US moves - quietly - toward a flat tax
[Editor's note: The original version omitted the writer's byline.]
Without much public debate or even awareness, the United States is heading toward an almost flat tax.
That means the middle class will pour nearly as large a share of its income into tax coffers as millionaires and billionaires do. Throw in another tax cut along the lines of the two successfully supported by President Bush, and the middle class could actually pay a little more.
That change would reverse decades of US policy and constitute a major victory for some conservatives who have long advocated a flat tax.
"Another significant tax cut could be enough to eliminate progressivity from the US tax system," says Brian Roach, an economist at Tufts University in Medford, Mass., and author of a new analysis on what citizens really pay to all levels of government - federal, state, and local.
Ever since the inauguration of the modern income tax, in 1913, the US has relied on a simple rationale. The well-to-do pay a larger share of their income in federal taxes than the rest of Americans, because the rich can afford it. In return, the government protects their wealth and property. The gap in tax rates has varied over time. (In 1913, only 0.5 percent of the population paid the tax, and rates rose from 1 percent to 7 percent as income increased.) But it has always remained progressive.
Then in 1996, Republican presidential candidate Steve Forbes championed a 17 percent flat tax that would eliminate personal deductions and many other loopholes, and exempt interest, dividends, and capital gains. This flat system, he argued, would bring in about the same revenues and be far simpler. Though receiving much attention during the campaign, Mr. Forbes did not win the Republican nomination and his proposal soon faded into obscurity.
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