America is a country with a progressive tax system. This is not an indication of its political leanings, we’re talking strict definitions. Basically what it means is that as the size of your taxable income increases the percentage of taxes you pay also increases. This has been the case for the last hundred years, except notably from 1988 to 1990 consider it Ol’ Ronnies parting smack to the federal government and our economy that in part crippled the federal government in the recession that followed. Suffice it to say progressive taxing is as American as apple pie. Every now and then though, people try to make the case for a flat tax that is applied to everyone equally. The idea is that we all should pay an equal amount. This is naturally viewed as a fairer system. The problem is there are some numbers left out in this calculation of fairness, not to mention a big whopping ethical question left unanswered.Proponents of a flat tax would like to get rid of income taxes all together. They’d prefer a tax on consumption. The notion is that in this way we’d only pay for taxes on the stuff we actually use. Think of it like tolls for roads, the tolls pay for the roads and only the people who use the roads actually should have to pay for them. First problem is how do you set up a consumption tax for military action? Would we tax the oil companies for our wars in the Middle East and Africa(actually not a bad idea)? The second and larger problem is that a lot of people who can’t really afford to pay these taxes would pay them, while a few people who benefit greatly from these services don’t pay at all. Take for example a toll road you use to go to work. You now have to pay a lot of money to get to and from work. Meanwhile you’re employer who needs those roads in order to get you to show up reaps tremendous benefit from your ability to get to work and does not have to pay anything.
What should be remembered is in order to create a truly “equal” system in which everyone paid the same amount would mean a radical increase in taxes on the rich. I’ll repeat that in a different way, currently the rich pay less in taxes then their middle class counter parts. As is we currently have several consumption taxes: tolls as we stated are one, sales tax is another, Social Security a third, then there are taxes on gas and so on. When you take these into consideration of total tax burden the middle and lower classes pay substantially more in terms of percentage of taxation then the wealthy. But I’ve heard that the rich pay 50% of all taxes collected? Yes in terms of taxes collected on income alone the wealthy 10% make up a lion share of revenue, this however is only 1/5th of taxes. When you add in all the consumption taxes that go to the government the percentage the working class pay is significantly higher than the wealthy, and has been increasing for the last 30 years.
The big problem with consumption taxes is they often fail to capture all who benefit from the consumption. To go back to the example of the toll roads, here in New York, our major tolls are on our bridges. The people using these bridges often complain that their toll expense goes to fund the Buses and Subways. Many people feel this is unfair, and want to put the funding of the mass transit system solely on those who use it. What people fail to realize is that having a convenient cost effective form of mass transit decreases the amount of cars on the road. Less people driving means cleaner better maintained roads, it also means shorter commute times for those who still choose to use the tolls regardless of the fee.
Lastly there is the moral question of a flat tax system. America is the land of liberty and freedom. The plaque within the statue of liberty proclaims:
“Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!”