Thursday, October 27, 2011

Flat tax Tom Foolery



The unveiling of Rick Perry's flat tax scheme, er plan, has a lot in common with Herman Cain's 9-9-9 contrivance, uh, er, plan - protestations to the contrary.

Of course, like all 'flat tax' gimmicks - plans (darn it) - it does favor high income earners (read: rich). But at least Perry admits that he has no problem with that...

"“My plan doesn’t trim around the edges, and it doesn’t bow down to the established interests,” Perry said, unveiling the plan before a friendly crowd inSouth Carolina. “Taxes will be cut across all income groups in America.”"
"Critics accused him of trying to shower favors on the elite while making life harder for the middle class and took issue with claims that lower taxes will stimulate growth."
"“If I needed evidence that Rick Perry isn’t going to be president, this would be it,” said Michael Ettlinger, vice president for economic policy at the Center for American Progress, a Democratic think tank. “It’s a gigantic tax cut for wealthy people, which ends up either shifting tax burdens to the middle class” or requires cuts throughout government programs."
"The Perry plan would let individual taxpayers stick with the current system, or move into a new “flat tax” system: a 20 percent tax rate with a $12,500 exemption for each member of a household. Taxpayers who earn up to $500,000 could still deduct interest on home mortgages, charitable contributions, and state and local taxes — elements that diverge from classic flat tax plans and could blunt the impact on some middle-class taxpayers."
"Perry’s plan would eliminate taxes that mainly hit the wealthy, on estates, dividends, interest and capital gains."
"The policy rollout comes as Perry retools his campaign staff in hopes of regaining traction, after plummeting from near-instant front-runner status. And he took aim at those in front of him, boasting that his plan was bold compared with theirs — a reference to GOP front-runner Mitt Romney, who wants to reshape the current system without scrapping it..."
"...But it wasn’t clear how Perry intends to whittle down the $14 trillion federal debt. Most analysts said his plan would cut deeply into government revenue. Perry appears to be counting on his plan unleashing robust economic growth, but it’s unclear, even if it could get through Congress, that it would do so."
"Perry promises to balance the federal budget by 2020, and he shrugged off complaints that his plan mostly benefits high-income taxpayers."
"“If folks who have money are going to be creating those jobs, then I don’t have a problem in the world with that,” he said..."
It's a classic line which falls silent with one simple question: "After 10 years of tax cuts for the wealthy, followed by declining job grow, flattened wages and a Great Recession that threatened the globe, exactly what evidence do we have that job growth would be the result of continued tax cuts?!'
No, this similarities, which Perry admits and Cain doesn't, isn't the one I'm talking about. 
The similarity is these contrivances - ok, plans! - don't address the problem with the economy or the systemic root of the problem. The economic near-crash of 2008 didn't have its source in inequitable tax rates. It had to do with an economy that produced nothing and looked to be sustained by corporations whose almost sole success measurement was stockholder dividends and executive compensation. The fiscal house of the U.S. nearly cratered because of a market based economy that relied on debt, broken up and sold multiple times to people willing to bet on the value of that debt and other corporations who insured that broken up debt without the resources to cover what they insured. 
A paper mache economy
A house of cards
Because of that, the rich found loopholes to hold on to their massive wealth, while they gained greater and greater control of the economy. Now, depending upon who you talk to, 5% of the wealthy control 85% of the wealth, or 3% control 95% or 1% control 99%. You can almost make up your figures and come sickeningly close to the truth. 
Almost as sickening, is the fact that candidates are flitting around the edge of the program with gimmicky, contrived versions of a flat tax. In reality, the financial system that allowed such excesses and used the middle class and low income U.S. citizens like pawns in a poorly played chess game is what desperately needs an overhaul. What difference does it make if you rearrange the tax codes if you allow irresponsible corporate barons to acquire so much wealth that they can afford to pay a few dollars more and not feel it? 
There is little appetite or political courage to fix this system which is growing wretchedly unfair. While what we used to call 'the middle class', are now falling into the ranks of the poor, while the safety net is being nibbled away from them. We poorly invest in education. We do not help retool workers for the jobs in a new economy in which modernization has rendered a good portion of manual labor obsolete. College graduates compete with traditional low skilled workers for low wage jobs. And the answer to all of this is a rancid stew of trickle down economics and flat-tax tom foolery. 
Amazing. 
This is the 21st political version of an old vaudeville joke. 
A man is frantically and apparently in vain, under a streetlight for a dollar bill he's lost. Soon a man comes along and asks him what he's doing. 'I'm searching for a dollar I lost'. The man gets down on his knees and helps with search. 'Exactly where over here did you lose it?' asks the stranger. 'Oh', says the man looking for his dollar, 'I didn't lose it over here, I lost back there.' He points back to a dark corner where you can barely see the street, much less a dollar. 'Then why are you looking for your money over here?!' The stranger asked incredulously. The man looking for the dollar said, 'The light's better over here!'