Flat tax flack: changes to system would reflect spirit of democracy

Rick Perry became the latest Republican Presidential hopeful to bring it up. It’s a dirty word (phrase) among liberals and how it will be received by the American people is still “to be determined.”

The issue is a flat tax.

Herman Cain started the discussion, at least among Republican candidates, with his 9-9-9 plan which calls for a flat tax rate of 9% plus a corporate tax and a sales tax.

Yes, with 50% of the American people not paying income tax due to incentives, refunds, and lack of income, a flat tax would raise taxes on just about everyone.

In fact, according to a recent study, the 9-9-9 plan would raise taxes on 84% of households in the United States.

Aren’t the Republicans about cutting taxes?

I can only assume that by “taxes” this study includes the sales tax since even though half the country doesn’t pay taxes, everyone else who does pay, is taxed at a rate of at least 10%. Plus, there are myriad people and families who pay taxes at 10% , but qualify for incentives and rebates that bring their net tax burden to 0 (I wonder how that is factored into this analysis).

Without looking at the financial implications directly, I want to take a broader and perhaps deeper view on how we think about taxes.

First, one must understand the way a government is formed and why we even have taxes.

Dating back centuries, even to 17th century philosophy Thomas Hobbes, there has been an understanding that government’s role is to protect.

Hobbes uses the image of the state of nature where everyone must take care of himself and his family.

The state of nature is a horrible, violent place, where the only consequences for your actions are the reactions of your fellow man.

For Hobbes, and even more modern contract theorists like Rousseau, we give up certain freedoms to gain certain others. In the state of nature, we have to live in constant fear for our lives so we could kill another person and only have to worry about his brother or son retaliating.

In government, we have laws prohibiting killing, which means we are safe from the homicidal whims of our neighbors.

In Hobbes’ time, taxes were often used more like we think of the mafia using them. ‘You pay us, and we’ll make sure you’re protected.’ There was less moderation of resources and more a vehicle to accumulate wealth for the rulers while demonstrating the ruler’s power.

Society, and in turn government, has evolved since then, although authoritarian countries still run very much like this.

The rise of Democracy allowed taxes to become a way for the citizens to pay for the work the government does. Soldiers, and later police were to be paid.

The larger populations became and the more the monetary system was used, the more it became necessary to staff larger numbers of government workers to do work like cleaning or paving the streets, managing public resources.

Taxes are a person’s way of paying the government to be a part of the social contract. If we are to assume certain protections from the government and the moderation of public resources, we have to pay for them.

It is decidedly undemocratic, and arguably a violation of the social contract, that half the population of a country does not contribute to the very system on which it relies. If we are all truly equal in the eyes of the government, it is unjust to expect us to pay unequally for that government.

Asking everyone to contribute does not truly mean “everyone,” but rather everyone who is able. Children, the elderly, people who are physically or mentally ill and cannot work, these are the people who ought to be exempt from having to pay.

Furthermore, a flat tax does not necessarily remove rebates like the Earned Income Tax Credit for low-wage workers who would likely end up paying nothing under a flat tax system.

In fact, a single mother with two children who made $10,000 would have to pay $900 in Herman Cain’s 9-9-9 plan, whereas now that mother would pay nothing. The EITC would be a credit of $4,716, literally a check for that amount. Essentially all that would do is lower the money she’s paid by the government $900.

A flat tax would literally do nothing to change the tax burden of that single mother, but rather only reduce the amount of government aid she could receive.

I don’t want to argue the economic benefits of a flat-tax. I don’t understand our multi-million word tax law (either do most people) well enough, nor do I have enough economic data to determine if the recent study showing 84% of people would see a tax increase under the 9-9-9 plan is based solely on the flat tax or if they’re including things like how much a family would pay in sales taxes as well.

Rather I simply point out that a progressive tax system in not in the spirit of democracy. Plenty of things about our democracy are hypocritical and a progressive tax is one of them.

In the social contract, everyone must give up certain rights. In doing so, we are all theoretically equal in the eyes of government (or at least we ought to be). As a result, we are allowed to be part of the state and receive the benefits contained therein.

Even if I grant that it is somehow just that certain people benefit from the government significantly more than others, I cannot simply grant that each person should also pay a disproportionate amount to receive even the same benefits (although we know that the people paying the highest rates receive no additional benefit for doing so).

A million still pays more in real dollars than someone who makes $20,000 a year. We’re not asking everyone to pay a flat amount, but rather a rate based on your income, proportionate and equal to everyone else since everyone else had to give up equal and proportionate rights to become a part of the system.

Herman Cain’s plan is flawed. Rick Perry’s will no doubt be flawed as well,  but the discussion about taxes is changing.

Finally, there’s hope we’ll have a tax system truly worthy of democracy.

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