Simplifying the maddeningly-complicated, multi-layered federal
tax code is a cause long championed by free market reformers. Now,
The New York Times editorial page -- heretofore a flat-tax
foe -- has picked up the cause. On Sunday, May 28, a Times
editorial pushed for a flat tax, but not for the United States.
Instead, the Times endorsed a flat tax proposal pushed by
Russian President Vladimir Putin for his country, but used arguments
that strongly echo those of flat tax supporters here in the U.S.
"By radically simplifying the code and slashing rates, Putin
hopes to raise collections by cutting down on the corruption that
has left his government starving for revenue," wrote the Times’
editors. "Many in the country, including the Communists, want to
hold on to progressive rates. But in a society where few people pay
anything close to their legally required taxes, and wealthy
individuals often pay no tax, the idea of a progressive tax code is
an illusion."
"By cutting rates and simplifying the code, Mr. Putin hopes to
encourage people to pay taxes and make it easier for the government
to track down those who do not. If Mr. Putin has the will, a flat
tax makes a crackdown feasible. A flat tax can also cut down
political corruption, removing layers of subsidies in the code that
officials like to shower on favored constituents," the editorial
added.
In this country, as economist
Bruce Bartlett noted recently, "the wealthy seldom pay the high
marginal tax rates imposed on them" by the current progressive tax
code. Instead, they pay armies of accountants to find legal ways to
shelter income from the tax collector. In a recent column, Bartlett
quoted IRS statistics showing that 1,189 Americans with gross
incomes above $200,000 paid no federal income tax in 1997.
In its editorial, the Times accurately noted that "it will
not be easy to make the flat tax and other reforms work. Corruption
and bureaucratic incompetence will not disappear overnight." Of
course, that just makes it more important to start enacting reforms
as soon as possible. Kudos to the New York Times editors for
standing up for the idea of a flat tax with arguments that should
resonate within the U.S. as well as in Russia.
— Rich
Noyes
