Flat Tops, Tires, Earth and Taxes

I had a flat top in high school where I learned that early civilizations thought the earth was flat. Both ideas, the haircut and belief, were dorky. Had my share of flat tires, too. Had flat sales taxes all of my life; not always steadily-flat, though. Sales taxes here in the Buckeye State often differ depending on the county tax or local taxes added-on.

Today there is talk of a Federal flat tax which is about to be resurrected from its cold, damp graveyard where The People buried it along with Steve Forbes nearly two decades ago. It is interesting that the name Forbes is perhaps best known in the phrase, The Forbes 400- Forbes Magazine’s annual list of the 400 wealthiest people in America. Gosh, how are the two related- wealth and flat tax?

Enter the tanking Rick Perry. His wife, it is reported, didn’t like the downward trajectory of her man, so she pressed hubby to hire some new blood for the campaign. Apparently two ideas floated to the top: Birtherism and flat tax. It is interesting to note that Steve Forbes himself is now part of Perry’s team along with his $$$.

So back in 1996, Forbes floated the Flat Tax idea-  a flat tax of 17% on all personal and corporate earned income, except that capital gains, pensions, inheritance, and savings would be exempt. Additionally, he supported keeping the first $33,000 of income exempt from tax. Both he and his flat tax flat-lined.

Why would a billionaire like Forbes like his own plan?  Could it be the exemption on capital gains? After all, that’s how many of the 400 stay on his 400 list. Currently [since 2001], the top marginal rate for long-term capital gains is 15%. Throughout the 2nd Reagan term and both of Clinton’s term, the rate tax rate was 28 percent. GW Bush famously cut it to its 15% level in 2001 where it has remained. After 2012, the long-term capital gains tax rate will be 20%. Ah, there’s the rub! Those top 400 will be subjected to a 5% increase on their long-term investments.  Can’t have that; after all, those are the so-called ‘job-creators.’

Well, the GOP would like you to believe that they are the job creators, but everyone knows that the only ‘jobs’ that the uber rich create are jobs for their portfolio managers and, gulp, their tax accountants. They live quite a nice life off of their dividends.

With the Forbes plan, however, there was NO tax on capital gains, neither long or short-term. Nada. Zero.

I’m holding my breath to see the ‘new’ Steve Forbes Flat Tax Plan that will be rolled out today by the Perry Campaign. I will be especially interested in the interest section and how ‘fairly’ the uber rich will fare. Will they skate as in the original Forbes plan?

Further, and quite a bit more worrisome, how will The People react to this idea? Will they be sucked-in because of the ‘simplicity’ of the idea and the clever wording of the proposal? The Low Information Voter will obviously be drawn to it like a fly to rotting meat. Then the task will begin- the reeducation of Mr. & Mrs. Dopey. Lord! Those remedial classes are some of the most difficult sessions of all!

Addendum: It is interesting to categorize the Forbes 400 by applying a filter to the list. If one applies the category of ‘manufacturing’ to the 400, the result is 17. Seventeen of the 400 are manufacturing ‘job creators.’  If ‘automobile industry’ is selected, the result is 3. Three also for ‘construction industry’ which is the same for ‘gaming.’ The category ‘real estate’ rings up 27; 37 in ‘energy.’  But the winner with 96 is in the category of ‘investments.’ And 25 of those are in the  infamous category of hedge funds.  Go figure!    Forbes 400

resources:

Capital Gains Taxes in the United States

Steve Forbes

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6 thoughts on “Flat Tops, Tires, Earth and Taxes

  1. “…there was NO tax on capital gains…” Just wondering, isn’t that a double tax then? You already paid an earned income tax on the amount invested, so its
    been taxed once, and now being taxed again….????

  2. ” Go figure!” I’m trying, but are you, M_R. In all do respect, it seems that you are just venting more…

    Just where are the manufacturing “jobs” to come from? I see two reasons that it is virtually impossible. One reason is globalization; Indians, Chinese, Africans, Latinos, and other Asian countries work a lot cheaper than in the
    United States and Europe. The second reason is technology. One robot on
    the assembly line of the Big Three Automakers does the work of a 100 line
    persons in 1950-1980. Even if we re-build new manufacturing, it well be run by higher technology, requiring even less human labor. Moreover, what
    investor is going to invest in manufacturing when he can’t compete with the
    rest of the world? It seems those days are long gone.

    Maybe agricultural production is an alternative? You know something about
    agricluture. An immediate problem, of course, is that Congress has
    enabled the five or six big conglomerates to take the market over, companies
    like ADM, Con-Agra, and …….well, this old brain got two, help us with the
    other three or four, lol…….Do i get a BINGO for that or a BONGO? In an
    event the world has a growing demand for food products. And, this gets to
    the point that some of us have made on here before, which is that the United
    States has to shift from a consumption economy to a production economy.
    Germany has done it already. We have the food production capability.

    We can produce a lot of natural gas for world consumption. Of course, I know
    its not “green”, but we wont be running on solar or battery power for decades into the future. An airline cannot run on wind, solar, or battery power! In
    the United States, natural gas is abundant and ready. It is cleaner than coal and oil. Re-tooling the United States for natural gas use would put hundres of
    thousands to work immediately…Obama talked yesterday about using his
    executive power to help housing, which will help one million home owners, but the other 10 million are left without a remedy, nothing but an election year
    gimmick, my friends. However, Obama could use his new found executive power and have all ground transportation of the the Federal Government
    mandated to use natural gas. Indeed, former Governor of PA, Ed Rendell has been pleading with him to do exactly that. Wonder why Obama won’t?

    Then there is the need for health care workers. We need more doctors,
    especially in the field of gerieactics. Need all levels of nursing care. We
    need welders and carpenters. We need more teachers. We need to
    produce more health care outcomes, a total revamping of our infrasturcture,
    and better education. That is production!

  3. The problem with any flat tax is that it is regressive–it hits those at the lowest segment of the economy disproportionately.

    Unfortunately, UTF double taxation occurs.

    But the problem is if they are creating jobs, then where are those jobs?

    It’s a bit of a cheat to say that money creates jobs, and if it does create them, it’s someplace where they pay the workers $10 a day rather than in the US.

  4. Laci says, But the problem is if they are creating jobs, then where are those jobs?

    Yes, WHERE? I wonder just how long The People can be fooled by the GOP with this ‘job-creators’ shenanigans?

    And yes, Laci, these created jobs are in 3rd world countries, not the USA.

    We need work FOR Americans that can’t be outsourced and that boils down to infrastructure, pure and simple.

  5. “We need work FOR Americans that can’t be outsourced and that boils down to infrastructure, pure and simple.”

    Does any one have an idea of how much it would cost to bring our infra-
    structure up to 21st century standards. I found it the other day. It is
    $14 TRILLION!! It would double the national debt! It’s not going to be
    that is to find that kind of money, “pure and simple.”

    Moreover, a large amount of the resources would not be produced in the
    United States. Today, our homes are built with non-United States products
    and furnishings. While a total U.S product home can be built it is hard, first,
    to get the products, and, secondly, the cost of the products are much
    greater than the imports. This would be true of renovating the infrastructure.
    Hell, we can’t even provide a made in the United States suitable bus for
    Obama to “see the U.S.A.”
    Finally, it’s a “make work program”. It wwould be another “bubble” as
    the “90s technology bubble and the Bush years housing bubble. Where is
    the long term retention of all these construction workers and their
    supervisors? After Toledo’s or Jackson’s airports are rebuilt, then what do
    the local workers do. And, who pays? Where is $14Trillion going to come
    from? China, you say?
    My friends, we are in deep do-do. There is no easy way out of the
    mess that all Democratic and Republican Congressional members and the
    Presidents have enabled us to be in. Obama’s jobs bill is a gimmick, and now
    this week he has adding to it with executive orders. Yeah, he can play
    with the regulations, but the real money is in Congress, and we know there
    will be none coming from either House.
    Moreover, we are going no where mired in a pile of debt. Infrastructure, while i totally support it, is consumer oriented. As I said elsewhere, we have tochange the economic structure into a productive economy, as Germany
    has, and even China. Infrastructure building will not do that. That’s why
    I suggested a massive reform of our agricultural production for world consumption. Six Billion people have to be fed, and we have it. In addition,
    we need to produce clean water for the world. Guess what country is working
    on that? Yep, China! Food and Water seems to be an area that we
    should be able to dominate. We most get involved!

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