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What The Media Tell Americans About Free Enterprise

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March 1996


Flat-Tax Flip-Floppers
Guest Editorial, by Bruce Bartlett

One of the most remarkable things about the recent rise in popularity of the flat tax is the way leading newspapers and magazines that previously supported the idea have suddenly turned against it. In particular, the New York Times and Washington Post had previously editorialized in favor of the flat tax, but now both oppose the idea.

For example, in an April 15, 1982 editorial, the Post said, "The ideal income tax would be a flat percentage of all income above an arbitrary threshold of, say, $10,000 per year." It concluded that the flat tax "is the obvious remedy" to the problems of the tax system.

On June 3, 1982 the Post reiterated its support. "Replacing the [tax] system with a low-rate tax on income -- with few, if any, exclusions allowed -- is an idea that, by promising efficiency, equity and simplicity, appeals to all parts of the political spectrum," it said.

Fourteen years later, however, the Post is now opposed to what it had earlier supported. On January 19, the Post called the flat tax "a flawed idea, less a serious tax proposal than a slogan in the name of which the advocates claim to be able to accomplish several things at once." It concluded that the flat tax "wouldn't be an improvement."

Back in 1982 the New York Times supported the flat tax. In a June 6, 1982 editorial, the Times favored "a flat-rate tax levied on a greatly broadened income base." It even praised Senator Jesse Helms's proposed 12 percent flat-rate tax.

As recently as 1992 the Times reiterated its support for the flat tax. In a March 27, 1992 editorial the Times explicitly endorsed the Hall-Rabushka plan upon which the Armey and Forbes plans are based. It called the flat tax "a superb idea."

But like the Post, the Times now opposes a flat tax. In a January 18, 1996 editorial the Times found "a glaring fault" in the flat tax. Like Claude Rains in Casablanca, the Times is now shocked, shocked to discover that the flat tax will benefit the wealthy! It concluded by denouncing the Forbes plan.

Individual reporters have also flip-flopped on the flat tax. For example, Business Week's Chris Farrell thought the flat tax was great in a January 9, 1995 column. "If Washington legislators truly want to make a difference, they should...embrace a flat tax," he wrote. The Armey plan "makes sense -- far more than any other reform being considered. Limiting exemptions and deductions would lower the tax rate by broadening the tax base. And the change would encourage a more efficient allocation of resources."

But like the Post and the Times, Farrell has suddenly decided that the flat tax is too risky. In a February 19, 1996 column, Farrell said flat-tax advocates are wrong. "Their florid rhetoric vastly overstates the economic gains and deeply understates the risks," he wrote. "The gains could be easily dwarfed by wrenching business and household upheavals as America shifts to a new tax code. Indeed, the transition to a flat tax is fraught with danger -- so much so that the long- term payoff may never come." According to Farrell, the stock market, home prices, and consumer spending all would collapse under a flat tax.

Such predictions can only be described as total nonsense. As Professor Glenn Hubbard of Columbia University points out, the magnitude of tax changes under a flat tax would be no greater than what we experienced in 1981 and 1986. And the impact on financial markets would be no greater than those experienced many times in the postwar era, when interest rates either rose or fell sharply. Moreover, there is no question that a flat tax will cause the stock market to rise, not fall.

Unfortunately, the ranks of those who have switched gears on the flat tax include conservatives. As a columnist, Pat Buchanan strongly supported Armey's flat-tax proposal. However, as a presidential candidate, Buchanan opposes it. In a January 27, 1996 article in the New York Times, Buchanan called the flat tax "simplistic" and attacked it for cutting the taxes of the rich. No wonder the Times published it.

Of course, everyone has the right -- indeed, the obligation -- to reconsider their positions when con- fronted with new information. But when major newspapers and prominent writers switch their positions 180 degrees on a major issue, especially within a short period of time, readers are entitled to an explanation. Otherwise, they can only assume that prevailing fashion dictates editorial views, rather than facts and analysis, and that such views aren't worthy of serious consideration.

Bruce Bartlett is a senior fellow with the National Center for Policy Analysis.


Rich Noyes


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