only (no income tax), and for similar reasons, but that tends to be viewed as unfair to the poor, while also putting a drag on economic transactions (which are important for the economy).)

As to paying MORE taxes, well, if I had to pay $500 more taxes a year, but I didn't have to pay $600 to have my taxes done by somebody else, I'd jump at it. (Yes, those numbers are pulledd out of the air.)

All of that to say, your precious Mr. Kinsley seems to miss most of the point.