Rahm Emmanuel and The Flat Tax

Rahm Emmanuel, former advisor to Bill Clinton, Democratic Congressman from Illinois, and Israeli Tank-Tread polisher during Gulf War I, has almost gotten it right with his flat tax.....
Ideas Primary » Blog Archive » The Middle-Class Flat Tax

"The principle is simple and fair: no middle-class family with an income of under $100,000 should ever have to pay an effective tax rate of more than 10%. If the amount they owe after calculating their taxes is more than 10% of their income, they won’t have to pay a dime above 10%. If what they owe is less than 10%, they’ll pay the lesser amount, and the Middle-Class Flat Tax will not apply."

So far, so good. Milton Friedman, the Libertarian demigod, couldn't have said it any better. If this proposal is succesful, the entire Tax Shelter Priesthood - Accountants, Tax Lawyers, and other Experts - can all be retrained at our Nation's Community Colleges. Careers in shipping, logistics, drafting, and electronics beckon. Because we're going with a flat tax for everybody, right? No more deductions, no more loopholes. The requirements for sheltering money from the government are incredibly wasteful, and devour a huge amount of resources. Here's more from Rahmbo....

Here’s how the idea works: As we’ve already pointed out, the current tax system is stacked against the ordinary taxpayer. Tax breaks go to those who need them least, while people who play by the rules get the shaft. What makes Americans most angry about the tax code is not just that it’s complex, but that they know the complexities are there because the game is rigged. They’re right- just look again at the difference between the wealthiest Americans’ tax bracket,and the effective tax rate they actually pay. In theory, taxpayers with incomes of $10 million or more are in the 35% tax bracket. But according to the New York Times survey, their average effective rate in 2003 - thanks to an average tax cut from Bush of more than $1 million - was 22%. In other words, the brackets themselves are a kind of tax fraud: What the wealthy actually pay bears no relation to the higher rates a progressive society intended them to pay."

Yes, the United States Tax Code is basically an elaborate record of the bribes paid to the dealers by the players in a long-running Blackjack game. Amen.

Emmanuel has nailed it. Except for the last line, which is standard boilerplate about the "rates a progressive society intended them to pay." I don't think our Founding Fathers came up with the progressive tax scale. Emmanuel's trying to equivocate the "tax" definition of progressive (escalating) with the currently fashionable "democrat" definition of progressive (warm and fuzzy feeling).

No one in his right mind wants to throw any more cash than necessary into the Gaping Maw of The Government Beast. I claim every deduction possible. If you can read this blog without moving your lips, or slobbering on your computer, then you claim your deductions too. Call your self a Progressive, Social Democrat, Marxist, Statist, etc., etc., etc., it doesn't matter. In between the Clinton White House and running for Congress, Rahm Emmanuel worked with an investment banking firm, and made an estimated 18 million dollars. Does anyone doubt that he took advantage of some accounting and legal advice to hang onto just a little bit of that 18 million? Maybe at least 7o% of it?

"Give unto Caesar the things that belong to Caesar" worked great for itinerant rabbis. But if our Lord and Savior Jesus Christ had gotten a job, and had to fill out a W-2 form, he would have claimed all his tax deductions. Caesar could just go figure out some other way to pay for his damn aquaducts.

I wish there were more deductions for children. I also wish there were huge deductions for weiner dogs. I wish I had the political influence to make it so. The incredibly wealthy, though, have ways of getting their tax percentage down to a level that roughly equals my tax percentage. But is there anything wrong with that? Who doubts that Bill Gates and Warren Buffet will spend money more wisely and create more jobs for the rest of society than Nancy Pelosi and Trent Lott? And should Gates and Buffet be required to hire a plague of Tax Law advisors to help them do so?

In William Faulkner's final novel, The Reivers, a vile old man digs a trench across a road that runs near his property. Then he floods the trench. He then makes a living pulling travellers out of the mud. The current tax code is a trench. Flooded by the very people who are paid to pull you out of it.

Some people resent the wealthy for manipulating their tax percentages and rates. Others say good for them; help starve the beast. But here's the strange part....I'm a member of a charitable organization that feeds street people, provides clothing for them, and will soon be providing temporary shelter for them during the winter months. This organization has some wealthy members who could buy and sell me several times over. But I don't resent the wealthy members who give less than I do. In fact, when I see that they're obviously donating less, I feel guilty that I don't give more.

What's up with that? Why does the charitable organization, which has a broad sampling of political views in it's membership, not need collectors, accountants, and lawyers to regulate it's donations? Could it be a competence issue with the charity, as compared to the government? Or could it be that I don't like paying the government to blow up Mosques, produce high school graduates who can't read a tape measure, and NOT fill in the potholes on Meadowbrook?

Regardless of the reason behind it, and I suspect it's all just an anti-Republican wedge issue, I hope Rahm Emmanuel's flat tax goes through. It would mean the end of the tax shelter industry for a lot of wealthy accountants and lawyers. But I'm hiring dock workers. If they can drive a forklift, they'll earn even more. And the government will only get 10%.