Thursday, June 18, 2015

Rand Paul to Announce Details of His Evil Flat Tax Proposal

Rand Paul will reveal his plan to overhaul the tax code today, reports NYT, by announcing his plan for a flat tax.

Murray Rothbard warned about the flat tax idea, years ago. Here are key snippets:

 The flat tax draws virtually unanimous support from the right-thinking
intellectuals in our society, including academics, writers, and media pundits.
By “right-thinking” I mean all people who have managed successfully to
identify their own views, whatever they may be, with the general welfare.
By this time, however, the cautious should be on the alert: any policy that
draws unanimous support from these people can’t be all good. There must be
a catch somewhere.
The flat tax has been cleverly labeled a tax “reform,” the very word
“reform” being heavy with the implication that no man or woman of good
will, be they liberal or conservative, Democrat or Republican, can possibly
stand opposed to such a plan. My favorite writer, H. L. Mencken, once wrote
that he had learned at his father’s knee in Baltimore what “reform” in
politics really meant: “mainly a conspiracy of prehensile charlatans to mulct
the taxpayer.”
To return now to the flat tax: the seductive rhetoric invoking the “special
interests” has lead most people to believe that everyone will benefit from the
flat tax except a few wicked corporations or multi-millionaires. Nothing
could be further from the truth. If the flat tax is enacted, millions of us will
find out, too late and to our chagrin, that, to paraphrase Pogo: “We have met
the special interests and they are us.” Or as Senator Robert Dole (R-KS) put
it recently on the issue of the flat tax as an allegedly fair tax: “Everybody
believes in fairness unless they’re involved.”
If the flat tax is neither evidently fair not genuinely simple nor neutral to
the market, if it is merely a snare and a delusion for more confiscatory
taxation, it is easy to understand why politicians and bureaucrats may love
the idea. 


  1. Fine and justifiable to be cynical as "reform" has a history of consistently making things worse. But just as it is knee jerk to assume the flat tax is necessarily better, it is knee-jerk to assume it is necessarily worse. And I mean better and worse not in terms of how much is being stolen from whom, which is impossible to judge. I mean in terms of total amount stolen.

    If a flat tax results in less tax receipts, this is a better, less unlibertarian tax. Moreover, the total burden of taxes is not just the receipts extracted from people, it's the wealth destroyed in the process. Compliance costs run $1 trillion annually. The victims, us, bear these costs. If the flat tax kept tax receipts neutral but slashed compliance costs this would also be a better, less unlibertarian tax.


    I like what Harry Browne said

    1. Cute. But achieving that goal is not currently on the table. And Browne commits an error by spurning any smaller measure that may move us toward that goal. As a flat tax that reduces tax receipts might. As a more steeply progressive tax that reduces tax receipts might. Reducing overall tax receipts while introducing no new categories of taxes is the right yardstick. Not the steepness or lack thereof of the income tax bracket percentages.

      I like what Rothbard had to say about this whole issue:

      If one agrees with Rothbard, the only question is whether a flat tax constitutes a new tax or a tax increase. I argue depending on how the proposed flat tax is written, it could very well be neither and represent a step forward toward the long term goal of reducing government tax receipts to zero and reducing tax compliance costs for victims to zero.

      A counterargument might come from the perspective of those who end up paying more under a flat tax since to them the new scheme would present a tax increase. But this argument for maintaining a status quo of higher overall taxation is dubious. By prioritizing concern with who is being robbed rather than how much is being robbed, this position ends up defending higher overall rates of theft based on special interest group concerns.

    2. OK so let say that we got a flat tax. Politicians are ever hungry. You can't possibly think that it would stay at any rate. Harry had said that too. I still agree with Harry, on the table or not a smaller govt should be the goal.

    3. Agreed 100% the goal as always remains 0 taxes. But that doesn't mean we turn our noses up at a tax decrease.

      There is no reason to think politicians would be more inclined to raise the rate of a flat tax than they would be inclined to raise the rates of the current gradated tax.

      If a tax decrease is bundled in with a flat tax, I'll take that package. If not, not.