This move toward flat taxes as a GOP litmus test is happening faster than I thought. The Republican field saw Herman Cain shoot to the top with his 9-9-9 business, and they’re rushing to copy him. Rick Perry introduced his flat tax plan today. Newt Gingrich, weather vane that he is, expressed support:
Newt Gingrich joined Rick Perry in calling for an opt-in flat tax Tuesday, saying that his version would, at most, tax Americans at a 15 percent rate. Perry is proposing a 20 percent flat-rate, and both candidates say they would preserve standard deductions and tax credits.
“An optional flat tax reform will be simple: tax returns can be done on one sheet of paper,” wrote Gingrich in an editorial for the Quad-City Times in Iowa. “Subtract from income a standard deduction and deductions for charity and home ownership, multiply the result by the fixed single rate of taxation of at most 15%, and the process is over.”
Keep in mind that Gingrich, astonishingly enough, is now fairly well-positioned in the GOP primary to pick up the pieces of support if Cain falls apart and Perry stays diminished. He’s actually rising everywhere, in every state. And he’s latching onto the flat tax and going one better than Perry by slashing the rate.
The string-pullers in the Republican Party are caught up in this flat tax advocacy as well. Here’s Haley Barbour, transitioning from a Southern governor (his term expires in November) to a party poohbah:
At an event sponsored by the American Action Forum, at the National Press Club in Washington, Mississippi Gov. Haley Barbour argued in favor of key elements of Rick Perry’s freshly released budget plan, which includes the option of a single income and corporate tax rate, unspecified spending cuts, a spending cap, and private savings accounts for workers as an alternative to Social Security.
“Is a flat tax good tax policy? Yes. It’s not the only good tax policy. But it’s certainly can be very good tax policy, particularly if you eliminate a lot of deductions so that it increases the appropriate amount of revenue,” Barbour said.
Barbour noted he hadn’t reviewed Perry’s plan, but seemed enthusiastic about individual elements of it.
“In my lifetime, the closest we came to a flat tax was the ’86 tax bill….we came out with two rates: 15 percent and 28 percent,” Barbour noted. “And it was enormously successful economically. I think the way that it’s been perverted and added on to, so now that it’s gone from two rates to five or six and the President wants to do more has been negative for the economy, not positive. And I think if we could go back to two rates, that would be a step in the right direction and the flat tax is a further step.”
There is only one possibility if you’re a Republican politician looking to get ahead. You have to support a flat tax now. Barbour tried to hedge with this talk of moving “toward” a flat tax, but that isn’t going to cut it. Your favored economic policy as a member of the GOP, pretty much the only stance you can take, is for a spending cap at somewhere around 18% of GDP, a balanced budget amendment to the Constitution, one tax rate for everybody and one for every corporation, and that’s pretty much it. The other differences are window dressing. This is now what you have to be for. And if Mitt Romney tries to wiggle out of it, the blowback will be much worse than what he’s getting for failing to endorse a couple of ballot measures in Ohio.
And this is all happening in the context of a stunning gap in income inequality that has grown over the past 30 years, as all the benefits from the economy have accrued to the top 1%. We used to grow together in this country, and after Reagan, now we grow apart. In fact only the rich see income growth. The argument inherent in these flat tax plans is that this income gap isn’t happening fast enough. Therefore, it solves the problem of rich people needing more after-tax income.
The class war is on.