February 27, 2007
The flat tax is back in the news
Do you remember the Steve Forbes candidacy of 1996? The main thrust of the Forbes campaign was the flat tax.
As most of you will probably know, Forbes fizzled in the '96 Republican primaries; but the issue of the flat tax hasn’t died. While watching the Sunday morning talk shows this past weekend, I noted that another Republican, Kansas Senator Sam Brownback is endorsing it. (Brownback has announced his bid for the 2008 Republican nomination.)
A flat tax can be a consumption-based tax or an income-based tax. The Forbes plan called for an across-the-board rate of 17%. The "consumption" of each household would have been calculated by subtracting savings from income. While 17% may sound low to many readers, there is catch: Forbes’ flat tax plan would have eliminated nearly all deductions.
The flat tax has been tried abroad. A number of Eastern European nations have employed it. It has also been proposed in Greece and Germany. (Germany currently has one of the most complex tax codes in the world.)
We will see how this issue plays out in the Brownback campaign.