The Republican Holiday: Trick, Treat or Flat Tax?

The official holiday of the Republican party is nearly upon us.  Halloween is for bogeymen and nobody loves a good bogeyman more than a Republican.

Obamacare!  Boo boo boo. (Grandma killers!)

Deficit! Boo boo boo boo! (Stop wasting money feeding poor people and declare more wars!)

But the biggest bogeyman of all is taxation.  Boo boo boo boo boo boo boo booooooooooooo . . . .

Since even Republicans realize you can't run a country without some form of revenue, not even the Keystone cop zanies seeking their presidential nomination advocate eliminating all taxes on everyone. So they're falling all over one another rediscovering Steve Forbes's old chestnut, the flat tax.

But in typical Republican logic, their flat tax isn't really flat.  It is just another  ploy to make the rich even richer and the poor even poorer.  First  Herman Cain -- a lobbyist  for the richest 1% of Americans before he donned his Halloween mask depicting a Republican populist -- introduced his "flat tax 9-9-9 plan."  This would give virtually every American with more than a million dollars a year income a tax cut of almost half a million.  Capital gains  -- which already enrich each retired American millionaire to the tune of 112,000 tax-free dollars a year -- would not be taxed at all. How flat is that ?

Now comes Rick Perry, with another cockamamie scheme that would let you opt for a so-called 20 per cent flat tax, or remain in your present bracket. “This is a change election, and I offer a plan that changes the way Washington does business,” the Texas governor said Tuesday at an event in Gray Court, S.C. It also guarantees less revenue at a time when we're fighting wars all over the globe, prattling about the deficit bogeyman and saying we can't afford to keep our bargain with retirees on Social Security.

As my friend David Cay Johnston (a registered Republican) has demonstrated over and over again in his books, the tax code is rigged to favor the very rich and every attempt by either party to repair it has only made the inequities worse.

Even so, the current tax laws sort of kind of try a little bit to treat everyone fairly. Tea Pots in my part of the country go berserk because very, very poor households pay no federal income tax at all.  "Our taxes support dead-beats," they wail.  They ignore the much larger portion of income paid by these households in payroll taxes, sales taxes and property taxes (directly, if they're struggling to buy a home; indirectly if they rent). In Florida, add the usurious cost of hurricane protection insurance on mortgages.

But the wailers themselves -- like every other taxpayer-- pay no income tax on the first roughly $20,000 of their earnings.  Taxpayers in higher brackets pay a higher rate only on that portion of their income that exceeds their bracket threshold -- not on their total income.

As Robert Reich, a former Clinton cabinet member, points out in a recent article, ending the Bush tax cuts on incomes over $250,000 would increase taxes only on the portion of income that exceeds $250,000.  Republicans consistently misrepresent this.  Reich writes that "they want Americans to believe, for example, that if the Bush tax cut ended, small business owners with incomes of $251,000 a year would suddenly have to pay 39 percent of their entire incomes in taxes rather than 35 percent. Wrong. They'd only have to pay the 39 percent rate on $1,000 -- the portion of their incomes over $250,000.

"Get it? We already have a flat tax -- flat within each bracket.

"The real problem is the top brackets are set too low relative to where the money is. The top-most bracket starts at $375,000 a year. People with incomes higher than that pay 35 percent -- again, only on that portion of their incomes exceeding $375,000.

"This is absurd. It means a professional who's making, say, $380,000 a year pays the same income-tax rate as a plutocrat pulling in $2 billion or $20 billion.

"Our current flat tax at the top is treating the nation's professional class exactly the same as it treats super-rich plutocrats. My doctor pays the same rate as Steve Forbes."

Which gets us back to square one.  The so-called flat tax was a clinker when Stevie first introduced it and no amount of tinkering by the likes of Herman Cain, Rick Perry, Ron Paul or Homer Simpson will gussy it up into responsible policy.