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Political Animal

Son of Zombie Ideas

It was March 1996, and I remember it like it was only a week ago. A bunch of us were standing around outside in the tiny backyard of my and my fiancee’s little Sowebo rowhouse. One of my friends was holding forth at length about how great a flat tax would be: “I could do my taxes on a postcard! It would be great!”

“Dude,” I answered, “if you hate doing them that much, give them to me, I’ll do them in TurboTax, and you can just pay me the difference.” The political world was rollicking with the debate over the flat tax, because Steve Forbes, worth at the time around $439 million according to Fortune magazine, was running for president on the platform of abolishing the current graduated tax system and replacing it with a flat tax of 17 percent.

What wasn’t mentioned as loudly, of course, was that Forbes’ plan would eliminate all taxes on investment income, stock dividends, and capital gains—the main income source of what we now call “the 1 percent,” the Masters of the Universe whose financial game-playing caused the crash of 2008. Forbes was trying to sneak in yet another Republican Trojan horse in order to not just lower the top rate for the wealthiest Americans, but to vaporize it altogether.

Perhaps a little history is in order here (again). Part of the reason we are where we are now is because 30 years ago,  Rep. Jack Kemp (R-N.Y.) and Sen. William Roth (R-Del.) pushed through a bill that, among other cuts across the tax brackets, dropped the top marginal tax rate from a communist 70 percent to a massively socialist 50 percent, which nowadays we might just call “socialism lite.” After then-President Ronald Reagan signed the bill into law, his finance director, David Stockman, let the cat out of the bag by noting to journalist William Greider in The Atlantic magazine that “Kemp-Roth was always a Trojan horse to bring down the top rate.”

Back in ’96, the Clinton White House told the media that Forbes’ flat-tax plan would lose $138.8 billion dollars in revenue annually. Associated Press economics writer Martin Crutsinger noted at the time that flat-tax proponents argued that the tax cuts would stimulate economic growth and generate even more revenue for the government.  I hate to say it, but in a column I wrote back in October 2008 called “Zombie Ideas,” I said:

Cutting taxes is a Republican panacea that can cure any economic woe short of a giant stock market crash, and you can be sure that even then, it won’t be long before the editors of The Wall Street Journal and their cheerleaders in the executive suites will be pushing for one yet again.

Do you see yet the circles in which we are traveling?

So here we are again: A Democrat is in the White House, and here is Herman Cain, the Godfather of Pizza, running for the presidency on the GOP side by claiming that we can solve our problems with his 9-9-9 plan, essentially another flat tax. One-upping Cain, Gov. Rick Perry of Texas is proposing what might be called the “Billionaire Opt-Out Plan,” which would create a parallel tax plan where individual and corporate income would be taxed at 20 percent, and—once again—investment income would go untaxed. Every American would have a choice of which tax code they’d prefer to use. Which plan do you suppose Cain, or for that matter, Forbes, would prefer to use?

The elephant in the room that all the Republicans will do their damnedest not to address is income inequality. They’d far prefer to talk about eye-glazing tax plans that rely on magic asterisks and Laffer curves rather than point out that ever since Kemp, Roth, Stockman, and Reagan pushed their giant wooden horse through the gates, the top 1 percent of this country has been the beneficiary each and every year of more and more of the largesse of the American tax system. 

Like Elizabeth Warren, the Democratic Senate candidate from Massachusetts, said, the underlying social contract says that if you’re making a mint, good for you, but you didn’t do it alone. You did it because of the system here in America that let you do it, free from pirates and dirt roads and an uneducated labor force like you’d find in, say, Sudan. And once upon a time we had a system that worked well enough that there wasn’t the gross inequality we have now, of Gilded Age proportions.

We really shouldn’t be surprised that Perry and Cain have loosed the Son of Zombie Ideas upon us; even a double-tap to the skull of a flat tax won’t send it away for good. But by now we all ought to know what the real goal is. After all, we’ve seen this movie before.

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