Thursday, November 12, 2015

Why Republican Candidates Are Selling Fair Tax Policies

If there is anything that Republican candidates all hate it is progressive taxation.  They don't like progressive taxation because the tax rate increases with one's income.  Their wealthy supporters want to make the tax system less progressive but this raises a question of how to convince those with low incomes to vote for them.  The solution to this problem is to propose a tax system that is both fair and less complicated than our current system.  The flat tax offers a good solution to this problem.  If the tax rate were the same for everyone it would be a fair system.  This argument is also combined with the idea that everyone's income is determined by the value that they add to the goods and services that they provide.  Given that assumption, a progressive tax system is both unfair, and bad for the economy, because it discourages effort from our more productive citizens.  Ben Carson takes the argument for a flat tax to an even a higher level.  He argues that it is fair because God proposed a flat tax of 10% on everyone. “The reason I liken it to tithing is because I believe that God is the fairest individual there is, and if he thought it was fair then I believe it’s pretty fair.”

All of the current GOP candidates have been touting changes to tax policies which make the tax system less progressive.  They are telling their low income partisans that a flatter tax rate is more fair than the current system and less complex that our current policies.  Most of the changes that are being proposed would also reduce government tax revenues.  They have two ways of dealing with that outcome.  One approach is to claim that the economy will expand in response to lower tax rates on our more productive citizens.  The increase in the tax base will compensate for the lower tax rates on those with high incomes.  The other approach is to argue that a reduction in taxes will reduce the size of government.  This idea appeals to the anti-government sentiment that is on the rise in the GOP base.

Each of the candidates has a somewhat different version of less progressive tax policy.  Politics is essentially about two things: How much revenue do we send to the government , who pays for it, and what do we spend it on.  Republican politics are pretty easy to understand.  Make the tax system less progressive and spend our tax dollars in ways that redistribute government spending to those whose taxes have been reduced.

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