Goal: Have a Chance of Becoming Law
The progressiveness of our current income tax changes all the time, so the progressive income tax variations get five stars.
However, despite what some in Congress would have taxpayers believe, a flat income tax has very little chance of becoming law. This conclusion is based upon two points. President Reagan wanted to flatten the tax rate, but the best even he could achieve was two brackets. Also, no flat tax bill in recent history has had more than 5 co-sponsors in Congress. But remember that we’re trying to be generous with the flat income tax, so we’ll pretend that so called “Flat Tax Act” that Rep. Michael Burgess (R-TX26) keeps submitting each session really is a flat income tax. So if we include this bill as a flat income tax, then we must say that no flat income tax bill in recent history has had more than 10 co-sponsors (still an insignificant number). But when we consider the flaws in that bill, it really is difficult to call it a flat income tax. Besides having a corporate income tax component that has some serious issues, it also taxes retirement distributions and unemployment compensation, on which the employee has already paid tax, when the money was earned. So now we’re talking double taxation and embedded taxes. But whether it’s 5 or 10 co-sponsors is of little import, since even 10 co-sponsors is insignificant.
We’ll continue to hear about a flat income tax, since talking about such a tax allows the tax and spend crowd, on both sides of the aisle, to deflect talk of real tax reform. In fact, a flat income tax makes great talking points. But that’s all it is. The reality is that it just won’t happen.
Then we have 9-9-9, which is worse yet. Besides the personal income tax component and the sales tax component, which are paid directly, the corporate income tax component is built into the price of every purchase. When 9-9-9 supporters eventually realize that under that plan, they will pay tax on the same dollar three times – once when it’s earned and twice when it’s spent – they turn against it. Remember that under 9-9-9 corporate income taxes will be embedded in the price of every retail product. Let’s face it. Nobody wants to be taxed three times on the same dollar. Perhaps that’s why 9-9-9 has gained no traction.
On the other hand, the FairTax gains more support with each new class of Congress, today having 79 sponsors and co-sponsors. That’s more co-sponsors than most tax bills that have ever become law. Even the leaders of both parties, who have become addicted to lobbyists’ money, are now feeling the pressure to bring the FairTax to the floor, for a vote. Critical mass to get a bill out of committee, when the leadership is blocking it tends to be around 90 to 100 co-sponsors across both houses. That could easily be achieved this session. It’s not a matter of “IF,” but “WHEN” the FairTax becomes law.
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