First, Mark Stricherz pointed out on the CV Blog the political danger of supporting a flat tax plan in a general election campaign. Then Ramesh Ponnuru wrote a similar article calling the flat tax “fools gold for conservatives.” Ponnuru summed up the mathematical problem rather succinctly: “[R]eplacing a progressive income tax with a flat tax necessarily means slashing revenues, raising middle-class taxes or both.” Simply put, this federal government is too huge to have just one flat tax rate on income. At least for now.
Neither Stricherz or Ponnuru are leftists who favor using the tax code to redistribute wealth. But both are Catholic and both think that tax policy should place families first. (In fact, Ponnuru wrote the CatholicVote white paper on taxes. It’s a quick read, worth your time.)
Now Phyllis Schlafly has a great article, which shows another flaw in the Perry plan. Her biggest complaint of the Texas governor’s flat tax plan is that it treats all adults merely as individuals, treating a husband and wife no different than an unmarried couple. And that’s a problem, she says.
Does Rick Perry want to undermine traditional marriage? This question leaps out from his new 20 percent flat-tax plan, which would eliminate all tax advantages for married couples where one spouse is the primary breadwinner.
For more than 60 years, the federal income tax has treated the family as an economic unit. A husband and wife have the benefit of pooling their income in a joint tax return, which affords larger deductions and lower rates.
Perry would replace the pooling of husband-wife income with a system in which each individual, regardless of marital status, would owe federal taxes on his or her separate income. Perry’s plan offers “generous standard deductions of $12,500 for individuals and their dependents” — which ignores the fact that children are dependents of both their parents, even if one earns all or most of the family income.
If an income tax were truly “flat,” filing status wouldn’t matter because a wife is taxed at the same rate as her husband. But Perry’s so-called flat tax isn’t anywhere near flat, so it matters greatly that he offers the same standard allowances to alternative lifestyles as for married couples. His plan would allow, for example, two unrelated adults living with two children to avoid income tax on their first $50,000 of income.
Rick Perry wanted to use a flat tax to regain momentum for his lackluster campaign. With Cain’s catchy 9-9-9 plan, Perry had reason to think that tax reform might just be the answer. But given these very sound objections from Ponnuru, Stricherz, and Schlafly, I don’t think the flat tax will be his ticket back to the top of the pack.
Read the rest of Schlafly’s article over at Crisis Magazine.
UPDATE: One aspect that I do like about the plan is its very generous tax breaks for children. If Perry were to rectify his plans to address Schlafly’s concerns, and tinker with the rates to insure that the middle class don’t face tax hikes while keeping these generous deductions for children… well, I guess it would be a totally different plan, wouldn’t it?