Flat Tax: A Battle Against Privateering

Unequal taxation and government intervention, it's as if leaders hired privateers to disrupt and bleed our society. There is a way to get out of this.

In an earlier blog we were talking about the flat tax. I promised to go deeper into the idea of a flat tax. I even suggested the title might be “Why there will never be a flat tax.”

Actually, I think all of us understand why there will not be a flat tax.

First, there is the power of the dollar. The U.S. Congress sets tax policies, so people who want favors make contributions to elected officials. Soon a law is passed favorable to the contributor's cause.

Second, Congress sets social policy by giving tax breaks to activities they deem to be in the country's best interest. Want people to buy more homes? Give tax credits for home ownership. If Congress desires to disarm the American public, they will tax gun ownership. Perhaps the most important reason there will never be a flat tax is the power the progressive tax scheme gives to elected officials.

The president and Congress just reached a deal on taxes. The new deal penalizes those who work and rewards those who are not working. How will this budget deal help the country? Dr. Art Laffer, noted economist, recently tried to reduce this issue to the basics with an example of two farmers. Farmer A and Farmer B are equal in earnings and opportunity. Farmer B goes on unemployment. Farmer A is now paying for Farmer B. You can stretch the numbers, but it always comes out; someone else is paying for the entitlements people collect. It doesn’t matter why a person is on government benefits, someone else must pay the bill.

You ask, doesn’t the government use their own money? The only money government has is taken from taxpayers. The government does not earn money.

This discussion is not about food stamps, social security, unemployment, disability or aid to dependent families. The question is one of freedom for people, from an unrestrained government. How do we know it is unrestrained? Some people pay more than 50% of their income in taxes while others don’t pay income taxes at all.

Our current progressive system disregards individuals in our system and places us into groups (classes) of people. Under the progressive system, it is assumed everyone is born to a certain class. It is the government’s job to even out the playing field so every person has an equal chance. This system supposes the government is the only qualified arbiter. Actually, the government and government bureaucrats/officials are the least able to achieve equal opportunity. The most a government can do is adjust the playing field to an equal level of misery. 

Flat taxes are fair. Flat taxes take the government bureaucrats out of your life. Flat taxes assure everybody a chance to have “skin in the game.”

What those who would divide us into classes and pit us against one another forget (or never knew) is that Americans are special. We do have Manifest Destiny. We are special, we do care about one another, and we are the most generous country in the world. We stop to pick one another up when there is a crisis. We don’t need the government to make our decisions; we are a great people whose best years are ahead of us.

Privateers were similar to pirates_ but were hired by governments to disrupt the opposing navy; it was outlawed in 1865. Nearly 150 years later, are we being disrupted by congressional privateers?

The flat tax will be the first step in taking this country away from the politicians and bureaucrats and returning it to the people who actually built it. The Left Wing in this country is wrong: taxpayers—not government—built this nation.

The current system benefits the super-rich, movie stars, professional athletes, politicians and special interest groups who claim to care for the rest of us. A flat tax benefits every American. The very poor may only pay 12% of a few thousand dollars, but they have the pride of knowing they count and they contribute. Pride, respect and participation matter. Because of who we are, class warfare will not survive here.

So the real question is why we allow Congress to continue to control our lives by giving them the power to unequally tax us? 

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

JustUs January 13, 2013 at 05:56 AM
I am a fiscal conservative and I know that the fiscal path this nation is currently on is a path to disaster. No way is it sustainable. The government is borrowing and printing money up the ying yang to fuel GDP. And we are deficit spending to keep the economy afloat. We are really stuck. If we balance the budget we would destroy the economy. Yet if we continue to grow the nation's debt - eventually it will hurt the nation's credit rating - causing interests rates to rise - interest rates that are currently being held ARTIFICIALLY low. What happens if interest rates go to a HISTORICAL NORM of 6% when we are sitting on a debtload of OVER $16T with no way to pay that amount down? How much would it cost us to merely to finance the debt? Do the math. Nearly a $trillion$ dollars. About one-quarter of our current entire Federal budget - just to service the debt. What happens if the bond market goes crazy because the investment markets don't believe we can pay our debts and our interest rates go to 10%? (not at all unrealistic). It would cost us $1.6T annually just to finance our debt at our CURRENT debtload. And it is expected that we will run deficits of $1T or more for many years in the future. I do not like the straight flat tax because I think it is too punitive for middle class and lower middle class families who will get HAMMERED with ObamaCare taxes. I favor Milton Freidmans NEGATIVE FLAT TAX which would give more relief to productive middle classers. Out of space
JustUs January 13, 2013 at 06:06 AM
Mike F. The Constitution, both State and National, is currently being used by our elected officials as toilet paper. It is being violated on so many fronts that it's a national disgrace. They are destroying our constitutional republic via incrementalism - like slowly boiling the frog in the hot pot of water where the burner constantly gets turned up another notch. I am not sure where this will end. It may cause another revolution eventually. I do not exactly know what the outcome will be....but based on US and world history I do not expect it to end pleasantly for any of us. I am just hoping that whenever it happens that the baby boomers take the brunt of the outcome since it has been the baby boomers who have caused most of the problem. Oh, and btw, I am a baby boomer. I do not root for the home team when the home team is the problem. I have NEVER seen or heard of another generation that has been so willfully selfish, greedy and full of arrogant avarice than the baby boom generation. We deserve to eat our peas. And I hope we do. I feel so sorry for what we have done to the younger generations. When I talk to the young college students I apologize to them for what my generation has imposed on them. It is deplorable and shameful.
John Webb January 14, 2013 at 12:18 AM
Mike F and JustUs, what would be your solutions? Being a student (self appointed) of Dr.'s Williams and Sowell, I believe a low tax rate increases revenue. I also believe a flat tax would require a National Discussion to increase. The flat tax does away with differences having to do with sources of income. We are in trouble, spell out your solutions. JustUs, talk about the ideas involved around a Negative Flat Tax.
John Webb January 14, 2013 at 12:23 AM
Mike F, forgot to ask.....are Libertarians really for big business? I've always been under the impression they are more against anything big rather than for it. Can you expand on that thought process?
tiny January 14, 2013 at 02:27 AM
I'm personally for a flat tax. You make twice as much as the next guy and you pay twice the taxes, simple. Get rid of most of the loopholes. It never made sense to me this progressive system where say you're are a familiy of six making 20K/year and you pay say 1K. Where as you're a family of three making 100K you pay 50K. Because the public money required for health care and education is much more for the family of six that is not paying hardly anything. So the incentive is to not make much and have a large family on the public dole. For me the important thing to do is to gear incentives/penalties to get people into jobs/work that are beneficial to the whole of society. So an engineer, scientist or aerospace wortker is rewarded more than a money speculator, liquor store owner or nail salon worker. Give the higher taxes or lower benefits to the latter and lower taxes and higher benefits to those that are good overall to the culture. Free trade has always been a con job from the get go.
JustUs January 14, 2013 at 03:22 AM
John Webb, the problem with the smorgasboard of these various tax systems is that they can all be gamed and they will all be gamed. What sounds good to you will be somebody else's misery. We all know that a straight flax tax is punitive for low wage earners since a larger proportion of their income will get dinged with a flat tax. What Tiny said: "You make twice as much as the next guy and you pay twice the taxes, simple." is an oversimplification. If the flat tax is 20% somebody making $200,000 pays $40,000 giving him a net income of $160,000. Somebody making $40,000 pays $8,000 giving him a net income of $32,000. The flat tax hurts the little guy the most. What would happen is that there would be more social programs created for the little guy to help him survive and you would still be running large spending deficits. The amount of revenue coming in would not cover the expenses going out. We would have the same problem we face today. The ANSWER is that we all have to grow up and act like ADULTS. We have to decide what we want to pay in taxes. And then we have to see if the revenue produced would cover our current spending habits. If not, we must cut spending to the point that there is $1 in revenue for each dollar of spending. Just like you do with your household budget. People have to decide what programs to cut. That is not happening today. The whole nation is run on fantasy economics. If this isn't done we eventually run into the brick wall. It's just ahead.
Mike F January 14, 2013 at 07:02 AM
John, Please check the tax program that I outlined in your previous blog: Forward and Backward. Everyone pays 1% on earnings from 10,000 to 20,000 dollars and walks up the 1% steps to 50% on 500,000 and above. Everyone steps down 1% for each child living at home. Only registered citizen voters may donate to a candidate's campaign. This income tax plus a business V.A.T. and a national sales tax are divided three ways: Federal, state, and local each receive one third. All other domestic taxes are eliminated. This removes any barriers per the Commerce Clause and places the decision making about government with our elected Representatives. Libertarians are hands off business. Bureaucrats are hands off government.
Mike F January 14, 2013 at 07:02 AM
John, Please check the tax program that I outlined in your previous blog: Forward and Backward. Everyone pays 1% on earnings from 10,000 to 20,000 dollars and walks up the 1% steps to 50% on 500,000 and above. Everyone steps down 1% for each child living at home. Only registered citizen voters may donate to a candidate's campaign. This income tax plus a business V.A.T. and a national sales tax are divided three ways: Federal, state, and local each receive one third. All other domestic taxes are eliminated. This removes any barriers per the Commerce Clause and places the decision making about government with our elected Representatives. Libertarians are hands off business. Bureaucrats are hands off government.
Mike F January 14, 2013 at 03:55 PM
John, In case someone does not check on the previous blog, income from all sources is divided 20% and 80%; 20% percent is not taxed and is held in an account that is only used for unemployment insurance for three months, medical insurance with a minimum of catastrophic care, and retirement investments including ones home. Property taxes are unConstitutional whether for land, structures, or vehicles. Property taxes are a rent imposed on something you own. 80% of income is taxed with everyone paying the same tax rate on each 1% in steps. This program is straight forward and ones tax can be figured on the back of a post card. Also, if one owns a business, farm, or ranch etc. that enterprise can be held in the special account, pay the annual V.A.T. and pass the enterprise to a close relative without imposing a tax. As an aside, Congress or a legislature must pass a budget based on the revenues from the previous year before any other legislation may be considered.
Capo Parent Too January 14, 2013 at 04:08 PM
Taxes are not a punishment and I'm so tired of hearing that. They are an important part of being in a civilized society with running water, sanitation, etc. The fact that the highest tax rates are more than half than what they were in some years shows the outrage is false. In years where we had such high taxes we were at WAR. We've been at war since 2002 and yet no higher taxes, in fact, we had a tax CUT, the largest in history. What bothers conservatives is not higher taxes but where those taxes are going. It's the same argument over and over again and those tax cuts created no jobs, none.
MFriedrich January 14, 2013 at 04:25 PM
I look at Greece. That's us in a few years. Whenever Greece tries to sell a bond, there is a huge roar of international laughter for about 2 weeks straight. So will it soon be with US treasuries. Perhaps matters are better for Greece, since they approved major austerity measures and passed an income tax increase . The US congress is incapable, as its members are all bought and paid for by special interests.
Joker Joe January 14, 2013 at 04:34 PM
"Taxes are not a punishment?" Well what are they? An incentive to work harder and pay more?? Cigarettes are taxed extremely high. Why? It is a punishment. Liquor is taxed high? Why? It is a punishment. Taxes are not an incentive to work more! To the contrary. When I put in work I look for the tax break off point that is beneficial to me. It takes a large part of my salary so timing is important to me. Most people have know idea what I am talking about... lol
Joker Joe January 14, 2013 at 04:36 PM
Tax the rich and leave me alone. They should be paying my taxes for the 4 kids and my home and my car and my boat.... you get it?
JustUs January 14, 2013 at 05:32 PM
"Taxes are not a punishment and I'm so tired of hearing that. They are an important part of being in a civilized society with running water, sanitation, etc." Capo Parent, responsible spending should also be an important part of living in a civilized society. Do you have any clue what we are doing to the youngest generation and unborn Americans? We are turning them into debt slaves. Is that the 'civilized' thing to do? Your quest to continuously raise taxes will only kill the incentive to work and to be productive. You will produce more leeches which is NEVER good for an economy. Any economy. If we increased taxes at the same rate as we increase our government spending people would barely have enough money left over at the end of the week to buy the gas required to drive to their polling place to cast a ballot on election day. But in today's society, voting has come down to choosing Dracula or Frankenstein anyway. So perhaps that function in society has been way overrated. Sorry. That's the only example that came to mind. Discard it at your discretion. :^)
JustUs January 14, 2013 at 05:45 PM
I see that the Republicans are barking like little Chiuahua's over the debt ceiling again. heh. They always do at the beginning of these debates. And in the end they'll cut and run like they always do. Good solid fiscal conservative Orange County Republicans will vote "yea". heh. Oh, there will be another laughable concession like the 'Stupid'....er.....I mean 'Super Committee' that will save us. The GOP has to do this to save face. But whatever the concession is made will be worthless as a plug nickle. You see, none of this discussion should really focus on taxes. It should focus instead on SPENDING. The question should be "What programs would you cut or defund in order to balance our budget and return us to fiscal sanity?" Instead our attention is drawn to taxes "What tax system do you think works best?" heh. You see, if you don't focus on the REAL PROBLEM you will NEVER find a SOLUTION. But we are good at diverting and sidestepping real problems in America. Like with guns. You hear few solutions about addressing the massive problem of mental illness in America. Instead they focus your attention on guns even though all these mass murderers are crazy as looney birds. heh. We are sure a funny group of people here in America. The entertainment value never disappoints. Every morning when I read the headlines I laugh out loud. I do. You should hear me. My dog looks at me as if I've lost my mind. :^)
JustUs January 14, 2013 at 05:53 PM
The US government is buying up all the treasuries with $80 billion in quantitative easing money printing per month. I predict that the US government will force 401-k holders to purchase US treasuries with their accounts in 3 years or less. There is a great book called 'The Fourth Turning' by a guy named Howe who has been spot-on with his predictions for the last 2 decades. We are on the cusp of some real nasty game changers that could get real ugly. If you don't read his book I suggest you watch one of his recent interviews on youtube to get an idea of his forecasts. It is very dangerous to be an American these days, especially if you are a producer. They have to squeeze you to keep it all afloat. And once they can't squeeze you anymore they have to look for another victim overseas. That's where it becomes real nasty. Stay tuned. Don't get caught stupid.
Joker Joe January 14, 2013 at 06:21 PM
The Republican party is non existent as far as I am concerned. The best you can expect from those pecker woods is to kick the can down the road. Only Rohrbacher has the guts to do it right now. The commentary will be, "it's not perfect but it is the best we could do for now".
John Webb January 14, 2013 at 07:30 PM
We, as a country, get what we deserve. When we, as a people, demand better we will get better. A flat tax takes power from politicians and returns it to the people who are affected by their inability to correct problems. The answer lies in getting more people to pay attention and more people demanding performance from those we elect. There is no reason to have a tax code so confusing we have to hire professionals to file a family tax return. There is no reason to have a tax code allowing some people to avoid taxes while charging higher rates for those working for a living. We get what we demand.
John Webb January 14, 2013 at 07:36 PM
There is a lot to like about your plan. I am against any citizen paying more than a third of their income to taxes. I am fearful of a VAT tax for one reason. If we added a VAT tax to an income tax, there would be two ways for politicians to raise our taxes. I could see a VAT if we did away from any other taxes. A VAT with a Constitution limit on the amount of the tax would be great. A flat tax has a slim chance, a VAT standing alone stands no chance. It makes too much sense.
JustUs January 14, 2013 at 07:48 PM
This is what Barack Obama told George W. Bush from the Senate floor in 2006: "Mr. President, I rise today to talk about America's debt problem. The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies. Increasing America's debt weakens us domestically and internationally. Leadership means that "the buck stops here.'' Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America's debt limit." And that is just one reason why I hate him so.
Joker Joe January 14, 2013 at 08:07 PM
I saw Obama give that speech. Loser and an empty suit.
Joker Joe January 14, 2013 at 08:11 PM
John Right on about the tax code. The flat tax would cost me more money but I am for it. As to the statement regarding the people get what they demand, they got it! Obama!!! For more years.
JustUs January 14, 2013 at 08:35 PM
I fully understand the argument. Trust me. I do. Those who have little or no skin in the game and only take from the system end up being the real winners in a scammed system. Those and the elite bankers who can commit financial felonies to their heart's content and be immune to any prosecution. But you're going to have to make a choice. You know those folks who pass out the burgers at Mickey Dee's or tacos at Taco Bell? Go ahead and flat tax them if you want. But you will end up paying more to social services for the increase in public assistance that they collect through the back door. Otherwise they will quit their jobs and go on full-time public assistance. Then you'll really get hammered with hidden taxes and fees. They'll make you pay at a ticket booth to get into your local park or beach, as if you were visiting Disneyland. So decide what you want. Flat tax (with more hidden taxes and fees.) No more fast food restaurants. Higher social services costs. Underclass civil unrest. Taxation fairness requiring you to purchase a $3500 video surveillance system and $1500 in guns to protect your home. There are TRADEOFFS to everything, my friends. Nobody rides for free unless you have nothing to lose and your numbers are so great that your special interest group is perceived as a threat to an orderly society. Then you get whatever you wnat to keep you quiet. That's America!
JustUs January 14, 2013 at 09:43 PM
Many probably don't understand that America's economy since the mid-90's has relied upon bubble economics to keep the economy afloat. Dotcom, real estate, gamed artificially low interest rates (anti-free market), etc.... These were plainly obvious to any fool. And now we have accumulated massive loads of national debt as a result. And we are trying to treat a debt fueled crisis by loading on more debt. This is like handing a falling down drunk with stage IV liver disease a fifth of Seagrams to cure his alcholism. It's more than bizarre. The latest bubble is the medicine bubble. This is a dangerous one. In 1980 we, as a nation, spent $53B on health care. In 2011 we spent $860B. The numbers for 2012 aren't out yet. Since 2007 we have lost about 4.6M jobs in America. But health care has added about 1.5M jobs. We spend right under 19% of GDP on health care. Without the health care stimulus (bubble) we collapse. So this means health care costs must go up, up, up....NOT down, down, down as the Affordable HC Act (Obamacare) promised. That is why so much is being diverted to the Too Big To Fail medical insurance corps (and banks)....to keep them afloat (fat and happy) while the middle class gets robbed with higher premiums and more health care rationing. It's a ponzi scam that is destined to blow up. Obamacare had nothing to do with decreasing costs (which was supposed to be the #1 objective of reform. It was designed to keep the economic boat afloat. heh. Hang on tight! :^)
JustUs January 14, 2013 at 10:36 PM
Seriously, Bill Bonney...... Read that statement from King Obama in 2006 and then fastforward the clock to today....how could anyone have any respect for such a hypocrite and pathological liar? Did you read his quote today "We are not a deadbeat nation" And then read his posted quote above in 2006 when the debt was less than half of what it is today: "America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America's debt limit." When the little people read such bald faced hypocritical lies from the POTUS, the man who should exhibit the highest degree of honor and integrity in our society, what does that message tell us? That's is perfectly fine to lie and act deceitful. And then people wonder why society if falling apart at the seams? heh. Not me. It all makes PERFECT sense to me!!! :^)
Clifford F. Baker January 14, 2013 at 11:12 PM
Perhaps the Federal Government should be compelled by way of public mandate to start generating income by means other than taxation of its constituents. Once an income is obtained, the government should than lose a percentage of that income; an arbitrary tax payed to the people. It would be a pleasant diversion, in my estimation, to see how well those who inflict taxes on income enjoy the table being turned.
Josh Nowack January 15, 2013 at 07:33 AM
Hey John - I really appreciate what you're trying to drive at here, but the flat tax is incredibly elusive. If Congress scrapped the code and replaced it with a simple line - all Americans will pay a tax on income of 10%. Simple enough right? There would be no shortage of accountants and lawyers debating the point on what it means to be an American and what exactly do they mean by income. Besides profoundly impacting retirement savings, the housing market and charitable institutions as we know it, we still are left with truism that for wherever there is a tax, an accountant or lawyer will be there, looking for the loophole -- and I guarantee you -- I'll find one.
John Webb January 15, 2013 at 06:01 PM
Clifford you have a devious mind and should expand on this thought process. I seem to remember the Roman's did something like that.....they used conquest, but what the heck, there may be other ways.
JustUs January 15, 2013 at 06:08 PM
Maybe the government could get into the business of managing brothels and make money that way. Oh wait. I forgot. They already manage the State Capital in Sacramento and the Nation's Capital in Washington DC. And, still, that doesn't seem to be effective in interrupting the flush. So I too would like Clifford to expound on his idea.
Joker Joe April 26, 2013 at 06:01 PM
More taxes please..... In an exclusive interview with The Fiscal Times, John F. Sopko, Special Inspector General for Afghanistan Reconstruction, said that the Pentagon, aid agencies and the State Department must quickly evaluate these projects to determine whether the billions being spent in Afghanistan right now will yield the desired results or not. Many projects are simply not sustainable, he said – and continuing to spend on them results not just in a wasted fortune, but very real risks to nearly 90,000 American soldiers who are still there. “They have not thought about sustainability,” Sopko said, referring to the military, aid agencies and the State Department. “If you don’t think about that, you’re going to build a bridge and give it to the Afghans who can’t sustain it.” He added, “There’s pervasive corruption throughout the country.”


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