The Case for the Flat Tax

Posted: Apr 17, 2001 12:00 AM
Wait a minute. Dick Cheney earned $36,086,635 last year? But wait an additional minute. Our vice president paid $14,295,058 in taxes on these earnings -- taxes the federal Treasury would not have collected had our vice president earned some smaller sum; more like, say, the rest of us earned. And so it goes -- the trade-off we'll never get used to because we believe simultaneously in reward and confiscation. The tax system, I grow convinced, is only in part a mechanism for financing government. It's also a mirror for self-examination. We know the system is a mess. It's a mess because, psychically at least, we're a mess: we, the citizens. We want things no simple, logical, straightforward system can provide. Thus we live with a complex, illogical and self-contradictory tax system. The basic problem here is a theological one. Just as they have virtues, so human beings have some pretty appalling traits, among them is envy: one of the Seven Deadly Sins, though I acknowledge sin isn't anything we like to talk about in the age of therapy. We envy those with more than we ourselves have. Envy starts revolutions, lops off the heads of the wealthy, burns their chateaux and drives schemes for redistribution of wealth via the tax system. Capitol Hill Democrats, following Al Gore's lead, yammer about tax cuts for "the wealthiest one percent.'' Just to say "the wealthiest one percent'' is to charge up the envy genes. The tax system, I said, isn't simply about the financing of government. It's about taking from "haves'' just because they have. The idea is, they shouldn't have. The government can do something about that, you bet. It can make the haves pony up for the benefit of the have-nots. Our income-tax system is founded in part on that premise -- the premise that, in a democracy, envy needs slaking. So where do Dick Cheney and his $36 million -- earned from the disposal of Halliburton stock when he became vice president -- fit into all this? Cheney's tax bill reminds us, provided eyes are open, that, yes, the rich receive -- and so also they give. Had not Dick Cheney, through business acumen and plain old good luck, earned $36 million last year, the federal government this year would have $14 million less to spend, yes, and to redisrtribute. In other words, the economic incentives afforded by the marketplace economy serve the public, as well as private ends. At its worst -- from a left-wing, redistributionist standpoint -- Vice President Cheney's business success underwrites the jobs of 140 federal bureaucrats earning $100,00 each. The problem, from the standpoint of tax reformers, is that rarely will redistributionists acknowledge the beneficial effects of accumulation. Cut rich people's tax rates? Abolish the tax on estates? Get rid of capital-gains taxes? Why, such unfair actions, such rich-people-loving actions would just ... Er, um. May I suggest what such actions would do? Namely, strengthen the already strong potential for economic rewards. Dick Cheney's $14 million tax bill isn't an argument for tender maintenance of the system that sent him the bill. What if the present tax system more generously rewarded accumulation? Might not there be even more accumulation, meaning more job growth? Might there not then be more accumulation to share with government? Today's federal tax system, with its 742 different forms and 254 separate publications, is a mess, and everyone knows it, but to abandon the notion that the system exists is to slake envy -- well, we couldn't go that far! What would the envious say? They like making "rich'' people pay. They like watching the government stake out a claim on dead people's estates. They like taxing capital gains not just once but twice. A flat-tax system: fair and efficient, everything taxed at the same rate -- the really, truly envious wouldn't stand for it. They'd rather rave about "the wealthiest one percent.'' But that doesn't make it less a sin.