Flat Tax is a Fair Tax

Almost exactly 20 years ago, Steven Forbes started talking about flat tax. Two decades later, the flat tax is again the rage in a presidential primary. A number of GOP candidates, including Rand Paul, Rick Perry, Ted Cruz and Scott Walker, are looking to go flat with a radically simplified postcard tax return. Mike Huckabee wants a low flat-rate tax too, but he would use a sales tax, not an income tax.

The new Republican Party has been baptized in the iron logic of the Laffer Curve. High tax rates stifle innovation, work, investment and American competitiveness. The United States’ absurdly high corporate tax rate (40 percent on average) is incontrovertibly sending jobs and corporations abroad, where rates are typically much lower. Just ask Burger King, one of the latest iconic American companies to flee to a lower-tax competitor.

When Reagan reduced the top marginal tax rate from 70 percent to 28 percent in the 1980s, the Laffer Curve effect was indisputable. The economy exploded, tax revenues nearly doubled over the decade and the share of income taxes paid by the rich soared from 19 to 26 percent.

The challenge for Republicans is to convince voters that abandoning the Rocky Mountain high of multiple tax rates for a flat tax is “fair.” Democrats will scream “tax cuts for millionaires and billionaires.” The key, as Forbes explains, is to “convince Americans that the current progressive rate system is unfair, because the people who get hurt the most from tax rates that chase jobs out of America are the poor and the middle class.”

Republicans can win this debate by going on the offensive and reminding voters that the best way to grow the economy, create jobs and increase tax payments by the rich is to flatten the code. Flat is the new fair.

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