Fox: We all share debt problems

Friday, August 19, 2011

I've kind of tried to put politics to the side for a while. Nothing more than middle-school schoolyard bullying. Republicans, Democrats and Tea Partiers all share at least same blame for the nation's gridlock and $14 trillion debt.

Tea Party supporters may object to that last statement, but it's true. We've gone down a conservative fiscal road for 30 years and it hasn't turned out like we'd hoped.

Many of them are also for a flat tax. Supporters of a flat tax may try to engage you in a debate over the fairness of a flat tax. Unless you have time for a stalemate debate, it's fruitless -- because sense of fairness is an individual thing.

This much can be said about a flat tax: it doesn't work. It's unfeasible. It goes against every basic economic principle that helped this country ascend to the height of power. And it only widens the economic gap between rich and poor.

Other than that, it's a great idea.

Here's a good flat-tax exercise: Say there are four people making $30,000 a year, two people making $100,000 and one person making $1 million. The first five are taxed at 25 percent and the millionaire is taxed at 40 percent.

The first five people generate tax revenue of $80,000. The millionaire generates $400,000. If you want to generate the same tax revenue, the basic rate jumps to 36 percent -- not much of a decrease for the millionaire, but a major increase for everyone else.

But here's where the millionaire loses: because the first five people pay more in taxes, they have less money to buy things. The millionaire sees less income from his business.

The other option, of course, is to accept the loss of tax revenue and cut government spending. However, taxes are the fee we pay for living in a civilized society. If you cut government spending, you hurt people -- not only those who get entitlements, but students, teachers, veterans, those who depend on police and fire departments, those who drive on public highways and are defended by our military, and those who like eating properly inspected food or knowing somebody's at least trying to catch rogue investors.

Yesterday's conservative understood this, especially the last part. Today's conservative, however, lives in Utopia.

The most frustrating part of our debt problem is that we know that a small tax increase on the super-rich -- still far below what they were even 30 years ago -- would quickly put us on the road to recovery.

We just choose to walk down the road of self-sabotage. Some of us would prefer we run.

These views are the author's and not necessarily reflective of the Tribune's views.