July 9, 1999

July 9, 1999 | Commentary on Taxes

Middle-class Families Need a Flat Tax

America is currently enjoying a remarkable economic boom, characterized by low unemployment, low inflation and almost weekly new stock market highs. More and more federal budget estimates are predicting a tremendous federal budget surplus over the next 10 years. But unless we demand and implement profound tax reform now, Washington bureaucrats and special interests will devise countless ways to spend the surplus.

Economic growth and prosperity cannot be measured just in terms of the gross national product, the Dow Jones average, and per capita income. I measure it in terms of the quality of life of average, hard-working families. Do both parents have to hold down full-time jobs merely to make ends meet? Are they able to take time off for family vacations? Are they free to arrive home at a decent hour for family dinner, or make time for their children's soccer games and school plays? As long as the federal government's tax policies prove more menacing than sensitive to America's families, real reform will still be needed.

I believe we should consider a simple, fair system that taxes income only one time and at one low rate-in short, a flat tax. Much of the rhetoric against the flat tax dismisses it as a gimmick for the rich, but the reality shows it could be some of the best news for hard-working American families since the microwave oven and the minivan.

The current tax code permits a family of four to shield its first $18,000 of income from taxation. The flat tax would enable that same family to protect almost twice as much, from $33,000 to $36,000, from the greedy hand of government. That is why families making $15,000 to $35,000 a year will benefit most from a flat tax.

Some have objected that the flat tax treats the rich, middle-class, and poor alike -- but that is precisely the point. The key to its fairness lies in the fact that in taxing people at the same equal rate, it will require those with means to pay a higher amount. The fabulously wealthy movie star or professional athlete who makes one thousand times as much money as the local plumber will pay one thousand times as much in taxes.

An additional benefit of a single-tax rate is that it will eliminate the insidious "marriage penalty," which taxes married couples at a higher rate than if the man and woman filed singly as individuals. At a time when family breakups are all too common, tax policy should place government on the side of America's families. It's their money and a government that truly supports families will let them keep it.

But a flat tax does more than simply hand a windfall tax cut to American families -- it encourages economic growth. By taxing income only once (unlike the current system, which taxes income when we make it and again when we save it and earn interest), a flat tax encourages savings and investment. Small family businesses will have incentives to invest on the basis of what makes the most financial sense, not what constitutes the best tax write-off. This, in turn, will stimulate productivity and lead to higher wages and better economic health for all Americans.

I consider tax policy merely one component of a strong and virtuous society. Vibrant democracy, individual liberties, healthy families, robust religious institutions, and the rule of law all contribute to a strong America. But to the extent that our current tax system violates the basic principles of fairness, efficiency and liberty, it also undercuts rather than reinforces those other values and institutions that sustain our nation.

Cynics and liberals who dismiss demands for lower taxes and economic growth as appeals to greed seem to operate from the presumption that the federal government has the right to confiscate money from America's families, and it is only government benevolence that permits us to keep some of what we earn. I operate from a different presumption. The money that America's families work hard to earn is theirs by right, and it is only through the consent of the people that governments are authorized to collect taxes fairly, efficiently and responsibly. That's not greed -- that's freedom.

This essay by Randy Tate, executive director of the Christian Coalition, is adapted from his chapter in The Heritage Foundation's (http://www.heritage.org), book "The IRS v. The People: Time For Real Tax Reform."

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