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