Editorial: Flat income taxes no solution to budget woes

Editorial Board

Perhaps the most popular idea to come out of the Republican Party’s nomination contest so far is a flat income tax. Several candidates have touted their support of the idea as a selling point for their campaigns. The more well known supporters of a flat tax include Mitt Romney, Rick Perry and Newt Gingrich.

The idea would have more credibility if it came from these politicians as part of their time in office, pursuant to their official duties — namely, working toward the general welfare, as our Constitution puts it. But instead it comes from politicians seeking election to the highest office in the land.

While candidates should always be expected to propose and to some degree hash out ideas to some degree of viability, those ideas should be related to actual circumstances, not quixotic idealism. A flat tax is probably not right for the United States at this time. Even if you think we have a spending problem, not a revenue problem, the fact is that in the past decade our budget deficits have skyrocketed.

After surpluses of over $100 billion from 1999 to 2001, budget deficits grew from $157 billion in 2002 to $1.41 trillion in 2009. We have those numbers despite lowering taxes on the wealthy and the wealthy allegedly taking their opportunity to grow the tax base. The sheer size of ongoing debate and its duration indicate by themselves whether lower tax rates lead to larger tax receipts is a question that is not answered satisfactorily.

Some individuals, if not most, have always been left with their incomes untaxed. Before the 16th Amendment was ratified in 1913, income taxes were levied on only a few occasions. During the Civil War a tax of 3 percent on incomes over $800 was enacted. In 1894 Congress passed another income tax: 2 percent on incomes over $4000. Attempts to levy income taxes on those most able to pay has been part of our political scene for a significant part of our history.

And, should anyone complain about his or her tax bill, think on this: the top rate during the final two years of World War II was 94 percent.

Some evidence exists that shows some kind of correlation between lower taxes and more economic growth with higher tax receipts. Revenues defied expectations and increased in the years following President Kennedy’s Revenue Act of 1964. But the economy we have now is not the one we had then. And frankly, in a world where members of one party filibuster anything that might become an increase in taxes and members of the other party filibuster the removal of taxes, we don’t have time to let the free market solve our problems for us.