Should the US adopt the Flat Tax Amendment?

No

9 of 12

by Lam Luu

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Flat tax does seem to be a great choice. First, no one like taxes. I don't. Even those who call for tax raise don't like taxes. It is, after all, a cut from one's income. Furthermore, complicated taxes are even worse. What if I remember something wrongly in the maze of questions I need to answer each year? Will IRS punish me? Will I be thrown into jail? Then comes the question of fairness. Does Bill Gates do anything bad that the government "punishes" him with sharp tax rates? Flat Tax gives a seemingly perfect answer for all of those concerns. It is low. It is visible. It is simple. It does not punish anyone. Furthermore, when everyone has the same tax rate, those who are wealthier will pay more in term of number of dollars, so its proponents even go as far as calling it "progressive." A silver bullet for the tax problem, is it not?

Well, as our experiences tell us, complicated problems require complicated answers. Wait, if you are a student, this may not hold true, since your complicated problems may produce fairly simple answers (by the way, that is how I usually check if my answers are right). However, that is because our professors design the problems so that they have simple answers. No one design the tax problem. Actually, no one wants it, either. However, it grows into a monster that each and every politician, as well as responsible citizen, has to deal with. And with those real-life complicated problem, a simple answer is usually not a good answer.

Let us start with the most fundamental characteristics of policy: justice. As John Rawls put it, an unjust policy, no matter how efficient and economic it is, must be either modified or abandoned. Hence, if a tax policy is unjust, it must be thrown away. By this time, Fair Tax proponents would start shouting out how "fair", hence "just", their policy is. Actually, it is not. Let us examine the problem of tax justice a bit closer. How would a just tax do? Between two people, which one should pay more tax, or should they pay the same? What should be the measurement, the amount of money, or the percentage of income? Taxes are for public services and goods. For example, infrastructures, police force, national security, public education, etc. Everyone in a country benefits from these services and goods, so everyone must pay taxes. Furthermore, it is perfectly just and fair to say that those who benefits more should pay more.

Who benefits the most from public services? The lazy poor who don't even bother looking for jobs? Well, how much does a person like that earn a year from those public services? Ten thousand dollars? That is not a small number, but how much do you think people like Bill Gates benefit from those public services and goods? Billions of dollars. Without infrastructure, those business owners and CEOs must spent their own money to carry their goods and services to their consumers. Without public education, those people cannot find good employees, which will, undoubtedly, increase the cost of producing and decrease the profit. Without a strong framework of laws and orders, Bill Gates cannot even sell softwares, since everyone will start to use illegal copies. The benefits from public services to the wealthy are, therefore, enormous.

From this insight, a just and fair tax system must take more from the wealthy, not because they are rich, not because the government wants to punish them, but simply because they get more from the public services and goods which taxes are used for. As I have stated from the beginning, tax is but necessary evil. If we can continue to provide public services and goods without taxes, we should just do that. However, we have to pay our dues. And those who get more should pay more. That is but justice.

I also want to touch on the complexity and economic factor of a truly progressive tax system. Obviously, to ensure that everyone pays his or her own dues in taxes fairly and justly, the tax system cannot be as simple as the system Fair Tax proposes. However, it needs not to be a monster. Actually, what we seen today is the result of countless compromises and exploits that people, especially those with enough power, have made. In the name of fail justice and economics, many people have carved many rebates and reductions out of the tax system. Those would be insignificant to an average tax payers, but a huge numbers to the wealthy who are obligated to pay high tax. Hence, it IS possible to draft a tax system that is both just and reasonably simple. An unjust and unfair system like Fair Tax is not needed.

The last question on taxes is about the economic factor: would not a tax system that takes more from the wealthy wreak havoc on the economy? Sometimes, I am pretty amazed at how some people answer this question. As a matter of fact, the tax money does not simply disappear. People may want to keep some money in lock boxes for safety (in case something like 1929 happens again). However, the government has no such luxury. The money take from the people will be spent on, as I said above, public services and goods. It does not disappear from the market, just being spent on things that no one will ever spend on alone. This will balance out the relationship between private and public goods. A good example is health care. Little do people know that money spent on health care research in the US cures the wrong problems. The US is spending more on luxury such as beauty than on more practical and widespread disease. This partially pushes the high cost of health care (I want to make clear that this is not the only problem). Should the government spend more on health care, the researches would have care more on popular diseases, simply because the government cannot spend money on fixing someone's nose, can it?

Let me draw a conclusion: Fair Tax is simple and pleasing to hear about, but is not a cure for any problem that it tries to answer. It is not fair, as we have seen. It is not the only simple thing in the world. And it is also not that much more economic than its opponent. Personally, I believe the first problem is the biggest. When a policy has problem with justice, there is only one thing we should do about it: throw it away. And Fair Tax should not be an exception

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