Sunday, April 09, 2006

Why A Flat Tax Isn't Coming Soon or Ever

Robert Samuelson reports:
politicians disdain simplicity because it deprives them of the chance to brag about tax breaks that fight global warming, pay for college tuition or encourage retirement saving, no matter how ineffective these are in practice.

The only exception to this logic is the Tax Reform Act of 1986. It reduced the top tax rate from 50 percent to 28 percent. Some major tax breaks were abolished. President Ronald Reagan and congressional Democrats joined together. Unfortunately, tax politics didn't permanently change. President Bill Clinton disavowed the theory of the 1986 law—broaden the tax base, lower tax rates—by raising the top rate to 39.6 percent in 1993. Republicans and Democrats have eagerly engineered new tax breaks. This is expedient and, in the short run, popular. But we should not delude ourselves. In the long run, it boomerangs. By making the tax system more confusing and less conducive to economic growth, it sows public cynicism and discontent.
The only real change will happen when enough of the public gets sick of paying an income tax.Getting rid of income tax is more likely than a flat tax.