Michael: Holy Flat Tax Batman!A long-time shibboleth of Conservative philosophy has been the institution of a flat tax. Every Conservative ideologue worth his salt has seriously toyed with idea. One of the most offensive things to Conservatives about our current income tax system is its progressivity; it takes a larger percentage bite as your income rises. Many Republicans just shake like outraged Chihuahuas at the thought of having to pay a larger percentage than a Wal-Mart employee. Wouldn’t it be ironic if the tax haters got a flat tax rate and it still gave them indigestion because it was even more progressive than the current system?
Well, that’s exactly what the UniTax does. It is a flat tax, not on income, as so many Conservatives dream of, but on ALL financial transactions. That’s right; from groceries to corporate arbitrage and foreign exchange, every financial transaction is taxed. Seems like a nightmare, right? But with the increasing use of electronic transactions, especially for large transactions, the cost of compliance and administration shrinks to nearly nothing. The IRS would practically whither away and you wouldn’t have to file an income tax return ever again.
At the same time, the tax base, which is now mainly personal and corporate income, would explode 100 fold, and most of that new tax base is heavily skewed to the wealthy. That means the UniTax takes its progressivity from economic distribution, not rate change. As wealth becomes more evenly distributed, so would the tax burden. The much greater tax base also means the UniTax rate could be 100 times lower and still preserve revenue neutrality. Economists estimate the new UniTax rate would be just 0.30%, or 30 cents on $100. The average person would pay pennies on the dollar of their current tax burden, but the super-wealthy, who are responsible for the vast majority of financial transactions, would pay a much greater proportion of overall taxes than they do now; though unless they spend more than their net worth every year, they would still pay less than 1% per annum. Would you want to argue that your freedom and the American dream weren’t worth less than 1% of your net worth? Didn’t think so.
The ideologues would get the flat tax that they are always mooning about (and they can’t complain about it from a principled position without revealing that they just wanted lower taxes on the rich all along) and the rich would pay more of the nation’s taxes, resulting in a more progressive, more efficient, and politically more difficult to subvert tax code, and the poor and middle class would get well-deserved tax relief. And everybody is shut of the IRS. The UniTax is a one of those rare beasts, a gift that gives everyone what they say they wanted, as well as everything they so richly deserve.
For more information on the UniTax, AKA the Automated Payment Transaction (APT) tax, visit the web site of the idea’s creator. If you are a blogger, please blog about this taxation system, too, and help bring awareness to this great idea.